Nicely nuanced article. Surely the foundational problem is that our whole public sector has a skewed view of risk - if you manage (i.e. minimise) it, all will be well. Better safe than sorry has become a mantra without asking who will be safer and who will be sorrier.
Our corporate experiment, now well into its second century, shows that risk and success dance to a more intricate measure - sometimes into growth, sometimes to destruction.
And so, our educational sector, and the NHS are in peril until we find a less primitive take on risk.
Increasingly, I have observed Boards adopt 'risk appetite' frameworks. I think this is broadly the right approach but I am not sure that these are necessarily always well calibrated.
Lots to say here. Formally most pre and post 92 universities are corporations. They are mostly charities as well with the Board/Council as trustees as well as (technically) corporate directors. Pre-92 universities are chartered corporations established by Royal Charter or Act of Parliament, established in constitutional law rather than company law. Post-92s are Higher Education Corporations under the 1992 Act and the 1988 act. So ‘corporate governance’ is right. And the esteemed Prof Serious (after all, a VC) underplays a little the role of Councils when just concentrating assurance. The Council (with some exceptions) are responsible as the ultimate decision maker though delegating day-to-day operations to the executive team and deferring to the academic senate on specific educational matters. And I know from personal experience of both HEFCE and OfS that they do engage with the Boards, albeit that in general the engagement is with the executive.
David Walker rightly draws attention to the issue of representative members. I think it is worse than he suggests as many board members (other than staff members) are essentially representing a stakeholder group (whether it be local residents or businesses ) and most - in my experience - board members have limited understanding of the constraints and drivers which the executives face. So yes, there is not easy alignment given that the formal responsibility of board members is to the institution as an entity, balancing the interests of multiple stakeholders but in their capacity as board members they are not responsible to the stakeholder group from which they were drawn. Squaring that is challenging for everyone.
Things are slightly different in Scotland (though not much) but it was visible to all in the painful public hearings that Dundee’s Court had failed the failed the institution in addition to the very serious weaknesses at executive level. A large part of that failure appears to have been in the assurance function but underneath that the university had challenges in terms of strategic direction for which the Court was unequivocally responsible. For those universities which face existential challenges - and I wish that was not so - the primary responsibility for direction lies with the governing body. As I have heard the story the early-ish stages of the City St George’s merger involved the Boards agreeing to pursue the plans developed - as you would expect - by the executives. And so it should be - get the Board on board early!
Which organisations recruit and train the governors? Is there an issue with Advance HE and the small group of sector recruitment agencies that has a disproportionate influence on university leadership - both executive and governing. Who oversees these commercial entities?
I am not sure that recruitment is the issue. The sector still attracts high-quality individuals to its governing bodies. Training and on-boarding is perhaps a bigger issue.
I’d make these general observations from a university council independent member perspective :
(i) The code does not address the ambiguous and some might say debilitating nature of university governance through boards that are simultaneously ‘representative’ (giving staff and students rights of membership) and strategic, requiring disinterested judgements to be made. UK codes of corporate governance have never favoured staff representation or consumers, if that term is appropriate for students.
(ii) The code does not address the ambiguity of having both detailed central inspection and regulation (primarily through the Office for Students) and a claim of autonomy for boards. The OFS – and funding bodies – operate not through the board but through university executive leadership, creating an uncomfortable asymmetry. The government talks to universities through the OfS, which in turn addresses executives not university boards.
(iii) The board cannot easily be both ‘unitary’ (executives and independent members working together) and encompass the academic identity of senior managers. Universities retain structures of professional decision-making (eg academic boards) which do not easily align, if at all, with governing boards.
(iv) Complex organisations (universities, NHS trusts) contain black boxes, impenetrable to board members' gaze ..for example, clinical practice, the conduct of research, academic evaluation. Boards can hope to put risk parameters around these boxes but they are partial and incomplete. Corporate governance is fated to be asymmetric. Non executives can't (shouldn't) know enough; executives know too much, too specific.
Just a note - you mention "corporate governance" twice. Yet, universities are not corporations. So, should one start from there, and fix what the board thinks a university is and what its goals should be (given what it is and not what it isn't)?
Otherwise we might as well apply other models - e.g., the armed forces governance model.
I'm reminded of a letter to the LRB:
"Vol. 35 No. 22 · 21 November 2013
Stefan Collini writes that British business enterprises have a mixed record whereas British public institutions have a very good one (LRB, 24 October). The observation reminded me of an encounter at the beginning of the 1990s at a reception held at the British Embassy in Tokyo to promote British higher education. A commercial attaché gave a short speech about a new dawn for British universities: they would become more like British businesses, dynamic, healthy, enterprising, swift to adapt to market conditions etc. I had recently returned from several years’ teaching in an American university and was astonished and embarrassed by this guff. Afterwards I struck up a conversation with a polite and reserved Japanese academic. It emerged that he held a chair of pathology at the University of Tokyo, and had special responsibility for determining the exact cause of death of members of the imperial Japanese family. ‘Your universities,’ he said later, after we’d had quite a few drinks, ‘they will follow British business model? But British business is … I am sorry … it is not well. It is dead, and your universities are famous and respected. They are not dead.’
Nicely nuanced article. Surely the foundational problem is that our whole public sector has a skewed view of risk - if you manage (i.e. minimise) it, all will be well. Better safe than sorry has become a mantra without asking who will be safer and who will be sorrier.
