Embracing a New Model for Higher Ed Governance Part 5: Board Improvement

Building a Culture of Continuous Board Improvement and Accountability

Table of Contents

Embracing a New Model for Higher Ed Governance Part 5 - Building a Culture of Continuous Board Improvement and Accountability | The Change Leader

The fifth and last installment in our series explores how higher education can reflect the ever-changing landscape of society and industry to meet their needs and expectations.  At The Change Leader, we propose a culture of continuous board improvement and accountability as a way to avoid the detrimental impact of stagnant governance. 

Higher education’s future depends on the ability of board members and campus leaders to work together to chart a course through very turbulent waters. To keep the metaphorical ship afloat will require strong leadership and management, attention to detail, and continual learning as each new wave – which will include enrollment declines, financial challenges, technological changes, and personnel challenges – threatens to overturn every closely held tradition that higher education believed was important and set in stone.

That’s where continuous improvement comes in. This approach, which is so common in much of the world, is not often at the forefront of higher education operations, and especially board operations. Yet, we at The Change Leader believe that it’s imperative for this omission to be corrected – and it’s up to the board and the institution’s top leaders to ensure that this approach becomes ingrained into the fabric of the university.

With that said, continuous improvement is not limited to the day-to-day workings of the institution. This approach also needs to be part of the board’s way of thinking and working. To do this requires a commitment to diverse ways of thinking, a belief in improvement, and a devotion to learning.

Building a Culture of Continuous Board Improvement

To be effective, higher education boards need to continue to “sharpen the saw,” as Stephen Covey says. That involves creating a culture of continuous board improvement both at that level and at the institutional level. It’s critical for both to be able to work together to effectively meet emerging challenges, no matter whether these are challenges to the institution’s survival or opportunities to move in a new direction. Furthermore, both the board and administration need to agree that innovation and growth are critical for the survival of the institution (and higher education).

In previous blogs and our podcasts, you have heard us discuss how corporate governance is “infiltrating” higher education governance. This is occurring for multiple reasons, but most of all because higher education governance is failing because it is not fulfilling institutions’ needs.

An institution’s board needs to be intentional in creating a culture of change for itself, but unfortunately, there are not many boards who are capable of doing this; higher education’s culture is not one of change, but instead one of stasis and entropy. Thus, it is appropriate to draw on other corporate governance organizations who understand how to implement change. One of these is the National Association of Corporate Directors (NACD).

NACD published its Blue Ribbon Commission on Building the Strategic-Asset Board report in 2016, and it identifies the need for the board to align its skill sets and processes with the institution’s strategy development. For example, if the college or university plans to focus its strategic efforts on a particular area – such as researching and developing emerging technologies such as robotics and artificial intelligence – the board should have a member who has expertise in some area of technology, which could include implementation or technology law.

At the same time, the board needs to be aware of its critical role in creating and maintaining the culture of the higher education institution. As NACD’s Blue Ribbon Commission on Culture as a Corporate Asset noted, institutional culture is interwoven with strategy, CEO/senior leadership selection, assessment and evaluation, and risk oversight – all of which are in the board’s domain. Therefore, boards need to keep the impact on institutional culture at the top of mind while making each board decision.

This board impact is why the politization of boards that we have seen over the past few years makes little or no sense.  Trustees should be leaders by helping the president and his team, not dictating to them how to run the institution, and certainly not by dictating what should or should not be taught in the classroom.

Trustees also need to consider the culture of continuous improvement – both in relation to the board and to the organization – as part of the board’s evaluation process. For example, the board should regularly assess the institution’s evolving mission and values at a strategic level, and then use institutional data to consider how curriculum offerings, investments, enrollment, and management reflect these values. The board can then offer direction, which then falls to the administration to implement.

Board Recruitment

In the past (and in some cases currently), board appointments were often made as a “thank you” for political support or donations. This has been especially true at state institutions – one needs to look no further than some of the current board appointment practices at the University of North Carolina or the University of Florida, two boards which have been in the news recently. Both boards (and many others) have the norm of requiring a significant financial contribution to the governor’s or state legislator’s political campaign to be considered for the board.

Boards also previously tended to be homogeneous groups that reflected one skill set or one ideology.  You can find this at many Christian universities where the majority (if not all) of board members are pastors or are affiliated with a particular denomination or church.

These approaches will no longer work as higher education faces continual and tumultuous change.  Boards are facing the increasing need to expand the expertise of its members, who then can serve in a consultant role for the board and the institution. As we noted in earlier blogs, this expertise should include key areas such as finance, human resources, fundraising, marketing, law, technology, strategic planning, and international affairs.

