Chairs and vice-chancellors: the relationship

Following the performance of Crossing the Line that took place on Thursday 30 November 2017, David Williams, governance web editor, Leadership Foundation reviews the dramatisation of the exchanges and experiences between vice-chancellors and chairs of boards.

Performed by professional actors, Crossing the Line, explores the views and actions of primarily chairs of governing bodies and vice-chancellors. The name of the role-play reflects the boundaries between the responsibilities of chairs of governing bodies and vice-chancellors, and how different ‘voices’ interpret ‘the line’ in discharging their responsibilities.

Crossing the Line is based on sixteen interviews with chairs of governing bodies and heads of institutions on how they view the chair-head relationship. The writer has used the transcript of the interviews to construct a short play, which adopts the format used by Dylan Thomas in the writing of Under Milk Wood.

A recurring mantra is that the relationship between chairs and vice-chancellors should operate on the basis of ‘trust, affection and respect’. However, the characters in the role-play illustrate that the ‘the line’ is interpreted differently by individual agents. The distinction between ‘rowing and steering’ is the demarcation between the work of the executive and that of governors. An understanding of the boundary is important. In practice, ‘the line’ is either protected or transgressed.

Using different institutional contexts and characters, colourful examples of the intentions and associated actions of different chairs and vice-chancellors are introduced. Some chairs have strong predetermined views, and come to the role with a mind-set of what ‘should be done’ or ‘how’ the relationship between the two agents must operate. Some chairs or governors focus on ‘pet’ concerns, such as ‘finance’, ‘the need to have a dashboard’ or making sure “all the instruments are playing” (i.e. all members of the governing body contribute).  Similarly, some vice-chancellors are portrayed as viewing governors as a nuisance: who get in the way. A question of how influential is a chair is raised. In one case, they are described as a ‘glorified stool’.

Relations between the governing body and heads of institution vary. In some instances, the relationship is closed and too cosy, in others the relationship is more open and difficult. The question of ‘professional distance is raised’. The role-play suggests that the only ‘sanction of the Board’ if they believe they have a major problem with the institution’s head is to remove them.

The multi-faceted role of the vice-chancellor is recognised, and the role of the registrar/secretary briefly mentioned. Vice-chancellors are highly intelligent, as is the possibility that they can sometimes act in egotistical way. Constructive dialogue between the chair and the vice-chancellor is vital. The ability to raise issues in private conversations, rather than at the Board is important. Difficult conversations are sometimes needed. The possible role of the registrar/secretary to act as a ‘go between’ is noted.

Questions raised as to the membership of the governing body include, length of service, whether to seek new governors with a view to youth or experience and the need for business experience on Boards. The concern that governors don’t understand the academic context is introduced. This is tied to the risk that governors unfamiliar with higher education may believe ‘nothing is different’, when compared to how private sector Boards work.

Getting the balance between trusting and challenging the executive is important. The asymmetry of information between the executive and the governing body is captured by the phrase: “you do not know, what you do not know”.

Crossing the Line was deliberately provocative, but equally contains examples which many involved in higher education governance are likely to recognise. Those who watched the role-play commented that how the chair and vice-chancellor work together is essentially about the relationship between two people. Understanding the roles of each is critical, as is the emotional intelligence of both parties. Listening skills in particular are often important. Both parties have a responsibility to make the relationship work.

For more about this key university relationship read the new Leadership Insights Managing the Chair/Vice-Chancellor Relationship: www.lfhe.ac.uk/RushforthLI22

Coming soon 
A second performance of Crossing the Line is planned for 2018. If you are interested in attending, please complete the form below: 

More about our governance events:  http://www.lfhe.ac.uk/gdp

The 7 leadership blog posts of 2017

As part of our 12 leadership days of Christmas campaign, we are pleased to release our 7 leadership blog posts of the year.

Take some time out this festive season to read some of your colleagues’ favourite blogs of the year and take the opportunity to start thinking about the next steps in your leadership development.

