Special report: A new age of governance

Is your board diverse enough? Should it be paid? And how’s it getting along with the OfS? Universities’ governing bodies are under scrutiny like never before. Charley Rogers investigates

In a time of increased scrutiny of higher education across the world, university boards in the UK are having to defend their position as the keepers of the system. Media attention on big issues such as vice-chancellor pay means that boards are under the spotlight now more than ever, but how is that affecting the way they’re run?

What is the role of a governing body?

In his opening remarks at the recent Hepi/AdvanceHE conference on university governance, Chris Sayers, chair of the Committee of University Chairs, said: “The word governance comes from the Greek word to steer. And in our context that also means being the facilitating process for setting the right strategy.”

Monica Chadha, chair of the council at Queen Mary University, also presented at the conference, and made the point that the purpose of governors is all about context: “The role of a governing body is to ensure that the organisation has the right strategy, resources and governance to achieve [its] purpose in the context that it operates in.”

However, that context – the HE sector – has undergone many changes, and as such the purpose of university boards needs to be re-evaluated.

In his foreword to Hepi’s report, University Governance in a New Age of Regulation, published in August last year, Prof Michael Shattock says: “In uncertain times, governance – and whether its forms are fit for purpose – become a public issue.”

But what kinds of issues are at the forefront of the public interest?

Responding to key issues

Nick Hillman, director of Hepi, says that major global concerns such as sustainability, mental health and wellbeing, and diversity are all on governing bodies’ radar, but that some are more of a “day-to-day management issue”. He told UB: “Something like mental health, which is an incredibly important issue, and taken increasingly seriously, quite rightly, by university management, will be discussed at a governance level, but is almost a more urgent issue, and [an issue of] day-to-day management.”

There are, however, a number of ways in which boards are involved in shaping universities’ responses to these issues, such as how they direct funding. Hillman explains: “In terms of environmental sustainability, boards are involved in lots of different ways. For example, they have their own reserves and their own endowment, so there’s a question about how they are invested. Is it appropriate or not for universities’ resources, for instance, to be invested in fossil fuels?”

Another key consideration for university boards right now is the need for greater diversity. Hillman says that boards are currently “a bit too male, pale and stale”, and Chadha comments that “there is room for improvement”.

Hillman suggests that diversity could be a more pertinent issue now than in the past because of the role that universities play in wider society. He says: “In a way one would hope it’s always been important, but I do think it’s more important [now]. Partly because universities reflect wider society – still not as well as they might – but more than they did in the past.”

Under the new OfS regulations, boards have responsibility for student access and participation, and Chadha seems to suggest that, in this way, governors should apply these same rules to their own composition: “It strikes me that ensuring people rise as high as their talents allow and equality of opportunity, irrespective of background or backstory, goes to the heart of active participation.”
At the end of the day, says Hillman, a governing body is a team, and “diverse teams are stronger than those that are not diverse, because everybody brings a different set of experiences with them”.

Chris Sayers, pro-chancellor of Northumbria University, Newcastle, is chair of the Committee of University Chairs

Economic diversity

Another key facet of the diversity conversation for boards is the issue of remuneration. Should governors be paid? Hillman suggests it’s something that at least needs to be talked about. He says: “Certainly I think we should continue to have the conversation about payment in the context of diversity. Because it’s unlikely you’ll get age diversity on governing bodies if you don’t pay.

“There’s a huge difference between a retired CEO with a nice big fat pension giving up a few hours a month to be a governor, and someone early in their career who hasn’t even got a mortgage yet, to do the same. And ‘why should they do it for free?’ is a valid question.”

Andy Shenstone, director of business development and delivery at AdvanceHE, agrees, and commented to UB that perpetuating a governance model that requires governors to give up their time freely – when many viable candidates may not be financially secure enough to do so, or have other responsibilities such as caring – means that “we could be, and are likely, excluding very many people of great talent”.

Current challenges

As well as global concerns, university boards are facing their own set of new challenges due to changes in the higher education sector. Undoubtedly the biggest change, says Hillman, is the abolition of the Higher Education Funding Council for England (Hefce) in January 2018, and the arrival of its regulatory replacement, the Office for Students (OfS).

Equality of opportunity, irrespective of background or backstory, goes to the heart of active participation

Hillman says: “The number one issue that’s occupying a lot of the concerns of governors is the relationship between their institution and the Office for Students.”

So what has the introduction of the OfS meant for university governors?

Carol Rudge, partner at business advisor Grant Thornton, explains the change as follows: “The Office for Students (OfS) may be under pressure to become a more interventionist regulator, stepping in to counteract the perceived retreating level of trust in universities.

“The OfS is responding to pressure from politicians, who, for different reasons, feel that the present structure doesn’t serve Britain’s interests as well as it should: some think it’s too elitist, others that it’s not elitist enough.”

But it’s the lack of personalisation the new system brings that can be hardest for governors, says Hillman. The previous “gentlemanly” and personal relationship between universities and their regional Hefce office has been replaced with a “more hard-nosed market regulator-type approach” which is “reflected in all communications between the OfS and institutions, including communication between the OfS and the chairs of university governing councils,” he says.

How will boards develop?

So what does the future of university governance look like? Sayers suggests that a “more enlightened view” of university governance and its role is “to enable the conditions and culture that will give executives the best possible chance to succeed”. He says that this could be achieved “through active and visible support when things are tough, [including] mentoring, coaching, bringing different skill sets and experience to the table. And absolutely not confining that to the boardroom.”

Chadha also emphasises the positives that a well-constructed and well-run board can bring to universities: “A highly engaged governing body can help executives, faculty members and students map perspectives, and prove valuable sounding boards.”

It’s the lack of personalisation the new system brings that can be hardest for governors

Shenstone would also like to see an increased professionalisation of governance in the UK, and says that amongst other things this means re-evaluating the appointments process: “The appointments process for governors needs to be attended to in many institutions, it’s still too informal, insufficiently rigorous, not addressing key skills and capabilities needed on the governing body.”

Despite this, adds Shenstone, the higher education system in the UK is still world-renowned, something which is “enabled by strong governance, and can be undermined by weak governance”.

All of these changes add up to a historic moment for university governance in the UK. In the words of Monica Chadha: “I don’t think there could be a more important time to be a member of a university board.”

The OfS’ four primary regulatory objectives

All students, from all backgrounds, and with the ability and desire to undertake
higher education:

1. Are supported to access, succeed in, and progress from, higher education.
2. Receive a high-quality academic experience, and their interests are protected while they study or in the event of provider, campus or course closure.
3. Are able to progress into employment or further study, and their qualifications hold their value over time.
4. Receive value for money.

A timeline of university governance

In England and Wales, a general pattern – a court, a council, a senate, faculty boards and departments – is established by the Bryce constitution for Owens College in Manchester.

The above is replicated in all unitary civic universities from Birmingham onwards.

University financing is taken over by the state.

Establishment of the New Universities; and the University Grants Committee’s (UGC) Model Charter is designed to assist the new universities in constructing their governance structures.

The National Union of Students and the Committee of Vice Chancellors endorse bringing student membership onto councils, senates and faculty boards.

The UGC is abolished and replaced by funding councils intended to be ‘executive instruments of government, rather than policy organs’.

The Jarratt Report characterises the vice-chancellor’s role as that of a chief executive.

Polytechnics are established as higher education corporations (HECs).

HECs become universities.

The Dearing Report recommends that all governing bodies reduce their membership to 25.

The Office for Students (OfS) replaces the Higher Education Funding Council for England (Hefce).

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