Board committees – the bedrock of effective organisations
Professor Randall Peterson reveals why board committees are the underappreciated foundation of corporate governance
When we think about effective corporate governance many of us picture a board meeting with serious-looking directors gathered around an oversized table pouring over board papers to deliberate the fate of the company in their hands. According to Randall Peterson, Professor of Organisational Behaviour and Academic Director of the Leadership Institute at London Business School, however, board committees, rather than full board meetings, are where most of the real work of the board happens.
Writing recently in MIT Sloan Management Review, he reveals that full board meetings are not always great places for all directors to contribute fully and that directors have greater freedom to express their views more fully at committee meetings.
Professor Peterson believes that companies derive benefit when they recognise the important role board committees’ play in corporate governance. In the article, written in collaboration with Pedro Fontes Falcão, an associate professor of negotiation at University Institute of Lisbon, Professor Peterson highlights how great boards use their committees to engage, develop, and retain their non-executive directors (NEDs). By doing so, they gain more input from each director and benefit from better decisions to become more effective organisations.
He and his co-author identify five ways to ensure that board committees reach their full potential. These are:
Help new NEDs to find their voice
Facilitate the success of NEDs from underrepresented populations
Use ad hoc committees to address specific issues
Bring outside experts into committees
Ensure board evaluation includes committee functioning.
Professor Peterson, author of Disaster in the Boardroom: Six Dysfunctions Everyone Should Understand, has written extensively about corporate governance and the important role it plays in helping companies to succeed. You can listen to his views about the six ways a board can fail and how boards can be set up to succeed in The Why podcast episode ‘Why is your board so dysfunctional?’.
