Building an Effective Board Governance Committee: Everything You Need to Know

Your company relies on its board of directors to ensure high profitability and a good public reputation, and effective corporate governance is essential for supporting those goals.

Creating and retaining a good governance committee helps you ensure your overarching board is functioning well, but who you appoint to this board and how you promote its activities plays a critical role in its success.

What Is a Governance Committee?

A governance committee is a small group of board members formed to support the activities of the broader board of directors. It serves a critical role in advising key processes such as:

• Compliance management
• Risk management
• Performance monitoring
• Stakeholder engagement

The committee also acts as the board’s primary resource on corporate governance requirements and related legal obligations.

Many governance committees meet quarterly. Committees at some organizations prefer more frequent meetings to help them maintain high productivity and accountability, but the right meeting schedule largely depends on your organization’s needs.

Who Serves on the Governance Committee?

The board governance committee is made up of three to seven company directors who fill the following roles:

• Chair: This individual leads decision-making and evaluation processes, ensuring that all committee activities align with its overall purpose. The committee chair is also responsible for reporting to the overall board chair on committee activities and progress.
• Secretary: The committee secretary performs typical secretarial duties such as documenting discussions and decisions, preparing meeting agendas and distributing meeting minutes to other committee members. Depending on the organization’s size and structure, the committee secretary may also be the company secretary.
• General members: The other directors on the committee usually have less structured roles than the chair and the secretary. For example, while they may collaborate on certain tasks, they may also work individually and report back to the chair.

The specific number of people on your governance committee will vary based on several factors, including your organization’s size, specific goals and business structure.

While this group may include the company CEO, that’s not always the case. In fact, many large companies are beginning to exclude the CEO and other C-suite executives from their governance committees to prevent conflicts of interest from influencing important decisions.

What Does a Governance Committee Do?

In a general sense, the governance committee oversees and guides the governance activities of your broader board of directors.

Some of the specific governance committee responsibilities within that description include:

1. Nominating and onboarding new directors: The governance committee advises the board on minimum qualifications for board membership and identifies individuals within the organization who meet these qualifications. When vacancies open on the board, the committee will recruit these nominees and set them up for success in their new role.
2. Carrying out due diligence: Your governance committee stays up to date on key trends and changes to important governance topics, including evolving legislation and standard updates. This background helps them perform due diligence on new board members.
3. Succession planning: As part of a business continuity plan (BCP), governance committee members identify and prepare potential matches for critical positions within the organization. This process helps mitigate risk by ensuring someone is always available to step into high-priority positions if they suddenly become vacant.
4. Conducting performance evaluations: Governance committee members oversee and assess board performance on a group and individual level to ensure your organization is meeting its profitability and governance goals. They then prepare detailed reports documenting key areas for improvement and providing recommendations.
5. Keeping stakeholders engaged: One of the most essential tasks a governance committee is responsible for is protecting stakeholder interests — including employees, shareholders, customers and the greater community — and maintaining their trust.
6. Managing compliance: The governance committee helps your organization remain compliant with applicable regulations at the industry, state and federal levels.
7. Mitigating risk: As part of their typical operations, your governance committee will identify existing and potential risks to your organization’s health. They will then come up with realistic, actionable solutions to minimize and even eliminate those risks.
8. Reviewing committees: At predetermined intervals, the governance committee will assess all standing and ad hoc board committees — including themselves — to ensure they are still necessary and appropriate for the organization’s functioning.

Board Governance Committee Best Practices

Board committees work best when they have the resources and processes they need to support their daily operations. Following these best practices will help you position your governance committee in a way that sets them up for long-term success.

Recruit Wisely

Because good corporate governance is so vital for an organization’s survival, you need to make sure you’re nominating the right board members to be part of your governance committee.

Evaluate potential committee members based on the following:

• Expertise: Does this individual have skills and experience that align with the committee’s overall mission, such as knowledge of industry standards and regulations? If yes, do they have enough experience to succeed in a leadership position?
• Openness: Close collaboration and openness to new ideas are critical traits for a functioning governance committee. Does the board member exhibit open-mindedness in communication and a willingness to work with others?
• Integrity: Committee members must remain dedicated to the principles of the mission. Does the board member in question demonstrate a commitment to standing by their own morals and beliefs? If yes, do these beliefs align with the mission of the committee?

Survey the Board

Your governance committee ensures your board of directors has what they need to achieve their goals. Creating an assessment questionnaire for the entire board can help your committee identify what they need to focus on to meet the board’s needs.

For example, your committee can use the questionnaire to understand how each board member feels about the group’s overall effectiveness and their specific role in it. This information can reveal valuable insights into what actions the governance committee can take to better equip the board with the appropriate resources.

Keep Meetings Organized and Focused

Your committee members each have a lot on their plates, but maintaining focus on the overarching mission is key to maximizing effectiveness. The agenda for each meeting should be based on the committee’s charter, which is its official purpose statement.

Limiting your meeting to only the topics that align with your committee charter helps improve productivity and efficiency, significantly increasing the chances that your committee members will conclude each meeting having made progress toward their goals.

Digital meeting management software can also help your committee secretary more efficiently plan and document meetings, even when some members are remote.

Trust LogicManager for Expert, Bespoke Solutions

LogicManager offers configurable risk-based solutions designed to meet your specific needs or achieve desired outcomes for your key stakeholders. We’re an industry leader in SaaS ERM solutions, recognized on the leading peer-review platform G2 for our ability to execute.

Over 3,000 organizations have adopted our Enterprise Risk Management and Corporate Governance Program to establish a risk-based approach through identifying, assessing, mitigating, monitoring and reporting. With scalable, repeatable and configurable software, plus expert analysis and support, LogicMaster can provide tailored solutions for any industry.

Empower Your Board Governance Committee With LogicManager

At LogicManager, we believe high performance is directly related to the success of your risk management program. That’s the guiding principle behind our integrated, user-friendly risk management software solutions — empowering strong corporate governance.

If your governance committee is looking for a solution to be more effective in their everyday operations, we can help. Request a demo today to get started.