"The Governor View" - The Big Conversation: Sustainable institutions

Governing boards have the difficult job of trying to balance the current and future financial sustainability of institutions while ensuring that broader academic, social, and environmental aims are being met.

At a time when the majority of universities are making operational cutbacks and closing courses to deal with growing financial pressures, as highlighted in a recent Universities UK survey, this balancing act is even more challenging. 

The topic was the latest to be covered in Advance HE’s ongoing Big Conversation on governance. Below is a summary of views gathered from a number of governors for our monthly governor view series.

Financial sustainability 

As one governor puts it, how to maintain and protect financial sustainability “is the million dollar question” and there are no easy answers. Across higher education, institutions differ, finances vary and the steps required will depend on myriad factors. 

In recent years, a focus on board diversity has tried to ensure the inclusion of governors with business experience, to bring different perspectives in challenging times. However, a governor at a Russell Group institution questions the extent to which this expertise is being mined and utilised.

“Universities want the business DNA, acumen and success of these members,” he said. “But sometimes, when business people join boards, they perceive it as doing something charitable; it can mean that their hard-nosed business skills don’t come into play.”

He cites the example of generous higher education pension schemes, which board members are willing to sign off but which would be deemed unacceptable in the private sector.

“These governors think they are giving something back and almost fulfilling a charitable role at the end of their career, not realising that the reason universities want them is so they can be hard-nosed business people and make tough decisions, question the orthodoxy and disrupt thing,” said the governor.

As well as learning lessons from business when times are tough, boards are interested in what other institutions are doing to weather the storm.

“A lot of people genuinely want to know how other institutions are doing and not just what they read in the press, where the figures are so grim,” said the vice chair of a post-92 university in the Midlands. “There is a little bit of comfort in thinking you are not the worst or near the worst even, but there is a genuine appetite for finding out how other institutions are tackling it.”

This governor sees a potentially bigger and more vocal role for the Council of University Chairs (CUC).

“I’m a vice chair and I’m not invited to anything,” she said. “How do I know what my friends in Coventry or whatever are doing? I think it would be helpful if CUC reached out to governors more generally, not just chairs. because who is going to want to join a governing board at the moment given what is happening?”

She also feels that some governors do not fully understand university accountability.

“I’m not sure they grasp the liabilities that we have hanging over our heads, particularly those that are retired,” she said. “I think more work should be done there, so they can almost understand the seriousness of the situation.”

Attempts to diversify revenue streams are at the forefront of governors’ minds but some feel there are barriers and limitations to what can be achieved. 

“To be fair to universities, they have been quite successful on this,” said a board member of a university in the north of England. “From attracting international students, opening up campuses abroad, franchised provision or deals with private student accommodation providers.

“But they get told to diversify their income and when they do, they get told they are over reliant on the new income source.”

He cites higher education’s success in attracting Chinese students, only to be warned not to be too reliant on China. Meanwhile newer universities formed franchise arrangements, many of which are now being called into question.

“In a way they are damned if they do and damned if they don’t,” he said.

For one governor, diversification is made more difficult by the ever changing HE landscape.

“There are empty rooms on campus because, since Covid, more people have become commuter students,” she said. “That leaves universities unable to even do the basic thing of filling university rooms, let alone diversify them and renting them out in the holidays to summer schools.”

At her institution, “what can we sell now?” is a common board room question.

“We are in a good position in that we own our assets so we can sell them, but other institutions don’t have that option, such as those in London where they are lease holders,” she said. “But even with this route there are questions like how much can you sell, where do you stop, and will there be anything left?”

Academic sustainability

At the same time as trying to assure financial sustainability, governing bodies have oversight of academic sustainability and must be assured that the policies and procedures are in place to maintain high academic and research standards and to enhance diversity and inclusion.

With redundancies, cutbacks and significant change programmes at some institutions, how do governing boards try to ensure that the academic offering is protected?

One board member recommends regular staff surveys and that governors ensure they are “on top of the results” and are tracking the morale of staff. 

Creating feedback loops between the senate/academic board and the governing board is also important. Very often there will be a governor representative or observer on the academic board who can assure colleagues that issues are being addressed. 

A governor at a Russell Group institution also cites the role of “providing backbone to management”. 

