Ideas & Debate

When a company board committee never meets

board

The 1997 film Wag the Dog was a movie that brought into fore the use of superfluous military action in order to distract from domestic scandal, according to the Merriam Webster dictionary.

The title was actually a shortened version of the idiom “the tail wagging the dog” which usually refers to something important or powerful being controlled by something less so, Merriam Webster defines further.

I was reminded of this term recently when a participant in a governance course I was teaching asked a question. “What happens when a board committee with clear terms of reference never meets?” Sounds odd, right?

How can a board committee, which knows what it is supposed to do, not do it? “Maybe it doesn’t have a committee work plan”, was another participant’s response.

A board committee is a body, with delegated authority from the board, that is charged with looking at specific board subject matters in greater length and detail.

They are an efficient way of dispensing with board tasks by allowing a fewer number of board members delve deeper into a board oversight matter with the help of the responsible management executive.

Therefore, for instance, board audit responsibilities will be covered by an audit committee where the material to be reviewed is driven by the organisation’s internal auditor.

Human resource matters would be driven by the organisation’s human resource (HR) manager and the materials tabled before a human resource committee board should be generated out of the HR office.

Management, including the chief executive officer, are invited to the committee and are usually not substantive members of oversight related committees to enable the directors review the outputs with dispassion and objectivity.

As management are invitees, this gives the board committee licence to ask them to step out of the meeting and leave the substantive members perhaps discussing management’s performance or the quality of the data being provided.

But back to the question, what happens if a committee is not meeting? This is not the quintessential “what came first, the chicken or the egg” question. This, in my not-so-humble and highly opinionated estimation, is a serious dereliction of duty by two parties.

First, the committee chairperson. It cannot be that one is appointed to chair a committee, handed the committee’s terms of reference in a blue ribbon tied bundle of induction materials and then proceed to twiddle one’s thumbs thereafter like Premier League football team substitute.

The chair in the title committee chairperson is a euphemism for leadership. To chair. To lead and demand for meetings and information. Not to sit on a bench and stare into the blank nothingness of zero oversight. The best supporting actor to the committee chair’s starring role in this travesty is the board chairperson herself.

Why, you ask in what I suspect is a defensive tone? Because the board chair is fully alive to a) which board committees exist, b) what they are supposed to be providing deeper oversights and insights on and c) when the committees are supposed to report to the board.

If the board chair is not aware of a, b or c above then she should “d” for definitely resign. And therefore the other participant’s class response of the committee workplan was correct.

At the beginning of every year the board chair should go through the board workplan with the company secretary.

The work plan is not the board meeting agenda. It delineates all the matters that the board should be looking at including strategy and board retreats and spreads them out over the four quarterly meetings.

It delegates some of the matters to the committees so that the board can then keep track of when and what the committee is looking at, and therefore at which quarterly board meeting it is supposed to flow back to the main board.

At the barest minimum, this plan should be circulated once a year at the beginning of the organisation’s financial year together with the board meeting calendar.

However, a highly functional board will have the workplan attached to each board meeting pack so that all board members have line of sight on where the board is with regards to their oversight role for each meeting.

When a board committee is not meeting, it is therefore not keeping management on its toes and is not reporting back to the board on a critical oversight function then management runs that show. In summary, the tail is wagging the dog.