Panel: Elaine Eisenman, Allan Grafman, and Lori Marcus
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Much of the work of a corporate board of directors happens not at board meetings but, rather, in between them– at committee meetings. Among other things, they perform much of the oversight and advising tasks that boards are responsible for.
As pointed out by Kevin D. Chen of the University of Pennsylvania and Andy Wu of Harvard Business School in their 2016 Working Paper, titled, The Structure of Board Committees, board committees provide three basic benefits: (a) through the process of decentralization, committees allow for knowledge specialization; (b) such specialization allows for a more efficient task allocation to directors; and (c) they tend to increase accountability of individual directors.
Best corporate governance practices, therefore, usually include the critical work done by committees in between full board meetings. Episode #5 of Bare Bone Board Basics, Committees of a Board & Work Between Board Meetings, sketches out the basic committees of a board; discusses best practices regarding how committees should be structured, operate, and interface with the Board as a whole; and suggests how committees should be comprised.