You can follow the campaign by using the hastag #LF12Days 

1. Top 12 things those new to higher education need to know

Rita Walters, marketing and communications coordinator, Leadership Foundation shares the insights from colleagues at the Leadership Foundation on what they believe are the key messages for those new to higher education.

2. Connected leadership: connecting people with purpose
Doug Parkin and Rebecca Nestor explore connected leadership and its applications to the Preparing for Senior Strategic Leadership programme.

3. 8 ways to be a better role model

We asked our Aurora facilitation team: Vijaya Nath, Phyllida Hancock, Rosemary Stamp, Rebecca Nestor, Jenny Garrett and Maeve Lankford how to be a good role model. Based on their experience of facilitating Aurora these insights will help you make the most of your experience and be the best role model you can be.

4. Our mentorship journey: Karen Twomey and Val Cummins
Karen Twomey is a Researcher at Tyndall National Institute, Cork who took part in Aurora in Dublin in 2014-15. Karen chose, Val Cummins, Senior Lecturer at University College Cork to be her mentor for the duration of the programme and the relationship continues to this day. We asked Karen and Val to reflect on their relationship as a mentee and mentor.

5. Coaching: The advice I would give my younger self
Jean Chandler, programme director of Transition to Leadership, shares her thoughts on coaching as a skill set, approaches to leading others, and her own leadership lessons.

6. Reflections from Leadership Matters

Rachael Ross is the course director of Leadership Matters, the Leadership Foundation programme for senior women in higher education. Two years on from its inception, Rachael reflects on why the programme is needed and how it was developed.

7. Up for a challenge: self-directed group learning for leaders

If our role as educators of adults is to enhance their capacity for self-directed learning, how does that apply to leadership development training? Doug Parkin, director of the Leadership Foundation’s Future Professional Directors programme, reflects on his experience of designing transformational self-directed group learning activities for leaders.

Let us know your favourite via Twitter #LF12Days or in the comments below.


You can read more of the Leadership Foundation blogs here. 

The full list of programmes at the Leadership Foundation can be found here. 

11 Key Insights from Higher Education Governors



Following the recent launch of our updated Framework for Supporting Governing Body Effectiveness Reviews, Helen Baird discusses some of the findings emerging from analysis of survey data from our governing body effectiveness reviews, and outlines our new comparative analysis and insight service. 

Last year we reviewed and updated the Framework for considering the effectiveness of higher education governing bodies. The drivers for the review were changes to higher education governance since the Framework was first introduced in 2010, broader sectoral developments and the evolution of ideas on good governance more generally.

The main conclusion from our research with the sector was that the three elements of the Framework remain an effective basis for considering governing body effectiveness. These are enablers of effective governance (processes), working relationships and behaviours, and outcomes of an effective governing body. We also found that as well as looking internally at their own governance, universities would value better comparative information to assess the relative effectiveness of their governing bodies and learn from peers. However, they required meaningful information and insights, rather than simply comparisons of what can be easily measured, such as size or composition of governing bodies.

Consequently, the Leadership Foundation has developed a new and unique comparative analysis and insight service, making use of the growing dataset we are building from the anonymised results of surveys as part of effectiveness reviews we undertake. As our new dataset develops, there will be potential to add other more ‘descriptive’ data from providers or from that collected by HESA, to enable more sophisticated analysis to benefit the sector and individual universities.

While our current dataset is relatively small at present, early analysis (carried out by Kay Renfrew, a Leadership Foundation associate consultant) has enabled us to produce some emerging findings which are worth sharing. These should be treated with caution and they will be subjected to further testing and analysis as the dataset grows. Some notable findings from surveys of 232 governors within eight institutions are as follows.

