Our institutions of higher learning must begin embracing a new model for higher education governance and shared governance. As change continually buffets colleges and universities, higher education boards are increasingly finding themselves in the hot seat. Trustees are facing challenges such as the pandemic, the enrollment cliff, declining state funding, and increasing online learning that ultimately will make or break the institution they govern and are responsible for.
To negotiate these challenges requires wise leadership at the trustee level as well as in the senior administrative ranks. Additionally, it will require a paradigm shift from the previous governance model where boards rubber-stamped the recommendations from university presidents and top administrators, to a new governance structure.
Instead, boards need to move into oversight and consultative roles to offer critical guidance to presidents and the institution at large. Arguably, educational entities – along with hospitals – have the greatest ramifications for society, and the CEO roles in these organizations are the most challenging in relation to achieving success. In higher education, the president has a responsibility to ensure that the institution remains focused on its educational mission through its faculty and curriculum, but there is far more to it – plant equipment, large and diverse groups of stakeholders, government regulation, and research, just to name a few.
However, as the external environment rapidly changes, institutions need expertise in dealing with the complexities created by new regulations, technology, the global environment, the economy, changing workforce needs, and funding. Furthermore, the pace and scale of this change are redefining how higher education creates and maintains value.
A New Governance Model for Higher Education Boards
The traditional higher education governance model looks like an hourglass. In the middle (bottleneck) is the president, who filters everything between the board and the institutions (students, parents, administration, faculty, community, and alumni). This model, which put the onus on the president, might have worked in simpler times. However, today’s scale and pace of change can totally engulf this model. Additionally, this model puts board members at risk of not getting enough or having the right information so that they can fulfill their fiduciary duties (but more on those duties later).
Given the rapid changes in the external environment, and the critical need for risk planning (executives / administration) and risk oversight (boards), a new mandate for boards is becoming more and more important.
What does this new mandate look like? The National Association of Corporate Directors’ new mandate for board leaders embraces five concepts that are foundational for the new model:
- This mandate is a result of interlocking and intensifying megatrends that include regulation, global competition, climate change, technology, and increased stakeholder involvement and activism.
- The increasing speed and scale of change requires higher education institutions to redefine how they are creating and preserving value, especially in relation to graduates’ ability to find a job and define a career for themselves.
- This mandate also requires boards to transform their composition, operations, and interactions – they must have new and broader skills that enable them to better understand and oversee administration. Additionally, this new model requires that boards hold themselves accountable in different ways, including annual board evaluations administered by objective third parties.
- Boards will have to shift their operations to include deeper and more proactive board engagement, a more strategic, proactive, and future looking approach to its own renewal, dynamic and flexible operations, enhanced internal and external transparency, and more rigorous accountability. This requires more frequent meetings of the board and establishing board committees with appropriate spans of control and charters.
- This mandate requires board leaders to have the “guts” to orchestrate these shifts through collaboration. Change management is going to become the norm instead of the exception, and board members must have the ability to both recognize when changes are needed, and the willingness and strength to drive them to completion.
In the new governance model for higher education, the structure places trustees in the center of a circle, similar to that of a bicycle tire with its hub and spokes. This enables information to flow in a two-way exchange between trustees and the faculty, students, parents, community, and alumni (as well as the president and administration).
One mechanism for enabling better communications between the board and the various stakeholders is through creating new standing board committees. Realistically, given the rapid changes that we have seen (e.g., COVID), it is impossible for a board to stay fully informed about everything that is going on so that they can properly oversee the institution. Thus, creating standing committees of the board makes a lot of sense.
Suggested areas for board committees include executive, strategy, risk, academic affairs, finance, audit, nominations and governance, fundraising, athletics, and student life. We’ll get more into the details about these committees in a later blog.
This is NOT designed to cut out the president from the loop; s/he is an ex officio member on all committees. Furthermore, the committees should NOT direct administration members to do something. The role of organizing and managing day-to-day work ALWAYS goes through the president.
