Committees make sense

PREREQUISITE: GET WHAT YOU NEED

They gather information, tackle issues, develop solutions and make recommendations to the board.

Setting up a board is an excellent way to institute governance structures in your organisation. A board affords certain oversights and an emphasis on critical areas, such as corporate governance and compliance. And it has the unique ability to establish board committees, which are an invaluable governing tool.

To benefit fully from implementing a board structure, committees must be established in line with organisational needs. And therein lies a prerequisite of them: they must be created based on the needs of the organisation. There is no use in establishing a committee that the company neither needs nor can afford financially (remember committee members must be remunerated).

It is at the discretion of the organisation as to which committees must be established. Examples of committees are audit, risk and assurance; health and safety; ethics and transformation; legal and compliance; and investment, to name a few.

Boards can create committees specific to them that might not be found in other organisations.

Committees act as subdivisions of the board, that tackle specific issues of the organisation in more detail than at general board meetings.

Essentially, committees collect information from specific areas of the organisation and feed this to the board for discussion.

Committees are not autonomous from the board.

For committees to be effective, board members with relevant skills, knowledge and experience must be chosen to participate in them.

For example, the audit committee must have personnel who understand finance, accounting and tax at a higher level than those who can read financial statements basically. In most cases a committee will have three to four members, including a chairperson. And, finally, a board can have as many committees as it requires, based on its governance policies, objectives, size and revenue.

Committees are an incredibly powerful tool that all businesses must make use of. Even if you do not have a board you can still establish committees. There are many areas in every organisation that could be better served by a committee that would improve processes and governance issues.

A simple example is a disciplinary committee. Instituting such a governance tool brings credibility and a sense of fair disciplinary procedure, especially in the eyes of the Commission for Conciliation, Mediation and Arbitration.

Munya Duvera is chief executive at Duvera Elgroup

Committees improve processes and governance issues