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Introduction and aim
This briefing note considers the role of the governing body and corporate ethics and values. The note should be read in conjunction with briefing note No 21, personal ethics and values. The present note summaries some of key issues in relation to corporate ethics and values, including what can go wrong in relation to accepting external sponsorship and donations.
Corporate ethics and values
Corporate ethics and values describe the expected behaviours of the organisation. For large commercial companies the UK Corporate Code highlights the responsibility of the company’s board in setting the organisation’s values and ethics:
‘One of the key roles of the boards includes establishing the culture, values and ethics of the company. It is important that the Board sets the “tone from the top.” The directors should lead by example and ensure good standards of behaviour permeate throughout all levels of the organisation. This will help to prevent misconduct, unethical practices and support the delivery of long-term success.’1
In the context of higher education, the Scottish Code of Good Higher Education Governance makes clear the role of the governing body in ‘setting institutional values is to be distinguished from the operational management by the senior team.’2 Governors should be mindful that they have an important role in setting institutional values.
Unless an institution is established for-profit, higher education institutions (HEIs) have a tradition and culture, which reflects a strong public interest ethos. For example, many of the large ‘civic’ or so-called ‘red-brick’ institutions (eg Birmingham, Bristol, Manchester) were originally founded on the basis of the generosity of local merchants and industrialists with the aim of educating local people and supporting the area’s economic development. More recently, the history of many post-92 institutions is one of a public sector institution serving their local communities.
For the present, reflecting their heritage and the continuing interest of the State, ‘public’ HEIs are expected to conduct their ‘business will due respect for the public interest.’3 In terms of corporate ethics and values this highlights that the benchmark by which institutions should be judged is the one applying to organisations operating in the public sector. Thus notwithstanding the movement to a greater reliance on tuition fees in England, albeit supported by a government backed loan system, institutions in the UK are generally expected to work in ways which reflect the norms of the public sector. Whether all institutions see, or will continue to see, themselves as public institutions has been questioned.4
Some, but not all HEIs also have a Court, General Assembly or similarly titled body, which is not the governing body.5 Rather Courts are often ceremonial or advisory bodies, but can play a role in the institution’s engagement with its local or wider communities. These bodies offer more of a public forum than the other structures within an institution’s system of governance, and provide the opportunity for a wider group of interested parties (stakeholders?) to hear about its work. The institution may seek to use the Court proactively as a means of engaging with its communities in order to foster a better understanding of specific matters.6
Codes and values
The Scottish Code of Good Higher Education Governance and The Higher Education Code of Governance view the Nolan principles (see briefing note 21) as core to the expected behaviours exhibited by ‘public’ HEIs. The Nolan principles are generic in that they apply to any part of the public sector and associated office holders. They do not take account of the specific characteristics of higher education. As a consequence, the higher education code of governance offers a set of values, which reflect the specific nature and traditions of higher education, namely:
Historically the right for an individual to exercise freedom of speech and expression has been at the centre of academic values. This is reflected in the right to offer alternative opinions and perspectives, and to pursue research unhindered by external pressures. For institution’s constituted under the Further and Higher Education Acts 1992 the principle of academic freedom is enshrined in their Articles of Government. The higher education code of governance essentially reflects this legislation by emphasizing the need to respect the principle of academic freedom for staff, by ‘within the law to question and test received wisdom, and to put forward new ideas and controversial or unpopular opinions, without placing themselves in jeopardy or losing their jobs or any privileges they may have at the University.’7 In a similar vein the Scottish Code of Good Higher Education Governance suggests a governing body in discharging its responsibilities should, amongst other things, ‘ensure the protection of academic freedom of relevant staff in compliance with relevant legislation and its own governing instruments’.8
Provision of information
In relation to the work of governing bodies, it has become increasingly common for information about the work of the governing body to be published on the institution’s website or available on request. This may include minutes of the governing body’s meetings, although where the minutes are disclosed the version provided often has sections redacted to avoid disclosing commercially sensitive, or personal, information.
The Scottish Code of Good Higher Education Governance expects ‘staff and students of the institution to have appropriate access to information about the proceedings of the governing body.’
Whistleblowing describes a situation where an individual employed by the organisation, in this case a HEI, suspects wrong-doing, which is against the public interest. Original driven by the desire to increase openness and transparency, and a recognition that staff within an institution are often the first to become aware of procedural failures or inappropriate practice, governing bodies are expected to approve a whistleblowing policy and may seek assurances as to its effectiveness by receiving an annual report on its operation.9 The audit committee will normally be expected to undertake any agreed monitoring of the policy.