To successfully implement this model, the board needs to delegate pertinent work to these committees without micromanaging the committees or administration. Additionally, these board committees need to work collegially with the administration, faculty, staff, students, and other stakeholders.
The board’s role in this model is specifically to think strategically about what’s working, what’s not, and what the board can do to help the staff. The board is charged with creating policies and strategies that the administration and staff implement.
A New Focus on Accountability
Increasingly, higher education boards are being asked to focus on accountability, both for themselves and holding administration accountable. Effective boards focus on these areas:
- Reviewing and adopting (or reaffirming) the institution’s mission, vision, and policies.
- Setting, approving, and broadly overseeing implementation of the university’s strategic direction and policies.
- Creating a culture of continuous improvement that includes evaluating the board’s effectiveness, long term.
- Monitoring student achievement indicators.
- Maintaining the institution’s financial and governance strength.
- Assessing the institution’s culture and risk, including cybersecurity.
- Hiring the university president and holding the president and – through the president – the staff accountable for results.
Additionally, this emerging commitment to accountability is taking on a 365-degree perspective. For example, Oregon’s legislature is considering a bill that would require that the evaluation of a university president include comments from students, faculty, and non-faculty-members, as well as trustees.
In another attempt to increase accountability, Oregon is changing the make-up of higher education boards, requiring them to include two students, two faculty and two non-faculty employees. Furthermore, the Oregon governor is now required by law to interview individuals before making these appointments. This goes directly against the common practice of “pay to play” in which governors appoint political friends or donors to these positions.
As part of that accountability, it is critical that boards remain independent. This is underscored after the recent issues when mega-donor Walter Hussman, Jr. objected to a University of North Carolina-Chapel Hill trustee as well as university administrators about Nikole Hannah-Jones’ hiring at the Hussman School of Journalism and Media. This situation, which resulted in a huge uproar, also drew the attention of SACSCOC, which is looking at UNC-CH for racism and corruption. Ultimately, the institution could be placed on probation for the actions of its board.
Learning from For-Profit Governance Models
The for-profit governance model is moving into higher education. This has become necessary as higher education boards have stepped back from the spotlight when a crisis hits, such as the Jerry Sandusky situation at Penn State and the Larry Nassar situation at Michigan State. Ultimately, boards are required to do certain things to fulfill their fiduciary duties.
NACD is among the leaders in creating this new approach. For example, The Report of the NACD Blue Ribbon Commission on Building the Strategic-Asset Board issued a call to action for directors of all organizations (public, private, and nonprofit). The report called for the development of a continuous improvement plan that keeps board skill sets and processes in alignment with their organization’s strategy.
Additionally, the Report of the NACD Blue Ribbon Commission on Culture as a Corporate Asset called on boards to view culture as critical for organizations, and its oversight by boards should be among the top governance imperatives, regardless of its size or sector. It is inextricably linked with strategy, CEO/senior leadership selection, assessment and evaluation, and risk oversight – all of which are squarely in the board’s domain.
As the pace and scale of the world’s issues increase, colleges and universities must keep up in order to educate the next generations of students and prepare them for the workforce. This requires significant and ongoing changes to these institutions that are grounded in transparency, accountability, and collegiality. Institutions that aren’t able to make this transition to a continuous improvement model will not succeed.
At the same time, higher education governing boards are not immune to change. Trustees can no longer sit back and rubberstamp the president’s or administration’s recommendations. These board members must take a more proactive role through both oversight and serving as a consultant. This requires a new model of work in which the president is no longer the central point of communication between the board and the institutional stakeholders.
Instead, the new governance model creates committees where board members work collegially with stakeholders to analyze and make recommendations on critical areas such as student life, risk, and finance. While the president is tasked with implementing these recommendations, the new model ensures that the board is well-informed about what is happening at the institution and trustees are able to bring their expertise to the table to help the institution navigate the challenges it is facing.