Boards, of necessity, operate at a high level and don’t have time for deep or detailed work. They rely on committees to provide opportunities for directors to get closer to the executive team and to gain exposure to complex or specialised issues and activities that would not be appropriate uses of the time of the whole board.
Just as every board is unique, so too is every board’s committee structure. The structure should be reviewed and refreshed to meet evolving governance needs and to benefit from changing skills available to the board. Committees need resourcing so it is wise to review your committee structure and ensure that you have the precise committees you need and no extras. It is also wise to ensure that you do not lack any necessary committees.
The questions below provide comprehensive coverage across:
- Constitutional and regulatory considerations
- Skills and strategic issues
- Resourcing and time constraints
- Delegations and reporting
- Scheduling
The questions are designed to start you thinking about issues that you may encounter. Your answers are not necessarily good or bad; they should reflect the current and desired state of your board, your committee structure, and the role of board committees in your company.
Trust yourself to recognise the most important questions to help you maximise progress with your board and directors.
At the end of the checklist, we have listed some references that you may wish to investigate for additional reading on the topic. We have also included some suggestions for putting into action the ideas that result from considering the checklist.
Constitutional and regulatory considerations
1. Are you a Corporations Act company with legislated ability to delegate the board’s workload to committees, taskforces, individual persons, or other organisations?
Click to add this item to your personal checklist
2. Does your constitution allow the board to delegate any activities to committees? Are there any activities and issues that are reserved for the full board?
Click to add this item to your personal checklist
3. Do you wish to delegate investigation and receive recommendations for decisions of the board or are you delegating some decision-making authority?
1Have you limited the decision-making ability to fit within the boards appetite for such delegations?
Click to add this item to your personal checklist
4. What committees are mentioned in your board charter? Does your board have the power to create and abolish its own committees or do they need to refer to shareholders/members or a regulator?
Click to add this item to your personal checklist
5. Are there any committees required by legislation for your industry? Does your regulator have mandatory requirements or strong recommendations for certain committee titles and terms of reference?
2
Click to add this item to your personal checklist
6. Are there any rules or recommended practices about which directors, or classes of director, may serve on certain committees?
3 Do you want to create requirements for only independent directors to serve on some or all committees?
Click to add this item to your personal checklist
7. If your committee structure differs from a recommended practice, can you demonstrate that you have practices and structures in place that meet the intended purpose of the recommendations?
4
Click to add this item to your personal checklist
8. Does your board regularly assess the advice it receives from committees and make its own independent judgement on whether to act upon that advice?
Click to add this item to your personal checklist
Skills and strategic issues
9. What are the key strategic issues facing your company? Do all of your directors possess the skills required to effectively add value in addressing these issues?
Click to add this item to your personal checklist
10. Are there enough directors to place at least two on each committee in your structure without creating a gargantuan workload for some directors?
Click to add this item to your personal checklist
11. What skills or experiences would directors need to possess to make a sound contribution to each committee? Can you recruit, train, or develop the skills you require?
Click to add this item to your personal checklist
12. Do you want to have people on the committee who are not directors on the board? What skills or abilities would they bring? How would you reward them for their service?
5
Click to add this item to your personal checklist
13. Are the skills on your board conducive to spreading the committee workload fairly or equitably across the directors?
Click to add this item to your personal checklist
14. Does your board use its committees to upskill directors or to refresh directors’ experiences? Is there a preferred rotation through committees or do certain directors serve on one or two specific committees during their entire tenure on your board?
Click to add this item to your personal checklist
15. Does your board use committee service to ‘test’ potential directors before offering them a board seat? Which committees would give the best insights into the suitability of a candidate for board appointment?
Click to add this item to your personal checklist
16. Do you need a board committee, or would an advisory board or council give you the insights you need? Is there an opportunity to use this to gain access to people who have reputations or networks of value to your board but who would not be willing to make the time commitment required of directors on a statutory governing board?
Click to add this item to your personal checklist
17. Would the board be able to assess each committee’s recommendations and make a robust decision on whether or not to adopt them? Do you need to train directors or change the scope of committee delegations before you can respond affirmatively to this question?
Click to add this item to your personal checklist
18. Do your committees presently provide the board with enough insights in all the key strategic areas of focus for your company? If the answer is ‘no’, do you need different committees, different committee members, or more skills among the directors?
Click to add this item to your personal checklist
19. What are the key trends in your sector at the moment? Can your board spend enough time to understand and respond to the challenges these trends create? Can you change the scope of any existing committees to allow them to take on this governance role? What committees might you create to take some of this work commitment of the board’s agenda? Do you have directors with the skill and time to resource these committees?