“There are courses that probably should be closed. Not only because they are not economical, but because they not particularly good quality either,” he said. “Universities are very good at starting new things but not very good at stopping things. Boards can give backbone to the executive who are taking difficult decisions.”

This support could include the board chair “going out and having a visible presence and playing a part in explaining important decisions”. 

Ensuring boards have the right data and the most up to date figures is crucial if boards are to provide effective oversight and understand how the institution is performing against comparable providers, said one governor. 

“Good analysis can make a huge difference,” he said. “At one governing board I was on, we invited data analysts to tell us about ourselves and how we stood relative to other institutions and what strategies the data should lead us to follow. For instance, areas of rapid growth that we could be chasing.”

National Student Survey (NSS) scores are another good source of information. 

“NSS scores came under quite a lot of scrutiny during the pandemic when scores dropped and that has now become a feature,” said a vice chair. “The NSS has become part and parcel of a lay governors’ lexicon.” 

A governor of an institution in London believes a greater focus on outcomes is required. 

“There might be student satisfaction across the board but what are the quantitative outcomes?” she asks. “I think we need to be trying to join some of this up - and that raises issues to do with changing culture and changing academics attitudes on quality of provision.”

Environmental sustainability

As other sustainability concerns rise up the agenda, the perception is that environmental issues are falling down it.  As one governor puts it: “The sector as a whole has hit pause on this.”

“Net zero was all we were hearing about in 2018/19 and we were very proud of gaining green awards. But it has just dropped off,” said one post-1992 university board member. “Now it is all about the bottom line and how you get through the day to day. Yes, governors will talk about investing for the future but none of it is going to put you into the black.”

Some institutions are better placed on environmental sustainability than others because of factors such as the age of their estate and their geography. 

At one university, part of the raison d'être for investing substantially in the estate was its environmental key performance indicators.

“A lot of emphasis is going into improving our estate and that has
to happen if we are going to meet our plan to get to net zero on our direct and indirect emissions by 2030,” said a governor at the institution.

A board member elsewhere points to a deal with a private company to implement a water source heat pump.

“It is great if you are located next to a river source, or have the land to invest in solar farms, but not every institution is in that position,” she said.

As ever, funding is seen as an obstacle in hitting green targets. 

“Universities are typically in old buildings, and they cost a lot of money to run. They can be made environmentally friendly by retrofitting but that is incredibly expensive,” said a governor in the north of England. 

Most institutions are “miles off” ambitious carbon reduction targets but rather than reset them and face criticism, providers are “regarding them as aspirational.”

“I think it is a bit disingenuous, but in the current economic climate, what can institutions do?” he asks. 

Stakeholders

All governors point to the importance of stakeholder engagement in helping boards to support sustainability. 

Some are involved in initiatives to boost it. At one university in the midlands, the number of development days has increased to four a year, in addition to normal board meetings - and eternal speakers are invited to speak.

“We don’t just want to hear from higher education bods, we want local business,  industry, the NHS and others,” said the university’s vice chair. “We want to make sure that the wider community knows about us, and we know about them. It means governors have to give up more time, but we need to do it.” 

Governor attendance at university events can also help build networks. One governor mentioned a recent alumni giving event: “I think all attendees - potential donors, university staff and students - appreciated having governors present,” he said.

Better engagement with employers was highlighted by governors, in light of a recent Institute of Student Employers survey which found that 54 per cent of employers reported that graduates did not meet expectations in self-awareness (up from 35 per cent in 2023), while 46 per cent had concerns about resilience (up from 30 per  in 2023). 

“Employers are forever saying they want graduates with oven ready skills so there needs to be a better way of somehow capturing what it is that employers want from current graduates,” said a governor at a northern university. “It just strikes me that governing bodies are jammed full of people with serious business expertise so there should be a mechanism via the board to inform that debate. I just don’t know what that mechanism is.”

This governor cannot recall a board meeting where the head of careers has attended or delivered a paper.

“It would be quite good for a board to hear from the university head of careers about how its members can help on a strategic level.”

Engagement builds connections, comments one governor.

“If we open that door, people from business and industry know who to approach, they don’t just have to go through the VC,” she says. “Boards can be quite a closed shop, not just internally – academics don’t know what happens on boards half the time – but to the wider communities that we sit in. What we need is an open house, shop front approach.”