  1. While in some areas questions remain, there is almost universal agreement amongst the governors surveyed that there is a genuine and shared commitment by the governing body and the executive to ensure effective governance.
  2. There are variations in the extent to which governing bodies review their own performance and demonstrate a commitment to continuous improvement, from a low of 60% of governors agreeing that this takes place at one institution to 92% in another. Governors in small institutions (65%) were less likely to agree that this takes place, compared with those at medium-sized or larger institutions (80% and 81%).
  3. Although there are high levels of agreement that there are effective arrangements in place for involving staff and students in the governing body, this view is more prevalent amongst lay and co-opted members (93% and 100%) than with staff and student members (83% and 80%).
  4. Staff members are less likely to agree that there are mechanisms in place to give the governing body confidence in the arrangements for monitoring the quality of teaching and learning. Only 67% of staff members agree with this statement, compared with 78% of lay members and 80% of student members. There is also variation between institutions in terms of their size, with governors in larger institutions more likely to agree this is the case (82%), than in medium or small institutions (62% and 69%).
  5. Governing bodies were confident there are mechanisms in place to enable assurance to be derived about financial stability, data integrity and value for money, with 100% of governors from four of the institutions agreeing this was the case. The lowest figure for an institution was 74%. However, there was variation between the views of lay and staff members with 93% of lay members agreeing compared with 78% of staff members.
  6. There was considerable variation in the views of lay and staff members that there are processes in place to ensure the recruitment of governing body members addresses equality and diversity requirements. While 90% of lay members agree, only 56% of staff members do.
  7. There is also variation at institutional level on whether recruitment, succession planning and reward is effectively undertaken, with only 56% agreeing in one institution and 92% at another. Lay members are more likely to agree this is the case than staff members, but the difference is less pronounced than in the case of equality and diversity.
  8. Individual institutions varied greatly as to whether the contribution of all members is reviewed regularly (lowest 35% of governors agreeing and highest 75%). Variation was also found in the responses as to whether regular performance reviews of the Vice Chancellor are undertaken. At one institution only 54% of governors agreed, rising to 92% at another (although at most institutions under 70% agreed).
  9. Most governors agreed that the governing body was provided with reliable and up-to-date information to ensure it is fully informed of its legal and regulatory responsibilities. However, they were less convinced that there is effective communication between the governing body and key stakeholder bodies. In one institution only 46% agreed, with the highest percentage agreeing reaching 83%. While staff and lay members had similar levels of agreement (78% and 74%), only 33% of student members agreed.
  10. There is also variation at institutional level on whether the governing body actively reviews the extent to which existing corporate governance arrangements will be appropriate to meet long term strategic plans, ranging from 45% of governors agreeing at one institution to 90% at another. Lay members are more likely to agree than staff members, and in this case small sized institutions are most likely to agree.
  11. It seems existing arrangements for academic governance to meet long term strategic plans are not reviewed in the same way as matters of corporate governance. In one institution only 36% agreed that they were reviewed, with the highest level of conformation being 75%. Lay members were slightly less likely to agree (61%) than staff members (67%). A higher percentage of respondents at large institutions agreed (72%) compared to medium (56%) or small institutions (53%).

In summary, it seems that not all institutions regularly undertake reviews of their own performance, including the contribution that individual members make. Similarly, there is variation in whether reviews of the vice chancellor’s performance or the quality of teaching and learning take place, or are reported to the governing body. There is however general agreement that governing body members are committed to effective governance, and that working relationships are in the main positive. Interestingly, the views of Lay and Staff governors can vary considerably. Overall, Staff members were less positive than Lay members, perhaps suggesting that they perceive the governing body to be less effective in its role.

Further analysis will be undertaken and the results disseminated as we develop our comparative analysis and insight service. For further information please visit www.lfhe.ac.uk/en/governance-new/governing-body-effectiveness/index.cfm

Helen Baird is a Managing Consultant in the Leadership Foundation’s strategic consultancy team and led the recent review and revision of the Framework for Supporting Governing Body Effectiveness Reviews.

Take a look at our next Governor Development Programme, Governance professionals in higher education for clerks, secretaries and staff in the professional support teams. The programme starts on Tuesday 5 December 2017, London. For more information, click here

 

Challenges facing good governance

We are delighted to have launched our 2017-18 governance year with a joint event with HEPI, the leading policy institute of higher education in the UK. In this blog post we provide a summary of the debate on the challenges facing good governance that took place last month, which included contributions from governors and governance specialists from within and outside of higher education.

