+44 020 3930 8303

Governance Under Pressure: Lessons from Corporate Governance

by Hanif Barma, Susie Hills | Aug 4, 2021 | Governance & Policy

Susie had a chat with Consulting Fellow Hanif Barma on lessons to take from governance in the corporate sector. Read their discussion here.

Susie: You have been working with Halpin on higher education governance projects for over three years now. What particular expertise do you bring to your work?

Hanif: I’ve been advising organisations in governance for over fifteen years now, and my work is cross sector. Although much of my work is with corporates, undertaking board reviews, I’ve now worked with Halpin on over half a dozen higher education reviews. I’ve also worked with charities, private companies and regulators. This means I’ve been fortunate to see how governance can work (and sometime shouldn’t) in different sectors and can my help clients learn from further afield than their own sectors.

Susie: What impresses you most about governance in universities?

Hanif: I’ve always believed in education as an enabler of personal development, progression and growth so I’ve particularly enjoyed my governance work in higher education. In the sector, all my clients have had a clear understanding of why governance is important to them, so that’s always a good starting point.

It’s only in the last few years, largely as a result of enhanced reporting requirements, that the corporate sector has really embraced a wider stakeholder perspective, beyond that of shareholders, in their decision making. I’ve been impressed with the way higher education boards take into account the interests of a wide range of their stakeholders, and this has been particularly evident when focusing on the wellbeing of students and staff during the pandemic.

Susie: Many of our clients want to see what practice can be adopted from the corporate sector. What have been the key developments in corporate governance which HE can learn from?

Hanif: In addition to now giving more focus to the wider range of their stakeholders, there are a number of key areas that corporate boards are now giving more focus to. Many of these are people related and these include culture, diversity and inclusion, as well as succession. Sustainability and ESG (environment, social and governance) is another big area of focus.

Culture is one particularly interesting area as boards begin to recognise the alignment of corporate purpose, strategy and culture. This means they appreciate the need to ensure their organisations have the ‘right’ culture to deliver on their corporate objectives. So, culture is increasingly a topic on board agendas and boards are now looking to get assurance on their organisation’s culture.

Susie: Are there any lessons for universities from recent corporate governance failures?

Hanif: Corporate governance failures have arisen for a range of reasons. Many failures have been strategic and have highlighted the need for boards to rise above the detail of routine agendas packed with operational detail with time devoted to box ticking compliance matters. Higher education board agendas can still very operational so spending time on longer-term thinking would, in many cases, be valuable. Ensuring financial viability and sustainability similarly needs to be a focus.

Getting board composition right is also vital. Boards members need to bring in the right skills and experience. Their ability to challenge constructively and support the business is also key. This means board members need sufficient understanding of the business, and engagement with it, so high-quality induction and ongoing board development is essential. With large boards typical in higher education, it can be easy to be a passenger. Universities should regularly ask themselves whether they are getting what they need from each of their governors and whether they are all contributing sufficiently. The right board behaviours are crucial.

Susie: And turning the tables, do you think there are lessons for companies in the way in which universities approach their governance?

Hanif: I earlier mentioned that higher education boards typically give focus to the wider range of their stakeholders. With stakeholder engagement recently getting increasing attention in the corporate sector, this could be an area where corporates could learn from higher education governance. Additionally, I’ve found higher education boards can be more flexible in their choice of committee structure, and there are times that corporate boards could usefully think beyond the well-established audit, remuneration and nomination committees.

Susie: Finally, one of your particular areas of expertise is risk. Have you any observations on how universities approach risk?

Hanif: The higher education clients I have worked with have generally given reasonable focus to risk, but they can give too much focus to the mechanics of risk registers. I’ve seen situations where the board’s discussion has focused on risk scores and ratings, when they would have been better served by giving more time to discussing principal risks and the responses required.

A few other areas are worth remembering. Boards should ensure that the risks identified are clearly aligned with the objectives and strategy. They should give sufficient focus to emerging risks as well as to low probability/high impact risks. The board should also make sure it has established a suitable programme of assurance that addresses the principal risks faced. Finally, boards should not forget that risks and uncertainty also present opportunities – so they should not just view risk as something to be avoided.

Hanif Barma is a Consulting Fellow at Halpin Partnership and founder of Board Alchemy.