A board of directors makes decisions regarding their organizations’ strategic planning and direction according to their goals, vision, and values. Boards, especially those with a large membership, don’t always have the luxury of meeting in-person to make some critical decisions. Executive committees are smaller groups with close ties to the leadership and can meet on short notice, without much prior notice, to deal with pressing issues impacting the organization.
In the absence of the full board, the executive committee can act in its place.
Executive committees serve as steering committees for the rest of the board. In the role of a steering committee, the executive committee sets priorities for resolution by the board as a whole. Executive committee members report to the board even though they are all senior-level leaders.
Officers of the board and senior executives make up the executive committee. Bylaws stipulate who sits on the executive committee. A typical executive committee will include all board members as well as the company’s president or CEO.
If the bylaws permit it, boards can also appoint the chair of each standing committee and the board’s chair to the executive committee. It is helpful in some cases for finance, governance, program development, and communications committee chairs to provide immediate feedback on urgent matters.
Executive committees often include the CEO. Of course, there’s a special relationship between the CEO and the executive committee no matter whether the board has such an arrangement.
Typically, the executive committee is responsible for recruiting, nominating, and hiring the CEO. Together, they set the CEO’s compensation package and work on establishing the CEO’s goals. The CEO’s performance is evaluated, and compensation is assigned accordingly by the executive committee each year. Executive committees report these activities to the board and must receive approval for them.
Within the bylaws of every organization, the board will define the duties and responsibilities of the executive committee. Here are a few of the duties that are common to all executive committees.
1. Providing organizational direction and representing the board
Boards of directors and CEOs work together through executive committees to provide direction. Committee members assist CEOs and board members with setting agendas for board meetings.
When necessary, the executive committee usually acts on behalf of the full board. The bylaws specify any limits on the powers of the committee based on this purpose.
The functions of executive committees include providing advice to the board on relevant business matters and conducting research related to investment, risk, and industry trends. The executive committee must keep a close watch on its goals and initiatives and make periodic and timely reports to the full board on their progress.
2. Oversight of the organization
The executive committee has many oversight responsibilities. Their responsibility is to ensure that board policies are implemented daily, and that good governance practices are maintained. This work includes monitoring the ethics policies, security guidelines, quality management, human resources, and company regulations. In addition, oversight duties include ensuring ad hoc committees working on policy development accomplish their goals. A timely report of the executive committee’s actions should be prepared in minutes and presented to the board.
Committees and task forces may also be created or sunsetted by executive committees. A three-year review of the committees and their chairs can be considered best practice for executive committees to ensure they are productive and necessary. A board’s evaluation should also consider how many committees each member serves on.
3. Managing serious workplace issues at a high level
Corporate hierarchy is a part of every organization. A manager is ordinarily responsible for handling workplace issues. However, in some cases, the board must deal with serious problems. These kinds of situations generally require the executive committee to hear matters first and to decide whether the board should review them.
4. Board development and communication
Executive committees also aid in communication between the board, committees, and staff in some measure. Keeping everyone informed about alignment and decision-making is often the responsibility of the executive committee.
Executive committee members also take part in board development, mentoring, and evaluating board members each year. In addition to streamlining many of the board’s activities, the work of the executive committee also helps the board function more efficiently.
State and federal laws require nonprofits to have a board of directors. By ensuring compliance with the organization’s tax-exempt status, the nonprofit board ensures that the organization’s charitable mission is accomplished.
Executive committees may be established by the board and include the president, vice president, treasurer, and secretary. Executive committee members hold board leadership positions. However, they differ from the board in terms of their authority and their ability to act independently.
Executive committees are usually defined by what they cannot do. This will prevent the dilution of essential powers away from the entire board.
An executive committee should not:
Meetings of the executive committee tend to be more frequent than those of the board. When needed, faster decisions can be made with more frequent meetings. It is common for corporations to have varying meeting schedules for their executive committees. Meetings of executive committees can take place monthly, bimonthly, quarterly, or whenever needed.
In most cases, the members of the executive committee are the board officers. Board chairs usually preside over meetings of committees as well. Boards with large memberships often choose to add other members to this committee to ensure a diverse decision-making process and prevent organizations from becoming too dominated by a few individuals.
Keep in mind that the committee should remain relatively small to keep it an efficient and flexible tool for the board. This committee is usually led by the chief executive, who serves as an ex officio member.
Officers of the board and senior executives make up the executive committee. In its bylaws, the organization specifies who is on its executive committee. The corporation’s president or CEO and all board officers are often invited to serve on the executive committee.
As the name implies, management committee board members are ultimately responsible for directing the organization’s activity, ensuring it is well run, and achieving its objectives.
A Management Committee can also be called a Board of Trustees, Governing Bodies, or Executive Committee.
It is common for smaller organizations, such as nonprofits and clubs, to have management committees. The duties of a management committee member are very similar to those of a traditional ‘company director’; however, these duties generally result from a different piece of legislation depending on the company structure.
An organization’s committee of management possesses similar responsibilities and roles as its board of directors. However, small organizations with limited resources and a small management committee may have greater involvement in the organization’s daily activities.
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