Managing Committee Scope Creep

“The audit committee can handle that.” “Nom gov can take that on.” “Seems appropriate for the comp committee.” These and similar statements are the forerunners of the all-too-familiar committee scope creep in private and public companies. For clarity, let’s distinguish between thoughtfully agreeing on an expansion of responsibilities from assuming additional duties without appropriate consideration and acceptance of the consequences. The latter, which often occurs gradually, is a frequent characteristic of committee scope creep and can present particular challenges for private companies. Consider the close relationships in a family-owned business with multi-generational members comprising the majority of the board. Envision a founder-led company evolving its governance practices and grappling with the functions of its committees and independent directors. These are just two examples where relationship dynamics may encourage acquiescence to scope creep.

The first critical step to mitigate or even prevent such creep from happening is to ensure the committee charter language is drafted with precision. The charter’s purpose and authority sections must clearly delineate expectations. Similarly, the responsibilities’ section should enumerate and elaborate on specific actions anticipated to be undertaken.

The next step is to create a detailed calendar of activities that aligns with the expectations of the charter. This calendar provides a pathway for developing and adhering to effective committee meeting agendas.

Now comes the difficult part. Businesses are dynamic and unanticipated matters arise.  Never more so than in today’s environment. No director wants to be viewed as sidestepping or shirking responsibility.  The tendency is to graciously take on whatever needs to be addressed. Here is where strong leadership and discipline come into play. It is imperative to pause and consider where responsibility for this matter belongs. Does it fit within the purpose of one of the existing committees? If not, then ask the following questions:

• Will the matter need attention only for a finite period of time and, if so, would a task force be more appropriate? 

• Would having the matter addressed by an external advisor provide beneficial knowledge and insights? 

• Does this matter really belong in the hands of management?

• Is a new board committee warranted?

• Is the matter best addressed by the board as a whole? 

These questions deserve timely yet thoughtful consideration.  

The answers will be influenced by, among other factors, the subject matter, the skill sets of the company’s board and management team, available resources, and shareholder expectations. For example, an early stage venture-capital funded company will likely reach a different conclusion than a mature global family-owned company.

What if noncore additional duties have crept in already? As part of an ongoing effort to improve, and ideally mandated by a well-drafted charter, the committee should conduct an annual evaluation of its performance. Properly designed, an evaluation provides a unique opportunity to identify and rectify committee scope creep before it expands beyond control. 

On an annual basis, review the minutes, reflecting on the activities the committee undertook. Map those activities to the committee’s charter and highlight any that were out of scope. Determine whether charter amendments are warranted. Alternatively, decide whether out-of-scope activities distract from the committee’s core responsibilities. If so, consider the questions outlined previously. Be accountable for having assumed duties that may have been extraneous to core responsibilities while making recommendations for reassignment.

This may feel awkward, and one may ask, “Why bother to manage committee scope creep? If the work has to get done, does it really matter who does it?” 

Keep in mind why boards have committees and what factors are considered in determining committee composition. Committees are able to devote additional time, focus attention on details, and more efficiently address complicated issues. Committee members often possess specialized expertise and experience.

Committees are designed to support the board in fulfilling its responsibilities. Committee scope creep endangers having the right people focused on the right matters at the right time. Viewed through this lens, it is the board’s collective responsibility to manage committee scope creep, and it is essential to fulfilling our duties as directors to create value for stakeholders.

Pamela Packard is an experienced private company board director currently serving on the board of Gray & Company, Inc. She also serves as President of the NACD New York Chapter and is an NACD Board Leadership Fellow.