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Executive Committee Vs Board of Directors

The executive committee is a subcommittee within the board of directors, which is an organise’s governing body, which oversees management and formulates the strategy. Members are elected by members or shareholders and meet regularly to assess the financial performance of the company and to set policies, as well as designate the senior management. It is the governing body which ensures that good governance procedures are adhered to.

Executive committees, in contrast to the full board are smaller committees which have close ties with their leadership. They can meet swiftly and at short notice to discuss major issues, like urgent workplace issues, strategic decisions, or organizational supervision. Typically, they’re responsible for ensuring board members understand their responsibilities and roles. They also take the lead on delivering effective training in governance practices. They could also be responsible for choosing a new CEO or conducting CEO performance reviews, and reporting to the board.

Ultimately, the executive committee serves as the steering wheel of the board, focusing on issues the board should consider. It is crucial, however, that the executive committee is fully transparent in its decisions to the board as a whole and abides by the board’s policies. To achieve this, it is suggested that the executive committee be a permanent committee of the board, with a fixed term of office and formal terms of reference. This allows the entire board to know what issues have been taken care of by the executive committee, as opposed to when it still requires the full board’s attention.

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