Governance News Alert: Governance Conference 2024: Transformation in HE - Governing with Humanity

This year’s conference opened with keynote speaker Sir David Behan, former CEO of the Care Quality Commission and Interim Chair of the Office for Students (OfS). He offered insights into his review of the regulator, its report on financial sustainability published last month and the challenges facing the sector. Panels and workshops included discussions on Advance HE’s new Diversity of governors in higher education report, measuring what matters and tackling tricky issues, with views from the devolved nations as well as international perspectives from Thailand, Greece and Ireland.

• Research around transformational change and successful organisations points to the importance of clarity of purpose and engagement with the workforce, Sir David said. Health care uses staff surveys and engagement indexes for insights into morale. Creating an environment of engagement is a responsibility of the board and executive team
   
• The OfS review outlines four priorities for the regulator: quality, acting in the student interest, financial sustainability and value for money, underpinned by participation and access. The purpose of any regulator is to protect the interests of the people using the service, not to give a score card to institutions
   
• Too often the relationships between the sector and the OfS has taken the form of parent-child, where instructions are given and met with “this isn’t fair”, Sir David warned. An adult-adult relationship is the ambition. The OfS and the sector cannot be successful without having adult-to-adult conversations
   
• There is a massive asymmetry between students and institutions on information and data. One of the jobs of the regulator is to begin to reduce that so individuals can make intentional choices in full possession of the knowledge
   
• Boards face very tough choices as they balance income and expenditure, not helped by over-optimistic assumptions around future student numbers. Who on boards asked ‘are these numbers correct and what is plan B if these numbers don’t come though?’ Sir David asked
   
• The OfS financial stability report asks what re-imaginings and collaborations might be possible. Many risks can be mitigated but it requires boards and VCs to make brave decisions about organisations that can collaborate or merge. Sir David cited the merger of St George’s Medical School and City University as one example of a way to reduce costs. There are certain towns in England that have two, three, four or even five universities, all with their own finance departments, HR departments etc that might benefit from collaboration or merger
   
• One institution in Wales that is facing a multi-million pound deficit has launched a transformation strategy, describing it as “pruning in order to focus on where the university wishes to grow and where it wants its resources to be”. The university is looking at where the pipeline of interest in future students might lie, transforming pedagogy, rationalising where schools are seemingly running courses that look the same and “asking questions about what we need to stop doing”
   
• Staff are fearful of change, job losses and the impact on students, research and their disciplines. The University is trying to be open and transparent, holding regular town halls, online Q&As etc. It is also asking whether its council and subcommittees are structured correctly to support and oversee the transformation, and can move from mitigating risk to a position of “risk appetite”
   
• Whilst there is a focus across the sector on efficiencies and cost cutting, income generation can also be explored. One Northern Ireland institution is looking at transnational education, commercial income and research contribution: “the small percentages can make a big difference in a tumultuous period,” said a panel member
   
• The regulator is able to feed back to government what the impact of HE policies is. OfS is working from audited accounts, which are out of data, so there is an argument for real time data. Good data from the sector is vital if OfS is to make an accurate assessment of financial viability and to make strong arguments to government
   
• An international speaker who has been involved in two successful mergers emphasised the importance of having a strong vision and engaging with key staff to ensure buy-in
   
• A Universities UK speaker said senior leaders and boards can consider how they are empowering student and staff to contribute to transformation processes. Visibility of governance is important. Are there ways to facilitate “getting out there, hearing from people and understanding emotions on the ground?”
   
• As financial distress comes to a head and starts to bite in earnest, there will be a greater focus on leadership and governance, said the UUK representative. Governors might consider what the right balance of support and accountability is at a time when leaders are facing the most pressured circumstances in their professional life. An international speaker described that support as the “wind beneath the wings” of the institution’s leader.
   

Implications for governance:

Large-scale organisational change is being considered by institutions across the sector, as a consequence of the financial difficulties that many find themselves in, the conference heard. As Sir David Behan puts it, once costs have been reduced, universities have to start “cutting into the real flesh”, making tough decisions that impact staff and students very directly and which may require transformational change to protect core business. The present very clear and present challenges for governing boards as well as senior managers.

There was a sobering warning from Sir David that while it is the regulator’s job to spot the risks that arise it should not be regarded as “the bank of first or last resort”.

Institutions need strong leadership and governance not only to weather the storm but to put in place the kind of transformational plans that will ensure they survive and thrive. Despite being buffeted by external factors beyond their immediate control, institutions need to recognise and embrace their own agency, according to Sir David.

Boards have a central role, from setting the culture to ensuring a diversity of voices are heard, not only on the board itself but from across the staff and student community – particularly when hard decisions are being made.

An illustration of this was given by a representative from a university in Northern Ireland who described a memorandum of understanding signed last year by its Senate and the student body. It agreed student engagement twice a year on the university’s investment policy, increased student representation on core committees and the Senate and reform of the chancellor appointment process.

A speaker from an institution embarking on transformational change described the town halls and Q&A sessions being held by the executive to acknowledge and hear staff concerns, if not allay their fears. Such is the scale of the necessary change at this institution, the leadership is adopting a more top down, directive approach than in the past, which feels alien to many staff who are used to collective decision making.

This institution is asking itself if the very structure of the board and subcommittees, which may have looked familiar 100 years ago, are appropriate to oversee the transformation. If governance in times of challenge needs freedom and agility, loading board member with 700 page documents six or seven times a year may not be the best way, it was suggested.

At this university, the governing board is being asked to move from a position of mitigating risk, through audit committees and risk registers, to a position of “risk appetite” to support the executive in its plans for urgent change.

Of interest to governors too will be questions raised about whether boards have the necessary make-up of skills and are the optimum size for good decision making.

In panel discussions, trust and relationships on boards were highlighted, as were processes, roles and responsibilities and the use of data. The latter is also essential to the OfS’s ability to fulfil its role and the argument was made that real time data may have to be supplied by institutions as audited accounts are out of the date by the time they get to the regulator.

Any reluctance on the part of providers to be realistic about their financial difficulties had to be laid aside, according to Sir David. “Why wouldn’t you as a sector give the information to the regulator so that they can feed back to government what the impact of its policies is?” he asked. “The sector can look at using the independence of the regulator to make a case for what their lived reality is.”

Governors across the sector are familiar with the measures institutions are being forced to introduce in efforts to cut costs and avoid or reduce deficits.

There is renewed focus on the prospects for collaboration. It was a central pillar in the UUK’s recent blueprint for the sector and mentioned by Sir David as a means to bring about efficiencies, (although one speaker commented that he could not remember John Lewis and Marks & Spencer’s having that conversation when they were in difficulties).

Institutions are exploring avenues for income generation and maximisation to bring in much-needed funds, particularly in research, international partnerships and commercialisation.

Governors will wish to note how mergers were presented as another solution, with Sir David mentioning the recent merger at St George’s Medical School and City University, in London. He seemed to question the rationale of numerous universities in the same location, each paying for their own services. According to the regulator’s interim chair, financial and market risks can be mitigated but it will require boards and vice chancellors to make “brave decisions” about collaboration or mergers going forward.

Finally, presentations from international speakers brought an additional perspective, suggesting that it may be helpful for governing bodies to take on board and apply some lessons from overseas: particularly in the area of institutional mergers and collaborations. The importance of meaningful and sustained engagement with staff and students has emerged as a key strategy here.