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Introduction and aim
This Note discusses the factors that influence whether governance is effective.
What is good governance?
Good governance is not only about the institution meeting its legal and regulatory requirements and the relevant higher education (HE) code of governance. Compliance is important, but the ability of governors to probe strategy and policies and exercise sound judgement is critical. Governors need to be capable of supporting or challenging proposals presented by the executive to the governing body. Once a decision has been agreed, the role of governors is to scrutinise implementation. Good governance is the exercise of oversight and accountability, and a reluctance to accept poor performance. Management, by contrast, is about planning, organising and day-to-day operations.
The Higher Education system of governance
Governors are one part of a higher education institution’s (HEI) system of governance. The other elements are the executive, the senate/academic board and school/faculty/ departmental boards. Each element provides a locus of authority within the system.1 Good governance requires the component parts to discharge their respective roles efficiently and effectively, work in harmony in pursuit of commonly agreed objectives and continually monitor progress in achieving or readjusting the objectives. The boundaries between the different elements of the system may change over time.
The role of the executive
The executive team comprises the head of the institution and the HEI’s most senior managers. The executive is tasked with proposing strategies and policies to the governing body for decision. Following examination, the governing body will decide whether it wishes to approve a proposal placed before it. If approved, the executive is responsible for the successful implementation of what has been agreed.
Leadership by the executive is a major determinant of the success of the institution. ‘The most important factor in ensuring long-term corporate success, whether for banks and other financial institutions (BOFIs) or a non-financial business, is a highly effective executive team’.2 In the absence of an effective executive team, there is likely to be a difficulty. ‘Even a good, well-skilled board cannot make up for ineffective chief executives and senior teams.’ 3
Appointing the executive team
The governing body plays a critical role in appointing the executive team. ‘The most important task of any board is to put in place the right executive leadership for the business.’ 4 If poor appointments are made, the governing body may at a future date face a decision as to whether it should remove a member of the executive team.
While the governing body is responsible for ‘taking all final decisions on matters of fundamental concern within it remit’, the senate/academic board is responsible for the institution’s academic governance. School/faculty/department boards report to the senate/academic board, and are responsible for academic governance at a ‘local’ level.
An emerging requirement is the expectation that the senate/academic board provide an explicit assurance to the governing body that the institution’s academic governance is effective.5 As part of the Annual Provider Review (APR), governing bodies of English HEIs in receipt of public funding are required to provide an annual assurance to HEFCE as to the ‘continuous improvement of the student academic experience and student outcomes’ and ‘the reliability of degree standards’.6 Governing bodies need to agree what information they require from the senate/academic board in order to be confident about the institution’s academic governance, and in turn provide the required assurance to HEFCE.
The governing body
As the senate/academic board, supported by school/ faculty/department boards, leads on academic governance, governing bodies have historically concentrated on matters of corporate governance. These include agreeing the institution’s strategic plan; setting the annual budget; appointing members of the executive; and ensuring the institution is compliant with legal and regulatory requirements. However, if governance is to be effective, academic and corporate governance must be aligned.
The independence of governors
The composition of a governing body has a profound bearing on effectiveness. Independent governors occupy the majority of places on a governing body. For a governor to be independent they cannot be employed by the institution, and should not have close ties. Personal or business relationships can affect independence and any such connections should be carefully considered when assessing independence. Personal or business relationships should be declared to the clerk/secretary.
Generic ability and skills
A fundamental principle is that governors should be selected on merit, exercise intelligence and good judgement and make decisions in the best interests of the institution. They should also have a strong commitment to the institution and its purpose. In addition to their general calibre and interest in the sector, individuals are normally selected on the basis of the specific knowledge and expertise they bring to the governing body.
Achieving a ‘balanced’ membership
An effective governing body needs to exercise oversight across all key areas of the HEI’s work. In appointing governors, governing bodies need to be mindful that although an educational entity, to remain viable in the long-term the institution must be operated as a sustainable business. A deep understanding of the sector (‘domain’ knowledge), as well as business or ‘technical’ skills should be present amongst the members of the governing body. Technical skills, such as auditing, are also required for the audit committee. Individuals with a professional background in specific curriculum areas, or are locally resident and offer connections to local businesses or the community, may also be appointed. Achieving a balanced governing body, capable of dealing with all the areas where decisions may need to be made, needs care. No amount of governor training is likely to compensate for a lack of appropriate skills and expertise.7
Refreshing the membership
The sector’s operating environment is dynamic. The skills needed by the governing body will evolve over time. A long-serving governor reaching the end of their final term of membership, provides an opportunity to consider whether their successor should have a similar, or a different, set of skills. Succession planning, including the membership of the governing body’s committees, should be an important aspect of the work of the Nominations Committee (NC).
Governors must give sufficient time
Governors need to commit sufficient time to the role. This includes preparing for, and attending, meetings of the governing body and any committees of which they are a member. Prior to their appointment as a governor, the
time required should be understood and accepted. Poor attendance should not be tolerated.
Selecting new members
The NC is responsible for considering applications from prospective governors, and making recommendations to the full governing body as to their appointment. Prospective governors may be sought by external advertising, placing an open call on the institution’s website or approaching known individuals. Regardless of the method used, care should be exercised to ensure individuals are independent, committed to institution’s values and beliefs, prepared to see the role as a high priority and have the necessary ability, skills and expertise.
Diversity of membership
Evidence from corporate failures in the private sector suggests that if directors are drawn from similar backgrounds there is risk of ‘group’ think. i.e. a tendency for directors to think in similar ways, which can lead to the executive not being challenged. Where governors are selected from a narrow sub-set of the population (e.g. a specific social, ethnic, age or gender group), with similar values and beliefs, the risk of group think can apply to HEIs. Diversity should be part of the selection process for new governors.