Following adverse comments in the press on its leadership and speculation about changes to the future funding of the English higher education system, the panel session organised by the Leadership Foundation and Higher Education Policy Institute on the challenges facing good governance in higher education proved timely.

The panel brought together individuals working in higher education, those who had chaired and served on governing bodies and those involved with regulation and governance in other sectors of the economy. Panel members offered different perspectives on higher education governance, noting areas of strength, but also highlighting aspects of governance that needed attention.

The context of the discussion was the scale of change facing institutions. ‘Winners’ and ‘losers’ were emerging from competition for students and funding. Balancing the academic and business aspects of running an institution had become more challenging. A dynamic environment made conventional five-year strategic plans a thing of the past. The changes were placing greater demands on governing bodies, changing the manner in which they needed to operate.

Central to good governance was the relationship between the head of the institution and the executive team and the governing body. A culture of openness and trust, was needed to encourage governors to act as ‘critical friends’; able to question and support the institution’s leadership as appropriate. There should be ‘no surprises’. The role of governors was summed-up as ‘noses in; hands out’.

Good governance meant that it was insufficient to focus on structure: attention needs to be paid to processes. In this context, it was important to examine how governance really operated, and not how it was described on paper.

Engagement of the governing body with the institution was critical: ‘lazy’ governance should be avoided. Governors need to hear about issues, while being mindful that the actions to address any issues raised would normally fall to the executive. Effective engagement might mean, for example, participating in staff and student forums held outside of the formal meetings of the governing body. Similarly, in the reverse direction, academic staff might need to be educated about the work of the governing body and its members. Each needed to understand the other.

The composition and orientation of a governing body was key to underpinning effective governance. As governing bodies were now expected to seek assurance about academic governance, the need to have lay governors with an understanding of the higher education sector had grown. Equally, it was important to have members who would forensically examine matters in great detail (e.g. in relation to matters of audit and compliance) as well as individuals who had a deep understanding of finance. Similarly, a governing body should have individuals amongst its membership who had a creative mindset, thereby helping to avoid a governing body becoming overly risk-adverse.

Governors must be able to demonstrate that they are competent in discharging their responsibilities. There should be a process of governor evaluation allowing a conversation between, say, an independent governor and the chair of the governing body to take place at regular intervals. Where a governor was unable to contribute effectively, the individual should be asked to step-down from the governing body.

Chairs and heads of institutions should discuss and agree how the governance within the institution would operate. Setting the right ‘tone’ in the boardroom was crucial. This could, for example, mean encouraging the executive to share ideas, as part of a process of testing and development, with the governing body at a formative stage, rather putting a chosen and well-developed option to the governing body for endorsement.

There was a high-risk that following the most recent criticism levelled at higher education, the sector would respond in a defensive manner: this would be a mistake. The danger was that the sector ‘feels sorry for itself’. Far better to reflect on the matters raised, consider carefully and then respond. Universities also had the opportunity to learn from the mistakes made in other sectors, and to avoid making the same mistakes. The observation was made that ‘universities don’t have the right to be silent’. Accountability was an essential part of autonomy. The risk was that if institutions did not take early and effective action, someone else would.

It was noted that in comparison to other professions such as law and medicine, academic staff were in an easier place in relation to professional codes of practice. For these other professions, there were explicit codes of behaviour, and an individual was at risk of facing sanctions if they failed to adhere to them.

An element of radicalism was needed in relation to institutional governance. The following conditions needed to be met:

• Governance needed to be perceived as honest and independent
• The role of a university, including the balance between teaching and research, needed to be made clear
• The processes of governance needed to be sufficiently open and transparent
• ‘Active’ trust needed to be achieved

Critically it was important to invest time into making the board process meaningful.

As one speaker noted, being a governor might be characterised as ‘intelligent people, asking stupid questions’.

