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Senior Independent Governors

by Susie Hills | Jan 15, 2021 | Governance & Policy

A Senior Independent Director/Governor/Trustee (SID) now appears, in some form, in the governance codes for all sectors:

The codes all operate on an ‘apply/comply’ or ‘explain’ basis. The Senior Independent Governor (SIG) is new to the CUC code, and as a result, many universities are either considering whether they wish to appoint one, or considering how they are going to ‘explain’ that they have considered it and decided not to do so.

Given that the SIDs have long been part of good governance in other sectors, one might ask whether some of the governance and reputational issues that have arisen in HE in recent years may have been avoided had we had this role in our university governing bodies. Indeed, The Halpin Review of the Governance at the University of Bath in May 2018 recommended that the University appointed a Senior Independent Governor and the Advance HE Governance Effectiveness at De Montford University in March 2020 stated that the University “should consider” appointing a SIG.

So, what is a SID, and do you need one?

The SID is described very similarly in both the UK Corporate Governance Code and NHS Foundation code:

“The board of directors should appoint one of the independent Non-Executive Directors to be the senior independent director, in consultation with the board of governors. The senior independent director should be available to members and governors if they have concerns which contact through the normal channels of chairman, chief executive or finance director has failed to resolve or for which such contact is inappropriate. The senior independent director could be the deputy chairman.” NHS Foundation Code

“The board should appoint one of the independent non-executive directors to be the senior independent director to provide a sounding board for the Chairman and to serve as an intermediary for the other directors when necessary. The senior independent director should be available to shareholders if they have concerns which contact through the normal channels of chairman, chief executive or other executive directors has failed to resolve or for which such contact is inappropriate.” UK Corporate Governance Code

Later in the UK Corporate Governance Code, the role of the SID is described as leading the non-executive directors to appraise the chair’s performance annually, and on such other occasions as are deemed appropriate. It also states that the SID should attend sufficient meetings with a range of major shareholders to listen to their views to help develop a balanced understanding of the issues and concerns. So the SID is another way to provide a listening ear to ‘stakeholders’.

The Financial Reporting Council outlines how “when the board is undergoing a period of stress” the SID “becomes critically important”. He or she is expected to work with the chair and the rest of the board and/or shareholders to resolve issues that are deemed significant.

The following examples are given as to when a SID may intervene:

  • There is a dispute between the chair and the CEO;
  • Shareholders or non-executive directors have expressed concerns that are not being addressed by the chair or CEO;
  • The strategy being followed by the chair and CEO is not supported by the entire board;
  • The relationship between the chair and CEO is particularly close, and decisions are being made without the approval of the full board; or
  • Succession planning is being ignored.

SIDs are commonplace in the context of NHS Trusts or Housing Associations, although less so in the Charity sector where the Good Governance Code mentions the role of senior independent trustee only in relation to larger charities:

*”a vice-chair, ‘senior independent trustee; or similar, who provides a sounding board for the chair and serves as an intermediary for the other trustees if needed. This person may be the deputy or vice-chair of the charity.” –*Good Governance Code

Again, given some of the recent high-profile issues relating to governance in the charity sector, the question arises – if these charities had a senior independent trustee in place would trustees, staff, stakeholders have had another route to air their concerns?

A key question we might want to consider is whether and how a SID or SIG might differ from a Vice or Deputy Chair role. Whilst the Charity guidance might suggest that the two can play a similar role in other sectors, they are clearly defined, separate roles with different functions. The benefit of a SID is that they are independent of the ‘front bench’. They are not the next Chair-in-waiting and do not cover for the Chair in her absence. As the CUC code states, the SIG is “different to the Deputy Chair who should be part of the leadership of the Board and deputise for the Chair as well as take on specific duties which are assigned to them.”As such they are a valuable sounding board at all times and in times of crisis are invaluable.

So perhaps the question should not be “should we have one?”, but “why would we not have one?” Why would we decide not to have an additional route to enable voices to be heard or concerns to be raised? Why would we not have in place a role that could help enable us to handle a future governance issue?

Universities are facing huge uncertainty and executive leaders and governors are having to make difficult decisions often outside of ‘normal’ governance cycle. Having another mechanism for mitigating the risks that could arise, and giving governors and stakeholders another means to express any concerns they have has to be a step forward.

Susie Hills is Joint CEO of Halpin, the home of experts in governance.