The governance of independent providers matters

Innovative approaches to higher education call for innovative approaches to governance. Smita Jamdar and Robin Middlehurst introduce Independent HE’s first steps.

It is not unusual for governance to be dismissed as distant from the real action of teaching, learning and professional practice, or regarded as an unnecessary burden and overhead for hard-pressed institutions and their management.

Yet when things go wrong, as is evident from scandals in both corporate and higher education sectors, the spotlight quickly shifts from leadership to governance.

This is unsurprising given that governance is all about authority, legitimacy and decision-making – where these lie, who can exercise them and how – in relation to an organisation’s purposes, policies, programmes, procedures and personnel. Governance is also about the sustainability of an institution in terms of resources, risks and reputation. The principles, rules and mechanisms through which day-to-day authority is exercised and decision-making executed is typically outlined in governance documents such as charters and statutes. Often these are amplified further in codes of governance that set out relevant and appropriate structures, processes and behaviours that are expected of those involved in governing institutions. Sound governance benefits many groups including students, staff, managers, external stakeholders (such as professional and regulatory bodies, funders, validating partners, connected companies and tax-payers) as well as the wider community. Sound governance is also key to maintaining public trust and confidence in the institution and the sector.

Fresh ideas for a new age

The past two years of the pandemic have placed unprecedented challenges on leadership and on structures and systems of governance. The challenges are far from over, as we enter a period of accelerating institutional differentiation, if not wholesale transformation of the higher education sector in response to economic, social and civic changes. The present Westminster Government is seeking to reform post-18 education so that it becomes more flexible with greater supply-side dynamism to meet the changes arising from the pandemic, but also from developments in technology and longer-term demographic trends.

New ideas are called for in the design and delivery of education and will often emerge in the form of new kinds of provider and types of partnership between institutions and sectors. Such innovation is already evident among independent providers which offer education and training across subjects ranging from design engineering, the arts, dentistry and child-care. These providers vary enormously in terms of size, history, culture and geographical location. They often operate at the intersection of further, higher and professional education and this can pose knotty problems for governance including multiple and overlapping regulatory requirements.

Providers display a diversity of ownership models, from family-run organisations to those with multiple shareholders or parent companies (UK-based or international), others may form part of a larger organisation whose principal business is not higher education. Governance arrangements already reflect this multiplicity of corporate form, ownership and accountability and effective governance systems, structures and processes must satisfy the many players interested in how these organisations are run, the education they provide and the outcomes they achieve. In addition, it is likely that the government’s desire to expand industry-driven provision including higher technical education and to encourage new investment into higher education will need to be accompanied by specific governance requirements that reflect corporate ownership, international structures, strategic partnerships with industry or nascent sub-sectors with very different cultures to those found in traditional higher education contexts.

Given the challenges ahead, the need for innovation, the diversity of providers and provision already present and likely to emerge in future, Independent Higher Education (IHE) has worked with its membership and the sector as a whole to develop a new Code of Governance to support institutions to be effective and accountable in the evolving landscape. While there are other Codes already in existence and of relevance to many providers (such as the CUC Code or the UK Corporate Governance Code) they are not always the right fit for providers with different ownership, accountability and regulatory requirements, or those for whom the rules, expectations and cultures of higher education as currently practised are not workable in practice.

Just the start

The new Code is the initial phase of a longer programme of work designed around principles of governance that offer flexibility in terms of their implementation. The Code is produced on an ‘apply or explain’ basis as featured in other codes of governance. Providers are encouraged to meet the principles by applying the recommended practices set out in the commentary, or explain why they have not applied them and/or what they have done instead given their context and circumstances. The principles in the Code focus upon effective decision-making for the short, medium and long-term; academic governance in the context of a diversity of size, shape and mode of institution; size and composition of the board; and mechanisms for dialogue between the board, stakeholders and shareholders. The aim is for providers to establish models of effective governance that work for their own circumstances. In this way, good governance is more likely to develop organically, and become well- established and routinely observed.

For example, Principle 1 states: “Every provider must establish an appropriate governance framework through which decisions about the organisation’s short, medium and long-term needs and objectives are made, with a clear primary decision-making or governing body (the board) and clear division of responsibility between governance and management.”

In the commentary below, several points of guidance are offered, relating to different provider contexts, for example: “Any matters which are reserved to shareholders, parent companies, family trusts and/or other related organisations should be explicitly stated, but the governance framework should recognise that the board is the primary decision-making body of the provider and any constraints on the ability of the board to make decisions should be kept to the minimum necessary to safeguard the legitimate interests of such stakeholders.”

The Code was produced collaboratively with guidance and input from a range of types of provider offering a range of educational provision. Feedback from those IHE members involved in the working group as well as the wider consultation on the draft Code, has highlighted the need for further specific guidance, for example, for institutions with charitable status, charities within larger corporate forms, validation partnerships, international bodies operating across jurisdictions and micro, specialist and hybrid models of provider.

The higher education landscape is not only increasingly challenging, but also becoming more complex. Assuming that a ‘one-size-fits-all’ governance model and code is relevant for all providers and types of provision is no longer a viable proposition, any more than a ‘one-size-fits-all’ regulatory framework is appropriate for a necessarily flexible and agile higher education sector. What is still needed, however, both now and into the future, is a recognition that good governance matters whatever the institutional context and provider’s particular circumstances.

 

 

 

 

 

 

 

 

 

  • On 16th September 2021