Advisory Panels and Committees

Advisory panels and committees make recommendations, give advice, identify important issues, and produce reports to guide decision making. An organization uses advisory panels and committees to increase the scope of its moral imagination to deal with uncertain situations with which its own members lack familiarity. Current examples of such uncertain situations that advisory panels and committees have been called to address include the consequences of rapidly innovating in biotechnology and nanotechnology; medical care providing experimental therapies; and the use of surveillance technology in free societies. In such unfamiliar situations, even well-intentioned people within the organization may be uncertain about the most appropriate principled behavior that considers and justly balances multidimensional consequences.

In addition to the need for guidance in uncertain situations, it may be difficult to make decisions that are credible to all stakeholders when the decision makers' self-interest also is at stake. It is helpful to balance the subjectivity of decision makers with input from wise, compassionate, skilled, and objective experts. Advisory panels and committees are formal institutional mechanisms whose function is to provide this seasoned and objective input. Recently, for example, advisory panels have been used to recommend the pay and benefits of top-level business managers and to avoid negative perceptions of self-interested managers awarding themselves extraordinarily extravagant pay and benefits.

As institutional mechanisms to signal an organization's objectivity, advisory panels and committees also have been called on to interpret policies for an organization, hold hearings on organizational members accused of policy violations, review draft decisions and approve final decisions, and provide [Page 30]oversight for policy implementation. By performing this function with independence, objectivity, and fairness, panels serve to increase procedural justice within an organization.

The effectiveness of advisory panels as mechanisms to introduce objectivity into decision making depends on the lack of any conflict of interest in the panel members. Such conflict of interest, unfortunately, has been a frequent criticism of advisory panels. In the example of panels used to recommend the pay and benefits of top-level business managers, interlocking membership between the advisory panels and managers is a common way of introducing conflict of interest. Interlocking membership means a person sits on a panel that makes a recommendation, such as setting pay, and the manager whose pay is being recommended sits on a similar panel for their recommender—a clear conflict of interest that interferes with objectivity in setting a fair pay level. In addition to not forming interlocking memberships, another common way for advisory panels and committees to avoid the appearance of conflicts of interest is for its members to serve without pay. The absence of pay for panel members suggests the absence of incentives for them to bias their decisions in favor of a paying organization.

Advisory panels and committees typically do not have all the information that is available to the organizational insiders. The effectiveness of panels, therefore, requires effort to overcome this information asymmetry. This effort is a function of the time and resources decision makers allocate to nurturing relationships between the organization and the panel. Some managers may minimize or neglect this effort because they think it is a burden on their costs and a constraint on their activity. By going without effective guidance, however, these managers are taking on the compound risk that they may act with suboptimal principles, that their expedient behavior may be publicly discovered, and that they will not be able to credibly demonstrate their intention to behave ethically.

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