An annex to the Scottish Code of Good Higher Education Governance provides guidance on whistleblowing, offering a statement of good practice and a number of general principles that any institutional policy should incorporate.10
Freedom of information
The thrust behind the introduction of legislation on freedom of information (FOI) was to achieve greater public disclosure. The legislation confers a general right of access to information held by a ‘public authority.’ Most HEIs are therefore covered by the FOI legislation. Individuals seeking information held by an HEI covered by the FOI legislation will be entitled to find out whether the information exists – the duty to confirm or deny – and the right to receive the information – the ‘right to access – except where an exemption applies. Save for cases of ‘absolute exemptions’ (e.g. generally personal information), for all other possible exemptions the institution is required to judge whether the public interest in disclosure out-weighs the public interest in denying access. Once a request for information has been received in the required form, together with any required fee payment, the institution is expected to respond promptly to the request. HEIs need to exercise care in ensuring that they satisfy the procedural requirements attached to a FOI request, and, in particular, meet the expected timelines when responding to a request for information.11
To meet the requirements of the FOI legislation every HEI is expected to adopt and maintain a publication scheme, approved by the relevant Information Commissioner (IC). The IC provides guidance to HEIs as to the contents of a publication scheme. In practice, FOI legislation has been used by a variety of interested parties, including journalists and the trade unions, to gain information about an HEI.
The Data Protection Act 1998 (DPA98) places obligations on computer and data users, establishing rights for living individuals for which personal data is held. Personal data essentially refers to data from which the individual can be identified. HEIs collect and process sizeable amounts of personal data, and therefore need to be compliant with DPA98.
Sponsorship and donations
In a competitive operating environment, institutions have increasingly sought donations and sponsorship, mindful of, for example, the success of some US HEIs in securing funding from these sources. Accepting donations and sponsorship, especially from high-wealth individuals or organisations, can lead to risks. Some donations and sponsorship may given without conditions placed on the receiving institution, while in some other instances the donor or sponsor may seeks to persuade the HEI to be discriminatory.
The London School of Economics (LSE) illustrates the risks that can arise from not having a clear policy and procedures in respect of donations, and for failing to ensure due diligence on the gift was carried out. The institution accepted a large donation, which appeared to be tied to the son of the then national ruler who had completed their Ph.D. at the institution. The resulting publicity led to the institution suffering significant reputational damage and to the director of the institution resigning.
The Woolf Inquiry examined the issues around the LSE’s management of the donation. Weaknesses identified included the lack of a clear process for determining whether to accept or reject a donation, the absence of a code of ethics and the need to establish a culture more sensitive to risks and ethnic values.
Policies on donations
HEIs need to be very careful about accepting, particularly large, donations and sponsorship, which could be interpreted as undermining the institution’s independence and reputation. The Higher Education Code of Governance states ‘the governing body will also want to ensure that fund-raising, donations, corporate sponsored research and partnerships and similar activities do not inappropriately influence institutional independence, mission or academic integrity.’12 Institutions should make sure they have in place an appropriate code to ethnics and related policies and procedures covering, for example, donations and sponsorship.
The institution’s code of ethics, policies and procedures should be regularly reviewed, and the donations and sponsorship received regularly monitored, at least annually. The institution’s Audit Committee normally undertakes this task.
Questions to consider
End notes and further reading
Associate Director, Governance
Aaron Porter was appointed as Associate Director, Governance at the Leadership Foundation (LF) in January 2014. He is also a higher education consultant and a freelance journalist, having previously been president of the National Union of Students (NUS) in 2010 – 2011. He is also an associate for the LF and the Higher Education Academy (HEA), on the advisory network for the Office for Fair Access (OFFA) and CFE research and consultancy alongside a number of other portfolio roles.
During his high profile term at NUS, he was the first NUS President to be invited as an observer to the board of the Higher Education Funding Council for England (Hefce) and to address the annual Universities UK Conference in September 2010. In addition he served as a non-executive director on the boards of UCAS, the HEA and Endsleigh Insurance. He also co-chaired the Beer/Porter Student Charter group which reported to Higher Education Minister David Willetts in January 2011, and was a member of the Hefce Online Learning Taskforce and the review of External Examiners chaired by Dame Janet Finch both conducted in 2010/11.
Previous to his term as NUS President, Aaron served two successful terms as NUS Vice-President (Higher Education), helping to build NUS’ reputation with the sector. He also served as a non-executive board member for the Office of the Independent Adjudicator (OIA) and on the board of the European Students’ Union (ESU). He was also a member of the Burgess Implementation Steering Group and the National Student Survey Steering Group. In 2009, he was part of the UK delegation to the European higher education ministerial summit in Leuven, Belgium.
Aaron studied BA English at the University of Leicester and graduated in 2006. He then spent two years as a sabbatical and trustee of the students’ union, he was also the founding chair of Unions94 (the students’ unions of the 1994 Group). As a student he was editor of the student newspaper, ‘The Ripple’.
Governance Web Editor
David Williams is Governance Editor for the LF website. He has over 25 years experience of working in higher education, as both as an academic and senior manager. During this time he has worked closely with governing bodies, contributing to, and supporting their work
in a variety of ways.
As Governance Editor, David works with the wider LF community and its members to ensure the governance website offers a repository of information and signposts recent developments in the field on governance.