David Williams is the editor of the Leadership Foundation’s governance website. We are hosting a major governance conference Governance: Improving Effectiveness for a New Age on Thursday 30 November. To book places for this conference or on our other governance development programmes and events, or to access our governance resources please go to www.lfhe.ac.uk/governance

To find out more about the work of HEPI, and also whether your institution is a member of the HEPI University Partnership Programme (providing advance embargoed access to all HEPI reports and briefing papers), please contact Sarah Isles, s.isles@hepi.ac.uk at HEPI.

Is HE governance the best there is?

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Mary Joyce, Leadership Foundation governance and leadership associate, considers the dynamics and impact of good governance and whether boards should be looking beyond compliance.

What were your experiences of what it was like working with your board this year? How did you manage those strategic discussions before and after the vote to leave the European Union? Are you changing the composition of your board and its ways of working? These are live questions for many boards at the present time, in all sectors across the UK. They represent factors that are an additional disruption to the already delicate and largely unseen dynamics of work on boards.

A glance at the past year’s news stories reveals the extent to which ethics, unchecked egos, financial constraints and increased regulation dominate much of the anxiety felt by non-executives as they discharge their responsibilities on boards. Interest in good governance and its importance in organisational life is only set to increase as the pace and scale of change in the public, private and charitable sectors gathers momentum. And, as more stories of failing and dysfunctional boards appear in news stories and official reports, the typical response is to produce even more formal guidance and codes of conduct.

Yet, in 2009 when Sir David Walker published his findings on corporate governance in banks and other financial industry entities (BOFIs), he found that:

“the principal deficiencies in BOFI boards related much more to patterns of behaviour than to organisation.”

While the focus of the Walker Review was on the financial sector, many of its insights and recommendations for good governance and apply to all sectors. The best strategy for developing the capacity of your board to work well together and use all its talents in decision-making is one that focuses not only on technical know-how (legal, financial and sectoral), but also on boardroom behaviour and leadership. This will ensure you achieve more than simply compliance in the stewardship of your organisation.

Just over two years ago the Leadership Foundation designed a series of developmental workshop sessions on boardroom dynamics for higher education governors. They were well received, and we built on those foundations to design a special programme for university secretaries and clerks in recognition of their leadership role at the interface between the board and the executive – a difficult role for which there is generally less developmental support. In its launch year 28 people from 25 institutions attended this innovative programme from roles that included not only university secretaries, clerks and registrars but also, directors of strategic planning; the vice-chancellor’s chiefs of staff; and heads of governance.

The programme uses a psychodynamic approach to develop an awareness and understanding of group behaviour and its potential to either hinder or help the board’s capacity to work effectively. Facilitated learning sets offer a unique opportunity for clerks, university secretaries and those working in the governance field to work on their own organisational issues in confidence, and to apply new theories to their practice.

Participants on the programme commented that they were able to make sense of their experiences in a way that helped them to be more effective both in their role and with colleagues. They said:

“A valuable, thought-provoking, supportive and informative programme, putting the role into a wider context.”
Head of Executive Services

“(The action learning experience was) very supportive while being rigorous. It has helped me reflect on my approaches and practice which has been a very valuable element of the programme.”
Director of Strategic Operations and University Secretary

“Great course content and I’ve made great contacts. I would definitely recommend this to all clerks, whether they are new in post or have been appointed for some time.”
Clerk to the Board and Head of Governance

The Leadership Foundation is running the Clerks and Secretaries Programme again in 2017, starting in February, offering another opportunity for governance professionals to develop their skills and leadership. This higher education specific programme consists of three one-day sessions, which will include action learning set meetings, and two additional half-day action learning set meetings.

Join us as we take a look at how higher education governance’s behaviours, roles and remit compare to those of other sectors, and take the opportunity to consider whether higher education is at the forefront of governance as it continuously explores what good governance means and how it can be improved to meet the changing world.

Mary Joyce specialises in leadership development, group dynamics and organisational behaviour, and executive coaching. Her reputation for working ‘beneath the surface’ has developed through a variety of leadership and consultancy commissions in the public and private sectors.