What are governors expected to do?
Governors are expected to both scrutinise (challenge) and support the executive. Achieving the right balance between challenge and support is not easy. Excessive challenge can lead to the executive feeling they have to persistently defend their position; while a lack of challenge may lead to complacency. The chair should lead by example, but governors need to find the right point along the spectrum of unquestioning support and excessive challenge.8 It is important that this is understood by both the governors and the executive.
The different backgrounds and personalities typically found on a governing body, will mean individual governors are likely to make different contributions. Governors with business or technical skills may offer guidance on matters such as, say, external funding or legal matters. Those with knowledge of the sector may contribute strongly to discussions about the academic development of the institution and its performance. However, regardless of their specialisms, all governors should be capable of examining all aspects of the institution’s work and making informed judgements.
The culture of the boardroom
The culture of the boardroom is critical, if there is to be a genuine open two-way communication between the executive and governors. If the culture encourages openness and debate, challenge is more likely to be accepted as a normal part of board dynamics (i.e. accepted conversations). Equally, the manner of any challenge can affect how it is viewed. If the challenge is constructive, offering suggestions as to how the matter might be advanced, this is more likely to be accepted, as opposed to if governors simply offer a dissenting view. The mark of good of successful board member is ‘the ability to ask really good questions in a constructive manner.9
The governing body as a social organisation
Governing bodies are social organisations. New governors closely observe the operation of the governing body and how established governors behave. This allows the cultural values of the governing body to be transmitted to new members. In time, new governors become an established member of the ‘group’ and inevitably develop closer relations with the executive. The social dynamics of governing board can make it more difficult for governors to retain their independence and continue to offer appropriate challenge to the executive. In this regard, it has been suggested that ‘true independence is also a state of mind.’10 All governors should remind themselves of the need to retain their independence and objectivity.
The chair of the governing body plays an important role in ensuring governance is effective. The chair is responsible for leading the governing body and chairs its meetings. The chair plays major role in determining whether the meetings of the governing body are conducted in an atmosphere, which encourages openness and debate. The chair also provides a role model for the other governors. The time required to fulfil the duties is often significant, and the post-holder needs to make the role a high priority.
Agendas and papers
Chairs work with the head of institution and clerk/secretary to ensure there are a sufficient number of meetings of the governing body; governors receive adequate and timely information to inform their decisions; and there is sufficient time to discuss key matters. Papers provided to governors should not be overly long, include and highlight key information and avoid offering an over-optimistic assessment of the institution’s position or strengths. If the chair or governors believe they are not receiving sufficient information to make an informed decision, they should be clear about what additional information they require to make a decision. Governing body agendas should provide sufficient time to discuss key matters, and avoid putting important items at the end of the meeting, and risk limiting discussion. The governing body must be involved in taking all key decisions affecting the institution’s future.11
The chair and the head of institution
The relationship between the chair and head of the institution is at the core of an HEI’s leadership and governance. The governing body appoints both post- holders: one is responsible for governance and other for management. The roles are distinct and the chair should not be drawn into the day-to-day management of the institution. An effective relationship is more likely when there is mutual understanding and respect and the differences in the roles and responsibilities are understood by both parties. The chair should not be uncritically close to the head of the institution. There should be regular communication between the two individuals. As a general rule, it is better to avoid ‘surprises’ being presented by either party to the other. A good working relationship between the two individuals is critical. The chair may, however, need to raise issues of concern or sensitivity. If the relationship is characterised by persistent tension or disagreement, one or both individuals may ultimately need to step aside.12
The chair will normally conduct the annual appraisal of the head of the institution, making recommendations to the Remuneration Committee as appropriate. The chair should also periodically meet with each governor to discuss how their contribution to work of the governing body might be improved, or if specific additional training might be beneficial. On occasions the chair may need to raise specific issues with individual governors, for example, if there is poor record of attendance at meetings or to discuss the possible renewal of the governor’s term.
Appointment of the chair
Normally, a chair will serve for a number of years. Appointment processes will vary, but there should be a detailed role description and agreed process. In many instances, the governing body will also appoint a vice-chair, to deputise for the chair in their absence. To allow the appointment of a replacement chair to be managed in an efficient and timely manner, anticipating when the existing chair may relinquish their position is vital. To facilitate a smooth transition, ideally the appointment of a chair- designate should be made to allow for a period of overlap between the out-going and in-coming chair.
The clerk/secretary is appointed by the governing body and plays a critical role in its operation and effectiveness. Although they may be an employee of the HEI, their allegiance as clerk/secretary is first and foremost to the governing body. As well as ensuring the necessary paperwork (e.g. agendas, papers) are issued in a timely and efficient way, they may be required to offer discrete advice to the chair or head of institution. The independence of the clerk/secretary, may also encourage independent governors to share matters of concern in confidence. If a clerk/secretary believes a proposed course of action by the chair or head of institution is inappropriate, they must be capable of saying so. In addition to having the ‘technical’ knowledge and skills to fulfil the role, the clerk/secretary must have the courage and personal standing to be able to ‘stand-up’ to the chair or head of institution, if required.
Governing bodies are expected to periodically review their own effectiveness. Reviews are increasingly conducted with the help of an independent external facilitator. Once a review is complete, the governing body should review any recommendations and agree what action should be taken.
Good governance requires all elements of an HEI’s system of governance (governing body, executive, senate/academic board, school/faculty/department board) to be fulfil their responsibilities efficiency and effectively, to work together and pursue common objectives. As a key part of the system of governance, the governing body is a major factor as to whether institutional governance is effective.
Questions to review
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.