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Governance Under Pressure: When Things Go Wrong

by Will Spinks | Jun 8, 2021 | Governance & Policy

In the latest of our Governance Under Pressure series, Halpin CEO Susie Hills caught up with Consulting Fellow Will Spinks to discuss when things go wrong in university governance.

Susie: We have seen several high-profile stories relating to governance failures in the charity and education sectors. Are there any common themes emerging which governors should take note of?

Will: Yes – some of the reports recently have been very uncomfortable if, for some of us, fascinating reading. You do find yourself sometimes both thanking your lucky stars you haven’t been in the centre of the storm and wondering, if you were, how might your own decision making have weathered it.

At a high level, I think there are some general themes, some of them, well-proven over time in different contexts:

  • When there is a problem, you need to act consistently with both your own organisation’s values and in keeping with what rational stakeholders might subsequently expect.
  • Helpful in this, is imagining all that you are saying and doing will subsequently be open to public scrutiny. How will you feel if this is the case?
  • If struggling, seek wise counsel and act upon it.
  • Remember, dealing with a difficult issue well can enhance reputation.

In political circles, the phrase often quoted is, “it’s the cover-up that gets you”, with the example usually being linked to President Nixon who famously was recorded saying, “it’s going to be forgotten”, three days after the Watergate break-in. Whilst Nixon was clearly complicit, the more recent examples we have seen have been more about an unwillingness to contemplate that mistakes have been made and investigate issues thoroughly. They have been more cultural in nature but the subsequent impact when opened up to scrutiny has still been deeply uncomfortable for those involved.

Things go wrong in all institutions. How can governors be confident that they will see the warning lights in time?

I’m not sure that, in a governance role, you can always be entirely confident that things won’t go wrong. I’ve worked in very large organisations all my career – in both executive and governance capacities – in commercial, public sector and charitable settings – and stuff inevitably happens.

What you can do is ensure the culture is right in both diligently managing risk and seeking assurances about key processes before things happen and then, particularly, in ensuring there are good processes for dealing with issues once they, inevitably, arise.

Is there a danger that the fear of things going wrong stops an institution from seizing new opportunities?

This is I think, a slightly different theme from the most recent cases but I would hope not.
My experience suggests that well-governed and managed institutions manage risk well by setting risk appetite and being prepared to manage different levels of risk in different settings. Earlier in my career, I found the concept of risk appetite somewhat theoretical but as I’ve had more experience, I’ve come to believe it is one of the most important areas for governors / NEDs/ Trustees to focus upon and specify. Done well, this allows institutions to knowingly establish, take on and manage risk.

How can you make sure the lines between non-exec and exec team are respected when things go wrong? Is it inevitable that boards end up taking on some executive powers when there is a crisis?

It is probably inevitable that there will be a tendency to do so but I’m not sure that it is inevitable that it has to happen. Context will also be important – in some cases it may be appropriate to do so in some cases it certainly won’t be.
On the temptation to get more involved, I think the nature of the crisis and the nature of the relationship the governors have with the executive team – and their confidence in them – directly impacts upon this.

During the pandemic, I’ve observed first-hand a number of institutions consciously delegating more to their executive team than would normally be the case balancing this with more frequent, often informal, communication updates as to how things are going.

In other types of crises at other times, I can think of examples where a demonstrable independence from the executive team has been vital in managing an organisation’s response to a particular challenge. I’ve heard it said that whilst “stepping in” can be uncomfortable, “stepping aside” is rarely an option. Stepping in may be through a governor exercising leadership or it could be through appointing independent wise counsel. Wise counsel can sometimes be important in a more public setting as well as in a more personal capacity.

What is the role of a board in a crisis? What support can/should they seek?

I think the Board should focus on three areas:

  • Ensuring the organisation is proactive in managing interest in the issue externally. Seeking to both be open about the content of the issue and how it is being managed. Establishing confidence in the process is key.
  • Ensuring that it is recognised that the issue may impact upon internal stakeholders too. The confidence of colleagues in how the issue is being managed will shape future relationships. This too needs to be managed.
  • Being certain that any regulatory obligations associated with the issue are being properly addressed in a timely manner.

Whilst executive teams will often practice in dealing with issues during crisis management training, it is rarer, in my experience, for Boards/governing bodies to be actively involved (other than checking you have contact details and testing how quickly you can get hold of key players). Boards need to practice too.

Q: What is the role of a secretary in a crisis? Who are they reporting to?

In some organisations, the Secretary may have a single “hat” they are wearing and in others they may have more than one. Certainly, I’ve had roles where I was both the “Secretary” and the “Chief Operating Officer” with distinctive crisis management accountabilities for each role.

In my view, a Secretary has an obligation to ensure the Board, and Chair specifically, are well-sighted on key issues as soon as is appropriate and practical, supporting a culture of “no surprises”. The Secretary may not necessarily do this personally but would, I suggest, ensure it is done, for example, through the Chief Executive. Once done, the Secretary should ensure that the Board focuses on the three areas I outlined earlier; managing external interest, ensuring internal impacts are considered and being certain that regulatory obligations are honoured.

With the Secretary hat on, the reporting obligation is, very clearly in my view, to the governing body or Board, with a specific obligation to the Chair. With the COO hat on, it is very clearly to the Chief Executive.

Will Spinks is a Consulting Fellow for Halpin – the home of experts in higher education governance.