One approach to doing this is having “advisory boards” for the institution and its various schools. This approach also gives higher education an opportunity to create a “pipeline” of talent. Optimally, individuals would have the opportunity to learn about the institution through serving on advisory councils at the department and college levels. This service allows potential board candidates to gain a deeper understanding of higher education while also making important contacts within the institution.

Boards also need to borrow a page out of corporate governance and ensure they have an effective nominations and governance (Nom/Gov) committee, which assists the board in providing oversight of governance structure, bylaws, governance best practices, and board nominations and assessment. This committee should be responsible for recruiting prospective trustees as well as for the internal development and growth of the board and its members.

The Nom/Gov committee should have the ability to recruit a diverse board membership with a wide range of expertise. Not only should boards be diverse in skills, they should be diverse in other areas such as race and gender, but not for appearances – primarily for the reason of diversity of thinking.

Unfortunately, many boards’ makeup is “pale, male, and stale” – all white men who have long tenures on the board. Not only does this hurt the institution and its ability to change, the board’s representation does not reflect the student population. And believe me, students coming to an institution want to see that the board and administration reflect their values and gender / racial makeup (i.e., are diverse).

Some of the other functions of the Nom/Gov committee include:

  • Periodically reviewing the structure and composition of the board and its committees, including their mandates. This is critical in an environment of volatility, uncertainty, complexity, and ambiguity (VUCA).
  • Developing recruitment/nominating profiles that describe candidate requirements to be considered for vacant board positions. The vast majority of boards do not do anything close to this – the way they bring on board members is through personal, political, and donor relationships. This type of approach results in group-think, which can hurt a board and hamper its ability to fulfill its fiduciary duties.
  • Presenting nominations for new board members to the board for its consideration (as well as nominations for chair and vice-chair). If people remember the four criteria for hiring someone (do they have the skills, is it a good “fit” with the culture, how much will it cost me, and will it make me look good) and apply that to board membership, two things stand out: (1) does the board have the necessary skills that it needs to help with developing and overseeing the institutional strategies; and (2) are the prospective board members a good fit with the culture of the board and that of the institution.
  • Presenting nominations of community members to serve on the board’s standing committees, as well as standing committees’ chair and vice-chair. Serving on board committees is a good proving ground for board officers, because the board can assess how well someone works within the committee structure, and whether they exhibit the necessary leadership and skills to assume positions of higher responsibility.

Setting and Assessing Performance Goals

To ensure continuous board improvement, boards need to be committed to setting goals and assessing performance for the entire board, committees, and individual members. The overall assessment should consider the onboarding process, the annual training, strategic planning, board meetings, the board’s culture, administrative evaluation process, and communications.

Board orientation is a critical piece in onboarding new board members and setting performance standards. An orientation should provide a solid overview of the trustees’ role, including: the duties described in the university’s governing documents; a review of board processes, policies, and structure; a tour of the campus; an introduction to administrative, faculty, and student leadership; the opportunity to sit down and share a meal with faculty, employees, and students; and the setting of expectations for trustee performance. This is one way of facilitating a board’s understanding of the university’s culture as well as the environment in which the institution operates.

The board’s annual training, whether done as part of an annual board retreat and/or orientation, should include a review of the board and individual fiduciary duties and responsibilities. Whether you are a new or an experienced board member, a review of your fiduciary duties, including conflict of interest, is important.

Many institutions include a review of their strategic plan as part of their annual training/board retreat. In many respects, this makes good sense because as the external environment changes, boards should have the right makeup and skills to ensure appropriate oversight. This also can kick off the new board recruitment cycle.

Many institutions ask, “How do we know what we need to train on”? The Change Leader has a proprietary survey that we give boards prior to their annual retreat that includes seven sections critical for boards to be aware of and even excel at. These sections are board leadership, strategic focus, stakeholders, board culture, learning and growth, financial and regulatory, and accreditation. The results of the survey are then used to tailor specific board training based on the results of the assessment.

One of the key metrics by which trustees should be evaluated is how prepared they are for board meetings. This starts with having quality board materials ready and sent to trustees at least one week prior to the meeting so they can thoughtfully prepare. Unfortunately, many trustees are too busy to adequately prepare for board meetings, and instead, just go along with the majority. If this is the case, consideration should be given to replacing those board members.

One of the major failings of boards is that their meetings do not provide ample time for substantive discussion of important ideas, issues, and concerns. For example, one public (state) institution’s system board also oversees the system’s 10 state public universities. Their board meetings are scheduled for three hours every other month. This is nowhere even close to what is needed to provide the necessary oversight for 10 institutions, let alone fulfill their fiduciary duties.

