The success of the oversight function, however, will depend on the resourcefulness and dedication of committee members and others responsible for this function, and the support and cooperation of the board and of management. When forming a committee, factors such as applicable state laws, provisions of the company's corporate charter and its practice for establishing committees should be considered. Most committees are established either by a resolution of the board of directors or by an amendment to the bylaws. Other factors to consider include the committee's duties and responsibilities, the number of members, and the length of time, members may serve. The committee should be large enough to represent a balance of views and experience, yet small enough to operate efficiently.
Most committees have three to five members.
Rapid turnover can be detrimental to effectiveness since members need enough time to understand technical issues and committee operations. On the other hand, new members bring fresh viewpoints. As a balance, the board may establish staggered terms. Some committees have terms of one year with possible reappointment, while some have longer or open terms. Often this is done in a written charter, which provides the board, committee members, management, internal auditors and independent auditors with a clear understanding of the committee's role.