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Governance in Other Sectors

The following factors justify an interest in looking at good practice in governance in other relevant sectors and considering its application to higher education:

Although higher education boards are very different in some aspects from private sector boards (for example the absence of responsibilities to shareholders), there are numerous similarities, and in some areas (for example board responsibilities for commercial activities) the parallels are very strong.
Similarly there are interesting parallels between higher education governance structures and some of those in partnerships, of which John Lewis is an interesting illustration. For example, the collegial nature of aspects of higher education governance is very similar in many respects to that in some partnership and cooperative models.
There are also some strong similarities to (and differences from) the NHS, in particular in relation to academic or clinical governance issues. Certainly, university governing bodies are often ill at ease in discharging their responsibility for the 'core business' of teaching and research, when in practice they may have little understanding of what this involves in practice.
The overall agenda of the government to modernise the public sector and its governance that universities share with other parts of the public sector, and how this relates to its multiple user or customer interface only one part of which is usually directly located within the public sector domain.

A major report 'A Review of Governance and Strategic Leadership in English Further Education' was published in November 2009. Appendix C has good practice suggestions which may be of interest to governors in higher education.

Many reports on governance in the private sector have influenced higher education.

Whilst one aspect of the drive towards codification has been the development and updating of Combined Code documentation, another has been a partial move away from the voluntary or discretionary principle. The Combined Code operates on a 'comply or explain' principle, meaning that where a company cannot comply with the Code then it should explain why. This is a step on from the voluntary principle which had hitherto characterised the use of governance codes, but is clearly a step short of outright compulsion. The CUC Code of Practice (page 13 in the CUC Guide) operates in the same way.

Amongst other current influences are two from outside the UK: the European Union review of company law, and the USA Sarbanes–Oxley Act concerned with the need for the closer regulation of auditing following a number of commercial failures.

In an article in Perspectives, the journal of the Association of University Administrators (AUA) in July 2010, Raphaela Henze asks whether, in relation to governance, universities can learn from the private sector. Although much of the research is from Germany, her conclusion that failures in the financial sector occurred where a high proportion of members of supervisory boards had little financial experience or expertise raises interesting questions for higher education.

There is a large amount of further information on governance in other sectors, but useful web sites include:

In addition a useful text on governance in the private sector is Neville Bain's book on The Effective Director available from the Institute of Directors.

Powerpoint Presentation:

The Governance Model of the John Lewis Partnership and how it ensures Board Effectiveness - Harriet Hounsell, Head of Organisation Development and Learning Development

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