The board’s culture in relation to respect, collaboration, transparency, and ethics must also be reviewed. For example, is the culture of the board one of the cliques where a small minority is the “majority”? Is there robust discussion about the issues? Are all the votes unanimous? These are some of the key questions that must be asked to ensure your board is functioning properly.

The board’s regular review of campus leadership, including holding these leaders accountable for their performance, is a critical function of the board. Presidential evaluations should be done at a minimum of every three years, but best practice suggests that they be done every year for the first three years, and then every other year subsequently.

Many institutions struggle with transparency, i.e., the level and frequency of communication between the board, the institutional staff, and outside advisors in relation to analyzing critical issues facing the university. In the past, board communications were very limited – far fewer communications with stakeholders than the military had with top-secret information! In today’s environment, communications must be far more frequent, and the secrecy behind board deliberations (with the exception of personnel issues) can no longer be the norm.

Bottom line, the board needs to be aware of its commitment to the institution through considering repercussions of personal actions, especially those in relation to loyalty to the university. Inside a board meeting is the time for significant discussion. After the board has met and decided is not the time to air personal views about the decision. The board must present a unified front, and not have “renegade board members” who speak out against what the board is doing.

Board Continuing Education

Creating a culture of continuous board improvement means Trustees need to also commit to continuing their own education during their tenure on the board. This includes regularly reviewing individual duties and responsibilities as well as those for the board as a whole. Board members also need to continually learn more about the institution that they serve, including analyzing enrollment trends, financial reports, accreditation reports, staffing levels, research productivity, and other metrics.

Additionally, trustees need to remain current in their thinking about the overall trends in higher education and board governance. To do this, board members should engage in organizations such as NACD, and higher education-specific organizations such as ACTA (American Council of Trustees and Alumni) and Association of Governing Boards (AGB).

Many higher education boards are trending toward having fewer higher education professionals as trustees. This is not a bad thing – outside trustees bring specific skills to an institution that can help it grow and thrive, e.g., marketing, operations, international experience, etc. However, these trustees can be at a disadvantage because they do not know the higher education marketplace.

Therefore, we suggest that outside board members:

  • First, subscribe to a number of higher ed newsletters, e.g., Inside Higher Ed, Higher Ed Dive, etc. Even reading these once a week will give you a relatively good update on what’s going on in the industry.
  • Second, attend 1-2 conferences focused on higher education each year. There is a number that is very good, including ACE, ACTA, AAC&U, and your accreditor’s annual meeting. These will give you a good grounding on the latest trends in higher ed.
  • Lastly, have administration and/or your board consultant conduct a briefing at your annual board retreat on the latest trends in higher education. This retreat provides an opportunity for the board to review the institution’s progress and challenges and explore big-picture trends that will affect the university in the near future.

Using a Higher Ed Governance Consultant for Board Improvement

Using an outside higher ed governance consultant makes a lot of sense for most boards. Why do I say this (and HINT: it’s not because I’m a governance consultant)?

First, an outside consultant provides an objective perspective on what’s going on at your board. S/he has seen multiple boards but understands that each board is unique in its own right – as the saying goes when you have seen one board, you have seen one board! Having said that, there are certain “basics” that need to be adhered to that ensure your board is effective and efficient. A good board consultant should know these.

Second, an outside consultant should have at his/her fingertips tools that can assess how your board is doing and be able to make improvements. They will have: sufficient legal background to review and make suggestions to improve bylaws and policies; expertise in accreditation and business (including the business of higher ed); and knowledge of organization strategy and culture. They understand where the trends are in business and higher education and can build board committees and board retreats to help your institution get ahead of the curve.

Lastly, a good higher education board consultant brings experiences from outside of higher education to improve an institution’s governance processes and procedures. For example, one institution recently hired TCL to get the institution off accreditation probation for a lack of board governance independence. We were able to review all their governance processes and documents, observe board meetings and make recommendations, and develop questionnaires to illustrate how the board had overcome the accreditation issues. The result: The institution was removed from probation almost a year earlier than projected.

In Conclusion

This brings to an end our series on embracing a new model for higher education governance. As a short recap:

 

In summary, higher education board governance is changing, and boards must evolve to ensure that their institution remains viable and sustainable. This requires significant investment on their part, not so much from a money perspective, but in time and energy. Ultimately, the quality of this investment will pay dividends for their institution and the students it strives to educate.

 

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