During a recent governance effectiveness review, I was asked, “How one measured governance effectiveness”? This got me thinking. Every year, the press brings to our attention where the governance in Universities has encountered problems. This year, we have Swansea University, University of Reading, De Montfort University and there will be others which escape press attention. Last year, the University of Bath and Bath Spa University. So, it is useful to consider what can go wrong but also what constitutes good governance practice and what changes might be needed in the future.
In a governance effectiveness review, we consider questions such as:
- Are the right people around the table and was the meeting well chaired?
- Were the members actively involved in decisions?
- Could they say what they really thought?
- Was there good challenge and was the debate constructive and supportive?
These issues will continue to be extremely important and will need continual review – governance is primarily about people and the way they interact, and the key people, officers, members and the executive, change frequently. Many governance failures arise because basic good practice principles fail. However, if these governance practices are good, in what areas will governing bodies have to improve their effectiveness in the future?
From Compliance to Culture
The Financial Reporting Council report on “Corporate Culture and the Role of Boards” stated that establishing and monitoring the culture, values and ethics of the company was a key role of the Board and the importance of this increased further when the value of the company was vested primarily in the quality of its people. In Higher Education, the governance focus has tended to be on compliance rather than culture. In the private sector and the NHS, Board and organisational culture is increasingly the focus, since compliance has not proved enough to prevent damaging crises. The report noted that “cultural failures damage reputation and have a substantial impact on shareholder value”. A recent headline in the Times reads, “We betrayed our values says Oxfam Chief”. For Board members – “spending time in the business is critical for getting a sense of the prevailing culture in different parts of the business.” In Universities, engagement by Council with staff and students is essential, so that they feel able to voice their ideas and concerns and Council members can understand the prevailing culture and challenge it constructively.
Focus on Strategy & Risk
The pressure on Universities is increasing with risks multiplying in areas such as Brexit, reputational management, (e.g., VC pay, grade inflation, unconditional offers), wafer-thin financial margins, value for money, staff and student well-being, and Regulation with the arrival of the OfS. Councils and the Executive will need to consider how much time they spend in the future on reviewing and discussing strategy and risk, as against compliance and regulation. Universities now have systems in place to manage risk and are able to tick the compliance box that they are “risk managed” but how useful is this really? How can risk management move to a more proactive position where it informs strategy and supports decisions? Universities will also want to consider how they do horizon scanning and how that feeds into strategy and how best to manage their discussions about strategy.
The Governance role in Universities has never been more difficult and ensuring Councils are well-equipped for the ride ahead has never been more important.
Frank Toop is a Consulting Fellow for Halpin Partnership, the home of experts in governance, marketing, strategy and fundraising in higher education.