Executive Committee: Roles, Responsibilities, and How They Function

The role of the executive committee has become increasingly significant in modern corporate governance.  Research conducted by Spencer Stuart highlights that more than 130 companies, each with a market capitalization of at least $500 million, have appointed an executive chair to their executive committees. Notably, this trend has surged by 50% between 2010 and 2019, reflecting its growing prevalence.

In this article, we explain the concept and roles of the executive committee, its responsibilities, and its functions. We also investigate the nonprofit executive committee’s roles and purpose.

What is an executive committee?

An executive committee also referred to as a standing committee, is a governing body working in close partnership with the member states as CEO or executive director. Such committees, elected by board officers for three years, can convene quickly and act urgently to resolve a crisis on behalf of the board.

Beyond crisis management, it serves as a guiding force, identifying and prioritizing emerging issues, shaping board meeting agendas, and providing strategic oversight.

As a rule, the executive committee structure includes the following senior positions:

• Chair or president
• Vice-chair
• Secretary
• Treasurer
• The leaders of other standing committees and temporary task groups

The number of representatives on a chair typically correlates with their duties and the organization’s size. The frequency of committee meetings, led by committee chairs and overseen by the board chair or present president, can range from quarterly to monthly. 

Senior leaders, such as the president, past president, chair, past chair, and officer representatives, bring a wealth of experience to the table. 

Executive committees serve diverse roles across various sectors. Here are a few examples:

• Nonprofits

Often advisory, they guide boards and leadership teams in achieving mission-focused objectives. For example, nonprofit executive committees typically oversee strategic partnerships or donor relationships during a funding cycle.

• Corporations

The focus is on high-level strategy and crisis management. In a tech company, the executive committee meets to adjust investment strategies or approve contingency plans during a sudden market downturn.

• Healthcare 

The function of the executive committee in the healthcare sector is to ensure regulatory compliance and maintain quality standards within an organization. For instance, a hospital’s executive committee acts promptly in response to new healthcare regulations or public health emergencies.

• Government and public entities 

The committee oversees accountability and manages time-sensitive decisions. Additionally, the city council’s executive committee might expedite budget approvals or coordinate responses to natural disasters.

Executive committee vs board of directors

Based on the roles and responsibilities often associated with the executive committee and the board of directors, it is vital to understand the differences and similarities between the two. 

Definition and purpose of the executive committee

Most executive committees typically enumerate from three to seven members and consist of the CEO, CFO, COO, and other top executives. Its main purpose is to handle urgent matters that require consideration outside of regular board meetings.

Executive committee purposes include the following: 

• Strategic execution. It implements the board’s strategies.
• Handling urgent decisions. When urgent matters come up, the committee steps in to make timely decisions without waiting for the entire board.
• Advising top management. The board serves in an advisory capacity, offering valuable insights and support to executives.
• Managing daily operations. It oversees daily functioning.
• Compliance and monitoring. It makes sure the organization follows policies, regulations, and ethical standards, protecting its reputation.
• Setting priorities. It identifies the most pressing issues for the board to address and ensures they’re at the top of the agenda.
• Leading during crises. When unexpected challenges arise, the committee takes charge of managing the situation.

While committee members have an array of responsibilities that go beyond purely operational functions, their powers are often defined by the organization’s bylaws. For example, they can’t overrule decisions made by the full board.

Let’s consider a real-life example of the Amazon excom, known as the S-Team, which guides the company’s strategic direction and oversees key initiatives. Executive committee positions include 29 members, in particular, three CEOs, 9 vice presidents, and other officers. 

A notable case of the S-Team’s strategic involvement is Amazon’s acquisition of MGM Studios. In May 2021, Amazon announced its intent to acquire MGM for $8.45 billion, enhancing its content offerings and strengthening its position in the entertainment sector.

Definition and purpose of a board of directors

The board of directors is the governing body that the shareholders elect. Its purpose is to oversee the organization’s overall direction and strategy. 

The executive board positions and responsibilities include: 

• Strategic oversight. The directors define the organization’s long-term goals, mission, and vision, ensuring strategic alignment.
• Governance and compliance. The governing board ensures adherence to laws, regulations, ethical standards, and internal policies, safeguarding organizational integrity.
• Stakeholder representation. The board serves as a mediator between management and shareholders, representing and protecting stakeholder interests.
• Performance monitoring. The directors monitor performance through regular evaluation of financial statements, business operations, and market trends.

Ultimately, the board of directors’ additional responsibilities include ensuring organizational performance, setting out company rules and policies, creating annual budgets, arranging compensation for top officials, and electing the CEO.

To ensure neutral monitoring, a board of directors must involve independent, non-executive directors.

What is the role of the executive committee?