Read our latest Governance Briefing Note – 25: The factors that influence whether governance is effective?

In addition to our highly regarded Governor Development Programme, the Leadership Foundation has a wealth of information, tools and tips on its Governance website, tailored to the specific needs of Governors of Higher Education institutions and colleges. Find out more at: www.lfhe.ac.uk/governance

Has the governing body given attention to the institution’s policies and actions in relation to students’ mental health?

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David Williams the Leadership Foundation’s governance web editor, highlights one area where governing bodies may need to give increased attention following the recent report from HEPI, on the students’ mental health.

Governing bodies have overall responsibility for the strategic direction and sustainability of higher education institutions (HEIs). Governors are concerned about all matters fundamentally affecting the institution and its sustainability. Typically, amongst the many matters that a governing body will exercise oversight is student recruitment, retention and achievement. An emerging concern will the potential to impact significantly on student retention is mental health.

A new report by the Higher Education Policy Institute (HEPI), ‘The invisible problem? Improving student mental health’, suggests that increasing numbers of HE students are experiencing mental health problems. The report highlights that the matter has significant implications not just for the student, but also the institution. Students experiencing mental health issues are at greater risk of not completing their studies, and the institution facing a loss of tuition fee income. Given the rising incidence of mental health issues, the report suggests governing bodies could consider giving one governor a specific remit to track their institution’s progress in improving mental health support.

The majority of higher education students in the UK enter full-time undergraduate education aged 18 or 19. While these students are classed as adults and able to vote in public elections, less attention is paid to the major transitions they face when entering higher education for the first time.

The HEPI report points out that unlike many other countries the UK has a ‘boarding school model’ of higher education. This means students normally live away from home for the first time.

At precisely the point when they face significant academic and personal changes, including the need to come to terms with new forms of learning and build new friendships, students are separated from their support networks. The increasingly demanding nature of the graduate labour market and rising student debt levels add further pressure on students to do well at university.

Student distress is particularly centered on feelings of stress, anxiety and unhappiness. The report highlights the need for students to develop emotional resilience and learn how to become more compassionate to themselves and others. Cognitive ability on its own is insufficient to ensure student survival and achievement.

Although the data is incomplete and increased levels of disclosure and awareness may account in part for the rising demand falling on university counselling services, the HEPI report suggests there is clear evidence that mental health issues are becoming more common amongst higher education students. The assessment is supported by the responses from HEIs to recent freedom of information requests made by The Guardian newspaper.

The HEPI report questions the level of current support for mental health being provided by some HEIs. Expenditure to support students shows marked variation.

The report cites examples of institutional good practice, but equally suggests that governing bodies need to seek assurance that the institution has a formal mental health policy and associated action plan. A pre-condition for assessing such policies and plans is ensuring the scale of the problem at the institution is understood together with the current level of support offered. Data about the scale of students’ mental health problems tends to be patchy.

If they haven’t already addressed the issue, a governing body should examine the provision provided by their institution to support students with mental health difficulties. Above all, governing bodies need to ensure mental health issues affecting students are understood and appropriately addressed.

David Williams has been by the Leadership Foundation’s governance web editor since 2013. He has worked with the governing bodies and senior leadership teams of different higher education institutions for over 20 years.

Editor’s notes

  1. For a full set of briefing guides on governance edited by David, please go to www.lfhe.ac.uk/govbriefings
  2. Read the latest news on governance, including the latest newspiece by David on students’ mental health and the role of governing bodies, click here
  3. Other blogs on governance include:
    Book Review: What can governance in higher education learn from other sectors?Book review: Nonprofit Governance
    How can universities enhance the strategic development of the academic portfolio?Poland’s rapid response to change in higher education makes it a hidden gem

Book Review: What can governance in higher education learn from other sectors?

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David Williams, our governance web editor reviews Jeff Gramm’s Dear Chairman: boardroom battles and tries of shareholder activism (Harper Collins, 2015).

