Operating committee: Overview, definition, and example
What is an operating committee?
An operating committee is a group of senior executives or managers within an organization responsible for overseeing the day-to-day operations, decision-making, and strategic implementation of the business. This committee typically works together to address operational issues, make decisions that impact the daily functioning of the company, and ensure that business goals are met efficiently and effectively.
The operating committee may consist of leaders from various departments such as finance, marketing, operations, human resources, and legal, depending on the size and structure of the organization. Its role is often to provide direction, review key performance indicators (KPIs), allocate resources, and monitor the execution of strategies to maintain smooth operations.
Why is an operating committee important?
An operating committee is important because it ensures that the organization’s operational activities are aligned with its overall business strategy. By having a dedicated group focused on day-to-day operations, the company can maintain operational efficiency, quickly address challenges, and make informed decisions that support both short-term and long-term goals.
The operating committee also provides a forum for cross-functional collaboration, allowing leaders from different departments to share insights, resolve conflicts, and work together to achieve business objectives. It plays a critical role in maintaining the health of the organization by overseeing key operational areas such as production, customer service, and resource management.
Understanding an operating committee through an example
Imagine a technology company that is scaling rapidly. The CEO decides to establish an operating committee made up of the heads of key departments, including the Chief Financial Officer (CFO), Chief Marketing Officer (CMO), Chief Technology Officer (CTO), and the Chief Operations Officer (COO).
The operating committee meets regularly to review the company’s operational performance, discuss challenges, and align on priorities. For example, the committee might address an issue where the company’s customer support team is experiencing long response times. The committee could allocate resources to improve customer service operations, adjust staffing levels, and invest in automation tools to enhance efficiency.
In another scenario, the operating committee could review the company’s quarterly financial performance and adjust the operational strategy to address any emerging issues, such as supply chain disruptions or shifts in customer demand.
Example of an operating committee clause
Here’s an example of what an operating committee clause might look like in a company’s governance document or organizational policy:
“The Operating Committee, consisting of the CEO, CFO, CMO, CTO, and COO, shall meet on a monthly basis to review the company’s operational performance, address key challenges, and make decisions regarding resource allocation, business operations, and strategy execution. The Operating Committee will report directly to the Board of Directors on major decisions and operational updates.”
Conclusion
An operating committee plays a crucial role in managing the day-to-day operations of a company, ensuring that business strategies are effectively executed, and operational challenges are addressed swiftly. By bringing together leaders from various departments, the operating committee facilitates collaboration and decision-making, helping the company run efficiently and meet its goals. Whether in large corporations or smaller organizations, the operating committee is essential for maintaining smooth operations and aligning daily activities with broader business objectives.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.