The roles and responsibilities of the executive board committee vary depending on the unique needs and specifications of each particular corporation.

In general, the executive board is responsible for driving key decisions, resolution of controversial ideas, implementing strategies, and bridging the management-board gap.

Here is the list of executive committee roles:

• Facilitating the comprehensive review of the CEO’s performance and compensation
• Advising the CEO, offering valuable insights and guidance
• Simplifying the board’s activities and key priorities
• Setting goals and a developmental plan for the organization’s growth
• Harmonizing and overseeing the collaborative efforts of the entire board

Executive committee responsibilities

An executive committee acts according to the corporate bylaws to maximize the efficiency of daily operations. Here’s a brief rundown of its duties. However, every committee will have different responsibilities depending on the company’s industry and needs.

1. Providing organizational direction for the full board and the CEO 

The CEO resolves a range of daily issues — some duties are covered by ad hoc task groups and standing committees; some are handled by the executive committee, while certain decisions require the attention of the full board. Therefore,  the committee must determine which items to include in the agenda for the board meetings.

2. Evaluating C-level executives’ performance

The board hires the C-suite to perform specific duties and achieve certain goals. The executive committee oversees how they fulfill these obligations to ensure that company resources are well-spent. This is needed to review the executive’s compensation and adjust it accordingly.

3. Nominating and selecting board members 

Board members might quit or retire, or circumstances might require increasing the size of the board. Through daily interaction with various managers, the executive committee can shortlist candidates for the board and submit them for approval at the next board meeting.

4. Advising the CEO and executing the board’s power between meetings

The CEO is responsible for performing many tasks and decision-making. Having a tightly knit group of experts working closely with the CEO helps achieve better operational agility and crisis management capabilities.

5. Emergency decision-making 

Business decisions are usually made after thorough consideration and discussion, but sometimes decision-making needs to be urgent. In emergencies, the executive committee must act immediately and let the full board judge later if their actions were necessary, correct, or justified.

6. Offering training and professional development for executives 

Leaders are responsible for steering the organization in the right direction. Since leaders are made, not born, board members should always have some new horizons for which to strive. The committee oversees individual training programs for board members to ensure that they become effective leaders.

The executive committee in nonprofit organizations

For effective management, nonprofits must have an executive committee. The size of its nonprofit executive board is crucial for the effectiveness of the entire organization. 

Recent studies continue to support the idea that smaller executive teams are more effective in decision-making. For instance, research suggests that teams with 5 to 9 members are optimal for efficiency and performance

Additionally, larger teams may experience increased coordination challenges and reduced individual accountability, leading to inefficiencies.

As the organization’s leadership team, they fulfill three fundamental legal obligations: care, loyalty, and obedience. They engage in various activities, such as:

• Creating a mission statement
• Electing and supervising the executive director 
• Managing human resources
• Overseeing nonprofit programs and fundraising

Kathy Cohen and Nanette Fridman, the corporate governance experts, emphasize the importance of a nonprofit’s executive committee of the board in making critical decisions while keeping the board united and building trust among its members. 

Nonprofits should consider integrating these practices and politics into their work:

• Make sure decisions reflect their mission and serve the community’s needs.
• Be open and transparent in how they operate.
• Make inclusivity a priority in all areas of their work.

However, these goals come with challenges that leaders need to tackle head-on.

A recent study shows that many nonprofit leaders are becoming disconnected from the communities they serve. About 49% of CEOs say their board members aren’t building trust with the community, and 51% believe it’s crucial to have board members who understand or represent the people they serve.

When should a board establish an executive committee?

When a board or organization becomes large and complex, an executive committee may be formed to facilitate decision-making and allow for more nimble responses to urgent matters. An executive communication plan might be integral here, ensuring clear communication over decisions and strategies.

During times of crisis or significant restructuring, this committee proves to be extremely valuable. The purpose of an executive committee here is to provide rapid response and oversight, serving as a steering committee. Additionally, in situations where confidential or sensitive information needs to be shared or discussed, the executive board may choose to record executive session minutes. 

The infographic displays how the executive committee works to reduce risk throughout all levels of the company’s organizational structure.

Additionally, certain regulatory or industry-specific requirements may necessitate the creation of an executive committee to oversee compliance and risk management. If specialized oversight is needed in areas like finance, technology, or mergers and acquisitions, an executive committee might be formed to harness the specific expertise within the board. 

According to the SEEP Network’s guide, there are several helpful tips for establishing an executive committee. These include:

• Establishing clear terms of reference
• Ensuring diversity within the committee 
• Defining the committee’s affairs and relations with the full board
• Regularly evaluating the effectiveness of the committee

7 tips on how to maximize the efficiency of an executive committee

It can be challenging when an executive committee that was previously successful encounters a setback. If board meetings have become more of a routine, the executive committee has become more exclusive, and the rest of the board seems to be feeling left out and not contributing as much as they used to. Thus, implementing some practical strategies can help get things back on track. 

