Many aspiring non-executive directors ask me the difference between a board role and a committee role. To understand the difference between the roles, we need to delve into what purpose each fulfils and their responsibilities within an organisation. Whilst they both play a vital role in an organisation’s governance, there are clear distinctions between their duties, responsibilities, authority and composition.
Essentially boards provide strategic direction, whilst committees handle specific tasks or projects. Boards focus on making high-level decisions that shape the organisation’s future. They steer the ship towards success by setting goals and objectives. On the other hand, committees are like the day-to-day council, taking care of specific operational matters to keep things running smoothly.
Both boards and committees are indispensable to an organisation’s management and governance structure. If you lack board experience, you should consider committee and board-sub committee roles.
The connection between boards and committees
In the United Kingdom, the board is a core component of an organisation’s governance structure and is more commonly referred to as the board of directors. They ensure that organisations are run ethically and responsibly. They act as fiduciaries for shareholders & stakeholders, safeguarding their interests by providing guidance and accountability to management. Board directors (executive and non-executive directors) bring their collective wisdom and experience, offering valuable insights on various matters. The CEO, usually also a board director, oversees the organisation’s overall operations.
To fulfil their duties effectively, boards often establish committees or sub-committees. These committees allow for a more detailed examination of critical aspects related to their respective domains. For example:
- The finance and audit committee ensures compliance with accounting practices and regulatory requirements.
- The compensation/remuneration committee determines appropriate remuneration packages for executives.
- The governance committee focuses on evaluating board performance and recommending improvements.
These committees report back to the board. By delegating specific responsibilities to these committees, boards can streamline decision-making processes while ensuring specialised attention is given to each area.
The difference between a committee and a board sub-committee
Generally, a committee’s role is to address specific tasks or initiatives, usually focusing on one or more operation and management aspects of the organisation. Unlike the board, committees will have defined objectives or mandates. For example, a management committee may oversee the day-to-day operations and decision-making processes. On the other hand, a steering committee might be formed to guide strategic planning and provide direction for future initiatives.
One essential function of committees is researching to make recommendations. They gather relevant information, analyse data, and explore potential solutions. This research helps committees make informed recommendations to the larger organisation based on their findings.
Committees also play an active role in implementing initiatives within their assigned areas. Once recommendations are approved, they execute plans, monitor progress, and ensure successful implementation. This hands-on involvement allows committees to contribute directly to achieving organisational goals.
What is the role of a board sub-committee?
On the other hand, board sub-committees are slightly different and primarily established to assist with the effective functioning of the board of directors. Board committees often include a small subsection of the board of directors. Board committees have more specific objectives than the board and may be called to deliberate issues sent to them by the board of directors.
Generally, two types of board committees in the UK are standing committees and special committees. A standing committee meets on a regular ongoing basis. Whilst special committees are established for a limited period and purpose.
Examples of standing board sub-committees include:
- Executive Committee
- Audit & Risk Committee
- Finance Committee
- Governance CommitteeRemuneration Committee
While overall responsibility lies with the board, these committees assist by providing in-depth analysis, recommendations, and expertise related to their designated area.
The function of board sub-committees
Assisting the Board
One of the primary functions of board committees is to provide valuable support to the board. Focusing on specific domains allows them to delve deeper into issues and offer specialised insights. For example, a finance committee may analyse financial statements and propose strategies for improving financial performance. Similarly, an audit committee may review internal controls and identify potential risks.
Another crucial role of board committees is ensuring compliance with regulations, policies, and best practices in their respective domains. They closely monitor legal requirements and industry standards to ensure the organisation operates ethically and responsibly. This helps safeguard against potential legal or reputational risks.
Board committees also help distribute the workload efficiently among board members. With complex matters requiring detailed attention, it would be overwhelming for the entire board to handle all responsibilities collectively. By delegating specific tasks to different committees based on expertise, boards can streamline operations and better use their resources.
The composition of boards and sub-committees
Boards comprise directors elected or appointed to represent the interests of stakeholders and the organisation. They typically consist of senior executives, external experts, and independent non-executive directors with a fiduciary duty to act in the organisation’s best interests. This diversity ensures that different perspectives are considered when addressing key issues and making strategic decisions. For example, having executives on the board provides valuable insights into operational matters, while industry experts contribute their specialised knowledge to shape long-term strategies.
On the other hand, committees are smaller groups of individuals with specialised expertise. Committee members are appointed based on their expertise and ability to contribute effectively to the committee’s objectives. Their involvement brings depth and precision to discussions on specific organisational issues or projects. Committee members may be appointed by the board and include both board members and external experts to ensure diverse perspectives.
Committees within an organisation focus on specific areas such as finance, marketing, or human resources. Unlike boards that encompass a broader scope of responsibilities, committee members possess specialised knowledge relevant to their respective focus areas. For instance, a finance committee includes financial experts who can provide insights into budgeting, investments, and financial planning.
Executive committees consist of high-level executives working closely with the CEO or top management team to make crucial operational decisions or address urgent matters requiring immediate attention. The executive committee acts as a smaller, more agile group that can respond swiftly to emerging challenges or opportunities.
Differing responsibility between board roles and committee roles
Decision-Making Authority: Boards have ultimate decision-making authority, while committees advise and make recommendations. The board holds the power to approve or reject proposals or recommendations of the committees.
Accountability and Ultimate Responsibility: The Board of Directors holds the ultimate responsibility for the organisation’s performance, making high-level strategic decisions and overseeing the overall management and direction. Committees, including the Executive Committee, act on the Board’s behalf and support its decision-making process.
Legal Duties: The Board, and individual executive and non-executive directors, have legal obligations, including fiduciary duties, to act in the best interests of the organisation and its stakeholders. The Board provides oversight, approves financial statements, ensures compliance with laws and regulations, and receives legal advice.
Reporting Structure: Committees report directly to the board and operate within its established framework. The board sets committee operations guidelines and receives regular progress updates. This reporting structure ensures alignment between committees’ activities and objectives set by the board.
What does this mean for you?
When starting your board career, you should consider board and committee roles. If you have no board experience, committee roles are an excellent way to gain experience working with boards. A great way to begin is by looking into what committee roles may be available within organisations you work for or are associated with. Also, consider external committee roles where your skills are relevant. Not only will you gain valuable experience, but you will also likely be working with directors who sit on other boards and committees. The process of gaining a board role is precisely the same as being appointed to a sub-committee role is the same and can be equally competitive, so if you aspire to a board role in the future, you need to start now.
About the Author
David Schwarz is CEO & Founder of Board Appointments – The UK’s leading board advertising and non-executive career support firm. He has over a decade of experience of putting people on boards as an international headhunter and a non-executive recruiter and has interviewed over one thousand non-executives and placed hundreds into some of the most significant public, private and NFP roles in the world.