Nomination committee
Introduction to the nomination committee
The role of the nomination committee straddles all committees of the board as well as the board itself. Its remit covers the current and future composition of all these forums, with the exception of the appointment of a new chair of the board. This latter is most often led by the most senior independent director on the board unless they are a potential candidate, in which case another non-executive board member would take the lead. The nominations committee does not work in isolation but draws on input from the existing board directors and committee members, as well as external experts, particularly on selection, evaluation and training. An increasingly topical area for nomination committees is that of boardroom diversity and dynamics. As organisations come to realise the benefits of diverse boards, the role of the nomination committee in identifying suitable candidates from a broader range of backgrounds is becoming more important.
The nomination committee sets the framework for the board itself through its recommendations for appointments, evaluations of composition, and planning for future succession. It has a key role in identifying expertise that could add additional value to forums, whether in the near or long term.
The nomination committee interacts closely with the remuneration committee, and these two forums can be combined. You may also consider combining a nomination committee with a governance committee reflecting the importance of the governance framework and its members.
Duties, responsibilities and tasks
In general terms, the nomination committee acts as an internal audit for the board and their committees in respect of their composition and effectiveness. The nomination committee must give consideration to the diversity, skills, experience and knowledge available to these forums. Specifically, this should be in respect of individuals, individual roles, the board or committee as a whole, and the interaction of appointed members when undertaking their roles. This means that the committee has a dual focus on both the individual appointees as well as the board or committee as a collective. The appointment, retirement or removal of one individual must be considered against the impact on the wider group and not just in isolation. When considering the full composition, the committee should consider the dynamics of the board and the effectiveness of its current composition, as well as any areas where new members could enhance or improve the effectiveness of the board.
In practice, the board establishes a nomination committee to:
- Plan: ensure plans are in place for orderly succession to both the board and senior management positions. Within this, they should oversee the development of a diverse pipeline for succession.
- Identify: lead the process for determining board and executive appointments
- Evaluate: undertake or oversee regular evaluations of the board and its committees
- Train: ensure induction and ongoing training is in place for directors/board members, executives and committee members
An effective succession plan should be maintained for the board and senior management positions, incorporating details on what objective criteria should be used for appointments and any specific objectives or deliverables of the roles. The nomination committee will periodically review the policy for the selection and appointment of board members and senior management and make recommendations to the board. Within this, there is an expectation from governing bodies, funding councils and other stakeholders that this should promote diversity of gender, disability, social and ethnic backgrounds, cognitive and personal strengths.
While the committee does not usually have the responsibility for the practical appointment of board members, they do have oversight responsibilities with regard to the process of appointment and induction of new directors and should prepare or oversee the preparation of a description of the roles, capabilities and expected time commitment for any particular appointment. The process should incorporate an evaluation of the balance of knowledge, skills and diversity of the board, and the nomination committee should decide on a target for the representation of underrepresented characteristics or demographics on the board and prepare a policy on how to meet that target (the requirements of the Code for Sports Governance will be instructive here, and this work might feed into the Diversity and Inclusion Action Plan required of all funded organisations). The process should be clear and applied in all scenarios.
Nomination committee members may be requested to be part of the interview panel or assessment process.
As the use and understanding of nomination committees develops, there has been a move to use the nominations committee to give attention to the organisation below the board and executive level. The added benefit of this is that the committee can use it as a means to identify future candidates for board-level roles in support of their succession planning. In addition, it embeds a consistent approach to evaluation through the business, aligning board reviews to reviews undertaken throughout the company.
An alternative approach to connecting board-level evaluation and succession planning is for the nomination committee to receive information on reviews undertaken by HR within the company. This can be in the form of a general report or through HR identifying talent early, which can then feed into succession planning considerations. This can also give nomination committee members additional insight into the wider business of the organisation. Additionally, it can be used as a means of identifying training or development needs to support future board talent that can be adopted in the learning and development plans of the business.