1. Develop a committee charter

To enhance the efficiency of the executive committee, create a committee charter that outlines its purpose, responsibilities, and decision-making authority. By establishing it, the executive committee can function cohesively, stay focused on its core objectives, and avoid potential misunderstandings within the organization.

2. Start with an open-hearted discussion

Talk with the CEO, the committee, and the full board of directors. Do the board members feel deeply involved in the company matters, or did they allow the executive committee to turn into an elitist clique that can’t be removed from power? In that case, it’s time to rebuild the board structure and replace the committee.

3. Discuss the structure rebuild during the next meeting

Discuss what every board member thinks the committee should be doing and whether it is currently doing what it should. Such conversations help uncover the reasons behind the irritation or inaction of board members, as well as resolve any potential conflicts.

4. Analyze the bylaws

Let’s be honest, how many times do executives read their company bylaws? Perhaps, there is a clause that prohibits anyone but the senior officers from serving on the executive committee? Or, maybe, their demands undermine the efficient operations of various departments?

5. Eat an elephant one bite at a time 

Try to increase the administration size, if possible, and add fresh blood from the managerial corps. These new members often bring new ideas to the table to help get the company moving in the right direction. If anything, this might produce enough votes to remove the all-too-powerful executive committee members.

6. Take clear notes of what every board member is doing 

This serves many purposes at once, from monitoring the work progress in particular task forces to highlighting the impact of a board member who’s zealously fulfilling — or neglecting — their duties. Reading through the executive committee meeting minutes is also preferable to endless email exchanges.

7. Create an executive communication plan 

Foster open and transparent communication among executive committee members and the board by creating an effective executive communication plan. It ensures all board members feel valued, informed, and encouraged to contribute their ideas and expertise.

How technology is changing the role of executive committees

Technology is changing the way executive committees work, making them more efficient, collaborative, and effective. Tools like board portals are leading this shift by simplifying processes and improving decision-making. Here’s how technology is reshaping the role of executive committees:

• Simplified document management

Board portals make it easy to store, share, and organize important documents securely. Members can upload files in bulk, quickly search for what they need, and even leave notes or comments directly on documents.

• Easy agenda creation

With drag-and-drop tools and autofill features, creating meeting agendas is faster than ever. Agendas are clear, organized, and ready in minutes, helping committees stay focused.

• Better virtual meetings

Technology makes online meetings seamless. Members can schedule meetings, access agendas, review materials, and keep track of minutes all in one platform.

• Real-time note-taking

Digital tools allow members to jot down key points, decisions, and ideas during meetings in real time. These notes are saved and easily accessible for follow-up.

• Quick and easy voting

With built-in voting features, members can cast votes, share opinions, and approve decisions right in the portal. 

• Faster meeting minutes

Meeting minutes can be created, shared, and approved with just a few clicks. Automated tools pull information directly from the meeting, saving time and reducing errors.

• Mobile access

With mobile-friendly platforms, members can access meeting materials, agendas, and documents anytime, anywhere

Key takeaways

• The executive committee’s composition and frequency of meetings are tailored to the organization’s size, scope, and specific needs, enabling agile responses to critical matters.
• Nonprofit organizations also benefit from executive committees, fulfilling essential legal obligations, facilitating fundraising, and aiding in crucial decision-making.
• Careful consideration of the executive committee roles and responsibilities, structure, and communication fosters efficient operations and balanced governance within the organization.
• The establishment of executive committees can be prompted by organizational growth, crisis management needs, or industry-specific requirements, enhancing risk management and specialized oversight.

FAQs

What does an executive committee do?

The executive committee’s roles and responsibilities include strategic planning, urgent decision-making, guiding top management, daily operations, compliance, and crisis leadership.

What is one of the key functions of the county executive committee?

The county executive committee oversees local government policies and ensures they align with broader government goals.

Who are the members of the executive committee?

The executive committee is made up of high-ranking executives, including the CEO, CFO, COO, and other top representatives. More particularly, it includes the chairman of the board, the vice president, the secretary, and the treasurer.

What does exco stand for?

Excom, short for executive committee, is a team of senior executives within an organization designated by the board of directors to manage critical decision-making and strategic initiatives. This committee is particularly useful in situations where the board is large and unable to respond swiftly to urgent issues.

Who are the members of the executive management committee?

The executive management committee typically includes the organization’s top leaders, like the CEO, CFO, COO, and heads of key departments such as marketing, operations, or finance. It’s made up of decision-makers responsible for shaping strategy and overseeing major initiatives. Sometimes, board members or advisors may also join in specific cases.