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Principles for University and Non-Profit Governance

Tomorrow's Academy

Message Number: 
1615

Boards are most effective when members know the difference between governance for the longer term and management for the near term. As David Riesman said, the role of a board is to save the university of the future from the decisions of the day.

Folks:

The posting below gives some good insights into how university and other non-profit governance works.  It is by Robert A. Scott* former president of Adelphi University, and it draws from his new book, How University Boards Work, Johns Hopkins University Press. http://jhupbooks.press.jhu.edu/content/how-university-boards-work. © 2018Johns Hopkins University Press.  All rights reserved. Reprinted with permission.

Regards,

Rick Reis

reis@stanford.edu

UP NEXT: Students’ Definitions of the College Classroom

 

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Principles for University and Non-Profit Governance

Introduction

Trustees and directors may wish to serve because they believe it is time to give back to an institution that was important to them at a critical time in their lives, or because they want to “give back” to society. While these motives are honorable, they do not reflect the true nature of what is needed for the position. Board service, if done well, is work. It takes energy, imagination, and commitment—neither old sentiments revisited nor a sense of “noblesse oblige”. Therefore, board members should know the positive reasons they wish to serve, understand what is rewarding and challenging about board service, and be committed to continuous study for their role.                                   

Those responsible for governance need to be trained in the complexities of programming, quality control, government regulations and legal requirements, fees and finances, and other issues if they are to be effective in their roles. For these reasons, board members should be chosen thoughtfully and provided with an ongoing orientation to their responsibilities.           

Corporate boards require members who know the industry, the competitive environment, the science or technology on which the business is based, and the other critical elements at the core of a company’s goals and strategies. Universities and other non-profit organizations also benefit from trustees who can contribute substantively to planning and decision-making. Those elected as trustees or directors are most effective when they know the history, the mission and purpose, the populations to be served, and the comparative advantages of the organizations they govern. A trustee’s responsibility is not limited to annual or capital gifts.

Effective Boards        

Boards are most effective when members know the difference between governance for the longer term and management for the near term. As David Riesman said, the role of a board is to save the university of the future from the decisions of the day. Board members should have the gumption to ask questions about things they do not understand or with which they disagree.

Members should not seek a board position for prestige any more than a corporate director should take a board position because of the stipend. They should collectively have the expertise necessary to guide a complex organization with multiple functions and constituents. Board service is an opportunity for learning, judgment, and setting organizational direction in fulfillment of historic missions and emerging priorities. Effective trusteeship requires time, talent, and treasure. It is not something to enhance an obituary.

The most effective board members bring questions, not prescriptions. There are board members, and others, who insist on a course of action because they heard or read that another institution or organization acted in a particular way. For example, I learned about a trustee who proposed to his board that the institution cut its tuition because another had gained front-page coverage in a major newspaper and extensive reporting on national radio for reducing its tuition by 10%. A fellow trustee, an academic from another university, asked whether the board was aware of the competitive setting of that university and the size of its endowment.

It turned out that the financial and competitive circumstances of the institutions were dramatically different, with the private college covered in the news having a substantial endowment and numerous public university competitors nearby. The net tuition of the university whose trustee introduced the topic was already nearly 20 percent lower than the tuition at the university covered in the media and had a much smaller endowment. The trustee withdrew his prescription reluctantly.

Imagine, though, if instead of proposing an action inspired by a news story, the trustee had asked about his institution’s tuition level relative to the competitive environment, and inquired as to whether his institution’s tuition was higher, lower, or the same as competing campuses. This question, then, could have led to a discussion of pricing strategy relative to the needs and competitive position of the institution for which he had a fiduciary responsibility.  A board’s culture should support challenging but civil inquiries and respect for a diversity of opinions.

The President

In my experience, universities and other non-profit organizations benefit most from a president who thinks of his or her role as the chief mission or purpose officer (CMO or CPO),  i.e., one who reinforces the fundamental purposes of the institution for student success or community service and has the trust of faculty, staff, students, clients, and volunteers. Such a president can use his or her position to remind the community of both the purpose and heritage of the organization and how it has evolved over time. However, the temptations are great to act as if fundraising and finances are divorced from mission fulfillment and service to the community. The pressures of budgets and politics can lead a president to think of him- or herself as a corporate-style chief executive officer and ignore or negate the priority for expressing institutional purpose and enhancing the environment for mission fulfillment through collaborative actions such as “shared governance” with the faculty.

The Need for Alignment

In all organizations, there should be greater alignment between and among the mission, the goals, the strategies, and the reward systems. In the case of a university, this means alignment of the following elements, among others, in order to achieve optimal effectiveness:

 

  • Criteria for board membership and evaluation as well as for institutional goals and  strategies.
  • Criteria for presidential selection and assessment in relation to the mission of theinstitution.
  • Rewards of promotion, tenure, sabbaticals, release time for scholarship, etc. and the goals for mission fulfillment.
  • Goals for enrollment and goals for retention and graduation rates.
  • Goals for fundraising and the priorities expressed in the institution’s mission statement.
  • The scheduling of space and the priorities for capital spending.

 

Orientation

The orientation to and guidance for board service need to be ongoing. They should not stop with Orientation 101, but should be a continuing effort of the president or Chief Mission Officer and the board chair or governance committee of the board. Continuing orientation should include briefings by university officers; members of the audit and legal firms serving the institution; consultants on special topics, including facilitators at board retreats, attendance at meetings of state and national associations; and reading—frequent reading. A single orientation session is not sufficient.

