The Governance of the Modern Australian University: One Approach or Many?
Panel Presentation by Professor the Hon Gareth Evans AC QC FASSA, Chancellor, The Australian National University, to Universities Australia Annual Higher Education Conference, Canberra, 27 February 2014
Universities are very distinctive organizations, with missions very distinctively different from businesses delivering goods or services for profit – even if some might be unkind enough to say that that distinction may be a little blurred at the more shameless end of our membership spectrum. There are certainly quite dramatic differences of emphasis across the spectrum in the way in which we go about pursuing our teaching, research and community outreach missions. And the organizational structures through which we deliver on our various missions can also vary significantly, most obviously in size.
Do any of these differences, as between universities and other kinds of corporations, and within the university sector, mean that different basic governance structures and processes are required to reflect them? I for one do not believe so. There are certain basic tasks that every university governing body has to perform, which are not distinctively different from the basic tasks of commercial boards. And there is a now rather well established body of best practice as to how those basic tasks should be performed. I don’t think it’s putting it too crudely to say that when it comes to both task definition and implementation you either get it right or you don’t.
The Three Basic Roles of University Governing Bodies
The Voluntary Code of Best Practice for the Governance of Australian Universities, endorsed by the University Chancellors’ Council and Universities Australia, lists in Principle 2 the nine primary responsibilities of every university council or senate. To enable us to more readily get our heads around what is involved, and how this should work in real world practice – can be distilled, without undue simplification, into three basic roles: strategic oversight, ensuring effective overall management, and ensuring responsible financial management.
Strategic Oversight encompasses:
- approving the mission and strategic direction of the university;
- ensuring that visions and goals are turned into effective management systems; and
- monitoring implementation of the strategic plan.
Ensuring Effective Overall Management encompasses:
- appointing the VC and monitoring his or her performance;
- overseeing and reviewing overall management performance; and
- monitoring the academic activities and performance of the university.
Ensuring Responsible Financial and Risk Management encompasses:
- approving the annual budget;
- approving and monitoring systems of control and accountability;
- overseeing and monitoring the assessment and management of risk; and
- ensuring compliance with legal and government policy requirements.
What Makes for Effective Governing Bodies
If any university’s governing body is to play effectively these basic roles, as it must, it needs to have its own house in order, in terms of both structure and process.
- Manageable size: I think, from long experience with Cabinets and Ministries and non-profit boards, and now four years at ANU, that our 15 is about right; that’s bigger than the average commercial board (mainly to enable the presence of a range of elected members from various constituencies, about which I’ll say more in a moment), but it’s smaller than the national university council average, as reflected in Code of Best Practice Principle 7, of around 22 – and when it comes to effective interchange, smaller beats larger.
- Right combination of qualifications and experience: That means primarily the presence of financial and commercial expertise, and having a majority of external members, as required by Principle 7 of the Best Practice Code), but also more than that: you need a good spread of other disciplines, a decent gender balance, and where appropriate a good geographical balance. As a result of some quite conscientious succession planning we will have managed by mid-year at ANU, within our ceiling of 15, to have science and the humanities as well as law and commerce well represented, a spread of interstate members reflecting our national identity, Indigenous representation, and – at least when the staff and student electors do the right thing – a reasonable gender balance.
- Right combination of old and new blood: Principle 8 of the Best Practice Code identifies a normal maximum of 12 years: terms of that length or even longer have been the norm at ANU in the past, but we have now decided to set the normal maximum at two four-year terms, and have been renewing our Council accordingly.
- Right combination of non-elected and elected members: the existence of elected members on many Australian university governing bodies (including ANU’s, where elected staff and student representatives make up fully one-third of our Council membership) is something that does distinguishes us from Anglo-Saxon commercial practice, and has been known to trouble some private sector members. In my experience this has caused no governance problems whatever: it’s simply a matter of making it clear beyond doubt, during induction processes and in the chair’s conduct of the meeting whenever a sensitive topic arises, that there are clear limits to the “representative” role that such elected members can play. While there should be no inhibition on these members keeping councils or senates informed of the views of their various “constituencies” on key current issues, and no inhibitions on their capacity to argue for particular outcomes during debates, their fiduciary responsibility is clear: they are there to advance the university interest, not any particular sectional interest, and if they cannot explain this back to their respective bases, and live with their council colleagues’ judgement as to what the larger interest of the university is, they have the option of resigning.
- Well prepared papers (with particular attention being paid to making more accessible financial reporting, and information about progress against targets and benchmarks);
- No longer – or shorter – than necessary (ANU’s meetings last around 3 hours on average, which seems about right: increasingly substantial time is being devoted to systematically discussing particular strategic issues);
- Real debate: the chancellor’s responsibility is not to engage in meandering soliloquies, or allow others to do so, but to encourage active participation by all council members.
- This is required by the Code of Best Practice Principle 7, but doesn’t need to be too formal. At ANU it is now taking the form of a series of sybaritic lunches by the Chancellor with individual members every second year or so – involving fairly frank exchanges, followed by a short written report back to Council by the Chancellor which does not identify any individuals, but summarizes views on key themes and issues, and records satisfaction or dissatisfaction with particular structures or processes.
Each of the three basic roles I have identified – strategic oversight, ensuring effective overall management, and ensuring responsible financial and risk management – involve functions which in any self-respecting and properly run university should be taken very seriously and fully exercised by the governing body - not treated as matters for tick-and-flick endorsement after a desultory question or two, with the Vice-Chancellor’s advice regarded as more or less sacrosanct unless the house is obviously falling down. Any university which operates in this way runs the risk of becoming a suitable case for application of the old Chinese saying that “The Fish Rots from the Head” (although the origin of the phrase seems more likely to have been Turkish than Chinese – and it’s wrong anyway, because any self-respecting fish rots from the guts first – it does capture a sentiment worth remembering.)
At the same time, when properly exercised, these functions absolutely need not cramp the style, or limit the freedom of action in any significant way, of creative and effective chief executives – and I say that having been a CEO myself working with quite tough-minded chairs and boards (albeit of a large international non-profit, not a business or public authority) If, in a university context, the Vice-Chancellor accepts and respects the governing body’s basic roles; gives it all the information it needs to exercise those roles in a timely and accessible fashion (and I emphasise “accessible”: the snow job, particularly when it comes to complex budgetary and financial matters, is not an unknown phenomenon in council papers); and responds cogently and honestly to questioning on sensitive or difficult matters, there is little prospect of the relationship being anything but comfortable.
The governing body of course has a reciprocal responsibility to stay strictly within the bounds of its basic functions, understanding and accepting the difference between oversight and management; treating its executive head with courtesy and genuine respect; and always giving great – if not necessarily decisive – weight to the advice the vice-chancellor will no doubt want to offer on matters within the council’s own prerogative, in particular the university’s strategic direction and its budgetary priorities.
The bottom line in all of this seems to me that in governance/management relations nothing is more important than the exercise of plain common sense on both sides. It is partly a matter of good clearly defined boundary lines making for good neighbours. But it’s also a symbiotic, synergistic relationship in which there are immense gains to be made from working constructively together, and recognizing that each needs the other. The best universities, like the best football clubs, are those where all this is instinctively understood, and where respective leadership roles are acknowledged – but where there is a great deal of communication and consultation on issues which straddle the border line, and where achieving genuine consensus on key issues rather than protecting decision-making turf is seen as the normal order of things.