When budgets are tight and resources are limited, it can be tempting to carry out your governance effectiveness review without any external input. This can be done by using the internal auditors, setting up a working group of governors to do the assessment or asking the Clerk or Secretary to lead on the review.
However, there are times when this approach doesn’t bring sufficient independence or fresh thinking. So here are our top three reasons to work with an external supplier on reviewing your governance arrangements:
1. Regulator and Code Guidance
The CUC Code of Governance suggests every university (excluding Scotland) should carry out a review of its effectiveness every four years. Whilst they don’t mandate an external review, they do say, “many governing bodies find an external perspective in this process useful”. This point is repeated in the draft CUC Code of Governance, which proposes that a review “with some degree of independent input” gives greater assurance to stakeholders.
The OfS takes a stronger view, welcoming external evidence of the effectiveness of management and governance arrangements. Reflecting on the previous year of registrations in their 2019/20 review , they say, “A large number of providers were unable to evidence regular external input into reviews of their arrangements. There was also a reliance on what appeared to be paper-based compliance exercises against a chosen Code. This did not allow the OfS to make judgements about the effectiveness of arrangements”. In some cases where they have concerns over financial strategy or risk management, the OfS will even ask for an external review to be done as a condition of registration.
2. Objectivity & Independence
If the review is led by one of the existing governance roles – the Clerk, Secretary, Chair or even the Senior Independent Governor – it is very difficult to put aside the inevitable conflict of interest that exist. No matter how impartial they strive to be, it is impossible to be entirely neutral, especially when assessing the behaviours and dynamics of the Board. An external assessor has no preconceptions – and ideally no prior relationship with any of the people involved – and so the review conclusions can be based only on evidence gathered during the project.
The second advantage of an external review is that the stakeholders being interviewed, whether they are an independent governor or a member of the Executive team, are likely to feel more able to be candid in their reflections. They should be able to speak freely about any concerns without fear of reprisal.
3. Learning from Best Practice
The final key benefit of an external review is the insight that your consultant can share with you from their work with other clients. The codes of governance can give guidance on best practice, but it is often real-world examples on how this has been implemented at other institutions which really add value. The most useful effectiveness review reports will include an element of sector benchmarking – perhaps around the size of boards, committee structures or student representation – which is tailored to your institution and particular needs. There is also value in choosing an external reviewer who has experience of other sectors beyond higher education as there are often useful lessons to be learnt from other areas including the public sector, further education, charity and even commercial organisations.
Are you confident that your internal review can stand up to scrutiny? If you’d like to discuss how we can help bring independence and objectivity to your next governance review, please contact us here.
Rachel Killian is a Consulting Fellow for Halpin, the home of experts in higher education.