Some states have mandated orientation sessions for new trustees of public institutions and have even developed official certifications for successful completion of the training. Texas offers online tutorials for trustees, and Oklahoma developed a model for training after prompting by the legislature. In some cases, the impetus for developing training sessions for public university trustees followed controversies regarding board governance. This can occur when the board departs from its role and tries to substitute itself or its chairperson for strong and effective presidential leadership.

Orientation is a time for board members to learn more about their responsibilities. With proper orientation, the board should be able to avoid conflicts of interest and controversy. The board’s role is to consider decisions in terms of institutional mission, strategy, priorities, and risk. Members must be appropriately prepared before making these decisions. A botched process in reaching a decision can have both legal and political consequences.

In preparation for the orientation session, the new trustee should be given a packet of materials that includes a compendium of important enrollment and financial data as well as information about the history, mission, by-laws, organizational processes, duties of and expectations for board members, succession planning for the board and executive team, goals for diversity, and more. Orientation discussions should cover the whole of the institution’s mission, including, in the case of a university, the mission for teaching and advising in relation to research, scholarship, and other creative activities of the faculty. Board members should also be reminded of the range of populations to be served, as it may be too easy for a board dominated by alumni with baccalaureate degrees to focus their attention on traditional undergraduates and ignore returning adults, master’s degree candidates, and doctoral and postdoctoral students.

New and continuing trustees should not enter an orientation program as passive vessels. Prospective, new, and continuing university board members should ask questions such as the following, among others, of the board chair and president:

·      What are the impediments to achieving institutional goals?

·      What are the criteria for selecting the institutions or organizations used for     comparisons in terms of goals and achievements? 

·      What does the president worry about when he or she is alone and thinking about the institution?

·      Why do we think that our business or economic model is sustainable for the long term?

·      What is the institutional commitment to intercollegiate athletics, and how does this commitment relate to academic priorities?

·      What is the role of fraternities and sororities on campus and how are they supervised?

·      What can be done to reduce the tuition discount rate?

·      What can we do to reduce the amount of student debt?

·      What can we do to increase the retention and graduation rates?

·      What forms of strategic collaborations does the institution have with other        institutions and organizations?

·      What are the most common ethical and legal challenges faced by the board? How are they handled?

·      Have any board members in recent years resigned or been terminated, and for what reasons?

These and other questions can prompt productive discussions about the organization and its governance, and about the role and expectations of a trustee. A central part of the discussion should be about what it will take to help the organization continue to improve, with attention to the institution’s goals, the reason for these goals, and the requirements for success in achieving them.

Boards As Partners

Ideally, boards should be partners with the organization’s president or chief mission officer. Board members are expected to be experts in an area of concern to the institution or organization without meddling in its affairs. Unfortunately, there are cases in which there is friction between the two parties. A strong partnership is essential in developing goals to fulfill the institutional mission and in monitoring the progress of strategic initiatives. However, not all boards adequately fulfill their responsibilities for overseeing standards, values, and finances. There are, unfortunately, examples of boards no longer acting as buffers against the media and other outside influences but that instead join those who buffet the administration.

The Board Chair

The chair must be the leader of the whole board, not of a faction, providing guidance for cohesion and consensus. The chair must encourage all to participate, but be mindful of the board’s responsibility to its duties and its purpose to help the university fulfill its mission in the most effective ways. When deciding on a candidate for chair of the board, it is important to consider leadership qualities, including the ability to engage all members in the work of the board.

An effective chair must have emotional intelligence and empathy, assuring that all voices have a chance to be heard. He or she also has to have the ability to handle topics and suggestions offered that are not relevant to the current discussion. Delegation of such a matter to a committee or to a later meeting may be in order. The chair must also be able effectively to manage minority factions within the board. Often, however, board leadership roles are awarded to the most generous donors, even if generosity is not highly correlated with good leadership qualities.

Assessing the Board and the Board Chair

The National Commission on College and University Board Governance defines “consequential” boards as those that meet the following tests:

  • They improve value in their institution and add value to institutional leadership and decision-making.
  • They act to ensure the long-term sustainability of their institutions. 
  • They improve their own capacity and functionality.
  • They focus their time on issues of greatest consequence. 

Therefore, an annual assessment of the board and board chair should consider these criteria. Each board member and the president should complete the assessment instrument.. Members may offer suggestions about how the board could get higher ratings for any or all of the considerations. Board assessment can help establish:

  • a consensus on specific objectives and plans to improve board organization and performance,
  • a better working relationship between the board and the chief executive,
  • more productive board meetings, and
  • an increased commitment to expectations for personal philanthropy.

 

Conclusion

In order for a board to meet these and related tests, members should know all aspects of the institution, not just its finances and business operations. This is as true for corporate and non-profit boards as it is for university boards. For boards to govern effectively, they must “think about how they acquire information, set policy, relate to other players, and assess outcomes.” They cannot expect to be strategic and agile in governance if they remain models of outdated methods in fulfillment of their duties.

           

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*Robert A. Scott is the author of How University Boards Work, Johns Hopkins University Press, 2018. //jhupbooks.press.jhu.edu/content/how-university-boards-work. He is President Emeritus and University Professor Emeritus, Adelphi University (2000-2015); President Emeritus and Professor Emeritus, Ramapo College of New Jersey (1985-2000); founding-acting Executive Director of the New Jersey Commission on Higher Education (1994); and lead director, then non-executive chairman of the board, American Educational Products, Inc. (1992-2000).