It is frequently argued that the best way to reflect on practice in a given sector is to look at what happens in other sectors. This is true with ‘Dear Chairman’, which looks at the rise of shareholder activism in the United States (US). Many of the conclusions contained in the book apply to governance in higher education (HE) and beyond.

The author, Jeff Gramm, a head fund manager and adjunct professor at Columbia Business School, looks at eight case studies, stretching from the 1920s to more recent time, to show the impact of shareholder activism on governance. The book also includes a selection of the ‘Dear Chairman’ letters written to the chairs of the boards of the companies featured.

The earliest case study looks at an oil pipeline company, Northern Pipeline. It shows what happens if disinterested shareholders are combined with a board of directors dominated by supporters of management: accountability is lost. The situation was made possible by the limited information the company was required at the date of the case to provide to shareholders. Lacking information shareholders were in the dark. The actions of an activist outsider brought change. The role of the ‘outsider’ as the catalyst for change is found in many of the examples cited in ‘Dear Chairman’.

The case of American Express illustrates how a major investor in the company, Buffet, supported the group’s chief executive. American Express’ warehousing subsidiary had guaranteed stocks of soybean oil. When as a result of a fraud on the value of stocks guaranteed to third parties the company faced significant losses, a group of shareholders argued the company should contest the claims. By contrast, Buffet urged management to compensate in full to maintain the reputation of the company. Buffet recognised that as a service company the value of the American Express rested on its name. Its long-term reputation was more important than any short-term gain.

The action of the Chief Executive Officer (CEO) supported by rest of the board bought out and removed a major shareholder and dissident director of the multi-national car manufacturer, General Motors (GM). The case shows how far the company was prepared to go to remove a well-informed critic of the company’s strategy. It also powerfully illustrates that having a board of high-calibre directors does not mean the board is effective. In GM’s case, such directors did result in an effective board.

The CEO and the largest shareholder, the daughter to the company’s founder, fought each other in the case of R P Scherer, a company manufacturing soft gelatin capsules. The two protagonists were also married to each other.

Scherer illustrates the perils of allowing directors to be picked by the CEO. The directors’ loyalty was to the CEO, rather than to the company. Conflicts of interest made the situation worse. Many of the individual directors worked for companies who were suppliers or advisors to Scherer. These directors had an economic interest in preserving the position of the CEO. Further, the CEO had picked at least one director ‘because he’s weak and he’ll do what I tell him to do’.

The individual cases allow wider conclusions about corporate governance to be drawn. These include the risks of ‘independent’ directors having deep connections with the CEO. The husband and wife example in case of Scherer, suggest that independence is a state of mind. Gramm suggests that once on a board independent directors inevitably develop closer relationships with management. He argues that humans are social beings, and connections develop over time; he quotes Buffett as saying ‘the nature of boards is that they are part business organisations and part social organisations. People behave part with their business brain and part with their social brain.’

The importance of having a thorough understanding of the company’s business is an important trait of a good director. Noting that in the case of private equity, where it’s their money, directors will act if things go wrong; by contrast boards often wait too long to get rid of poor people.

When governance goes wrong shareholders share some of the blame. Gramm’s conclusion is for the system of corporate governance to be effective it requires the ‘right’ professional managers, directors and shareholders. i.e. the three elements need to be present. Given Gramm’s analysis, who fulfills an equivalent role to that of the shareholders in the case of ‘public’ higher education institutions (HEIs)? Or in the words of Gillies ‘who guards the guards’.

Dear Chairman is not a book that most governors or clerks/secretaries of HEIs should rush out and buy, but it does illustrate the value of looking from a different angle to gain a better perspective on good governance in higher education.

Editor’s notes

  1. Take a look at our newly revamped governance page to discover what services we offer to support governors in higher education. Visit www.lfhe.ac.uk/governance
  2. Read about our latest Hefce sponsored project focussing on supporting governing bodies to be able to monitor standards in their institution. http://bit.ly/1VVJWOG