Our corporate experiment, now well into its second century, shows that risk and success dance to a more intricate measure - sometimes into growth, sometimes to destruction.
And so, our educational sector, and the NHS are in peril until we find a less primitive take on risk.
Increasingly, I have observed Boards adopt 'risk appetite' frameworks. I think this is broadly the right approach but I am not sure that these are necessarily always well calibrated.
Lots to say here. Formally most pre and post 92 universities are corporations. They are mostly charities as well with the Board/Council as trustees as well as (technically) corporate directors. Pre-92 universities are chartered corporations established by Royal Charter or Act of Parliament, established in constitutional law rather than company law. Post-92s are Higher Education Corporations under the 1992 Act and the 1988 act. So ‘corporate governance’ is right. And the esteemed Prof Serious (after all, a VC) underplays a little the role of Councils when just concentrating assurance. The Council (with some exceptions) are responsible as the ultimate decision maker though delegating day-to-day operations to the executive team and deferring to the academic senate on specific educational matters. And I know from personal experience of both HEFCE and OfS that they do engage with the Boards, albeit that in general the engagement is with the executive.
David Walker rightly draws attention to the issue of representative members. I think it is worse than he suggests as many board members (other than staff members) are essentially representing a stakeholder group (whether it be local residents or businesses ) and most - in my experience - board members have limited understanding of the constraints and drivers which the executives face. So yes, there is not easy alignment given that the formal responsibility of board members is to the institution as an entity, balancing the interests of multiple stakeholders but in their capacity as board members they are not responsible to the stakeholder group from which they were drawn. Squaring that is challenging for everyone.
Things are slightly different in Scotland (though not much) but it was visible to all in the painful public hearings that Dundee’s Court had failed the failed the institution in addition to the very serious weaknesses at executive level. A large part of that failure appears to have been in the assurance function but underneath that the university had challenges in terms of strategic direction for which the Court was unequivocally responsible. For those universities which face existential challenges - and I wish that was not so - the primary responsibility for direction lies with the governing body. As I have heard the story the early-ish stages of the City St George’s merger involved the Boards agreeing to pursue the plans developed - as you would expect - by the executives. And so it should be - get the Board on board early!
My strong sense is that the problems at Dundee were ultimately strategic but the sectoral response is to add more assurance of the wrong kind.
Which organisations recruit and train the governors? Is there an issue with Advance HE and the small group of sector recruitment agencies that has a disproportionate influence on university leadership - both executive and governing. Who oversees these commercial entities?
I am not sure that recruitment is the issue. The sector still attracts high-quality individuals to its governing bodies. Training and on-boarding is perhaps a bigger issue.
I’d make these general observations from a university council independent member perspective :
(i) The code does not address the ambiguous and some might say debilitating nature of university governance through boards that are simultaneously ‘representative’ (giving staff and students rights of membership) and strategic, requiring disinterested judgements to be made. UK codes of corporate governance have never favoured staff representation or consumers, if that term is appropriate for students.
(ii) The code does not address the ambiguity of having both detailed central inspection and regulation (primarily through the Office for Students) and a claim of autonomy for boards. The OFS – and funding bodies – operate not through the board but through university executive leadership, creating an uncomfortable asymmetry. The government talks to universities through the OfS, which in turn addresses executives not university boards.
(iii) The board cannot easily be both ‘unitary’ (executives and independent members working together) and encompass the academic identity of senior managers. Universities retain structures of professional decision-making (eg academic boards) which do not easily align, if at all, with governing boards.
(iv) Complex organisations (universities, NHS trusts) contain black boxes, impenetrable to board members' gaze ..for example, clinical practice, the conduct of research, academic evaluation. Boards can hope to put risk parameters around these boxes but they are partial and incomplete. Corporate governance is fated to be asymmetric. Non executives can't (shouldn't) know enough; executives know too much, too specific.
Just a note - you mention "corporate governance" twice. Yet, universities are not corporations. So, should one start from there, and fix what the board thinks a university is and what its goals should be (given what it is and not what it isn't)?
Otherwise we might as well apply other models - e.g., the armed forces governance model.
I'm reminded of a letter to the LRB:
"Vol. 35 No. 22 · 21 November 2013
Stefan Collini writes that British business enterprises have a mixed record whereas British public institutions have a very good one (LRB, 24 October). The observation reminded me of an encounter at the beginning of the 1990s at a reception held at the British Embassy in Tokyo to promote British higher education. A commercial attaché gave a short speech about a new dawn for British universities: they would become more like British businesses, dynamic, healthy, enterprising, swift to adapt to market conditions etc. I had recently returned from several years’ teaching in an American university and was astonished and embarrassed by this guff. Afterwards I struck up a conversation with a polite and reserved Japanese academic. It emerged that he held a chair of pathology at the University of Tokyo, and had special responsibility for determining the exact cause of death of members of the imperial Japanese family. ‘Your universities,’ he said later, after we’d had quite a few drinks, ‘they will follow British business model? But British business is … I am sorry … it is not well. It is dead, and your universities are famous and respected. They are not dead.’
Vaughan Grylls
Canterbury"
[https://www.lrb.co.uk/the-paper/v35/n20/stefan-collini/sold-out]
"They are not dead."
UK governments since then: Hold my beer!
I do think we can learn from business without mimicking it.
Thank you for this interesting analysis. I very much concur with it.