Click to add this item to your personal checklist
20. What is the typical committee structure in your sector? Do you have any strategic reasons to adopt or vary that structure?
Click to add this item to your personal checklist
21. Do you have a need for detailed work at the moment but not on an ongoing or permanent basis? Would an ad hoc committee or a standing committee better suit your needs?
Click to add this item to your personal checklist
22. Would you prefer to delegate to an individual or to an outside consultant or contractor? Is a committee the best way to gain the oversight and insight that your board needs?
Click to add this item to your personal checklist
Resourcing and time constraints
23. How many hours per year or month do you require directors to invest in their governance duties? How much of that is on board work and how much on committee work?
Click to add this item to your personal checklist
24. Does your board remunerate additional work on committees or is it expected of all directors regardless of remuneration status? Does this represent an equitable situation?
Click to add this item to your personal checklist
25. Do any of your directors have passionate interests into matters that you would like to delegate to a committee? Would they see this work as a labour of love?
Click to add this item to your personal checklist
26. How many committees do you currently have? How often does each committee meet? How long are the committee papers? What is the reading and attendance commitment of each director? What is the expected time commitment of each director on each committee?
Click to add this item to your personal checklist
27. Which executive team members have duties that involve supporting a board committee? Is the workload equitably spread and fairly remunerated?
Click to add this item to your personal checklist
28. How much time do your executives spend preparing committee papers, minutes and agendas? Is that the best use of this time? Would they need to spend more time if the governance and oversight were provided by the board rather than by a committee? Do you need to bolster skills or capacity in your executive team?
Click to add this item to your personal checklist
Delegations and reporting to the board
29. Does each committee have a clear delegation of authority and scope of work? Have these been reviewed recently? Are they fit for purpose given the strategy and the environment in which you operate?
Click to add this item to your personal checklist
30. Does each committee have an appropriate annual agenda that gives adequate coverage of all the strategic items within the purview of the committee? Does the board have access to that agenda? Does the board approve it?
Click to add this item to your personal checklist
31. Do the board members have access to the papers of all committees, including those upon which they do not serve, so that they can discharge their duty to be informed?
Click to add this item to your personal checklist
32. Do the board members have the right to attend meetings of all committees if they wish? How do you handle the costs of this attendance?
Click to add this item to your personal checklist
33. Are the minutes of committee meetings prepared promptly and – once approved – circulated to the board by inclusion in the papers for the next meeting?
Click to add this item to your personal checklist
34. Is time made available at each meeting for a verbal report from the chair of each committee that has met in the time elapsed between board meetings? Do board members avail themselves of the opportunity to ask committee hairs and members questions about their committee work?
Click to add this item to your personal checklist
35. How will you evaluate the performance of each committee and of each committee member and chair? How often will the evaluation be performed? Who will undertake the evaluation? How will the board be informed of the results of the evaluation?
Click to add this item to your personal checklist
Scheduling
36. How long are committee meetings compared to the board meeting? How frequent are committee meetings compared to the board meetings? Do these relative proportions seem appropriate to you?
Click to add this item to your personal checklist
37. Do you have your committee meetings well-spaced between board meetings (to allow for papers and minutes to be prepared without excessive work peak loads) or in association with the board meetings (to gain synergies with travel costs and time allocations in director diaries)? Are you happy with the current schedule?
Click to add this item to your personal checklist
38. Do you allocate dates for board and committee meetings with plenty of notice or is it more of an ad hoc last minute activity?
Click to add this item to your personal checklist
39. What are the key dates for each committee?
6 Does the annual agenda accommodate these dates and take advantage of any synergies?
Click to add this item to your personal checklist
40. Who are the key stakeholders for each committee? When are these stakeholders more accessible? Do the committee meeting dates accommodate stakeholder needs or convenience?
Click to add this item to your personal checklist
Taking action
Read the questions and note which ones you can confidently answer. Make a record of any actions that you wish to take to help answer any questions that you were not confident about.
There are no right or wrong answers to these questions. However, there are some that will make you think and that may merit either a quiet discussion with your chair or raising in an in-camera session. Ultimately, each board must make its own decisions about the committee structure that will best suit their organisation. This is a topic that merits regular review and constant revision to make best use of skills available and give the best response to situations, threats, or opportunities.
Additional reading and reference sources
Dilemmas, Dilemmas, Practical Case Studies for Company Directors, J Garland McLellan, Great Governance Press, 2016
The Great Chair, Brian Hayward, Friesen Press, 2020