working well with the board to get governance right association of governing boards
TRANSCRIPT
WORKING WELL WITH THE BOARD TO GET GOVERNANCE RIGHT
Association of Governing Boards
Working Titles
Governance Works; Until It Doesn’tor How to Have a Mediocre Board (and an
Effective Audit Committee)
What Does Your Board Do?
Partner in
Leader-ship and
Strategy
Hold Account-able; Verify
Confuse Gov. with
Admin.
Interrupt (and
Disrupt)
Eat and Tour
The Goals of Governance
“Effective governance entails influential participation in meaningful discussions about consequential matters that lead to significant outcomes.” Richard Chait
Chait, R.(2009, July/August). The Gremlins of Governance. Trusteeship. Association of Governing Boards. Washington DC.
What Kind of Board Do You Need?
All Light; No Heat or Live Wires
Strategic Leader/ Partner
No Harm;
No Foul; No Value
Board is Bored
En
gagem
en
t
Capacity
High
Low
HighLow
Observations from the Field
Anxiety Uncapp
ed
Recognize
High(er) Stakes
Excited/
Excitable
Boards*
*And nervous presidents = stressed cabinets
How Restless?
How apprehensive is your board?
1 (low) 2 3 4 5 (high)
What are the three things that keep them up at night? 1. 2.3.
Effective Boards?
Effective Boards?
Mediocrity more than Dysfunction
How to Have a Mediocre Board Strive for under-engagement/Over-
engagement Never have new members Develop unquestioned routines Have the chair try to be president Avoid focusing on the work of the board (only
on the work of the institution) Re-structure committees frequently (board
culture) Confuse good philanthropy with good
governance
How to Have a Mediocre Board
Confuse interest for expertise CEOs vs. Lawyers vs. Deacons/Ministers Expect “30 second answers” to “10 minute
problems” Do not learn to agree (or disagree) Use the “loud-voice veto” Avoid risk Have competing agendas “Women’s Golf”
Competing Agendas
“For the meeting, I need a copy of the agenda, the hidden agenda, and my own twisted personal agenda.”
High Performing Boards
Focuses on strategic issues Thought partners looking forward Willingness to make tough decisions
Monitors of progress and risk Welcomes multiple perspectives; speak as one
Climate of openness and positive social dynamic Maintenance of confidentiality Respect for institutional governance model
Advances Mission Embodies trust and candor; meaningful
deliberations
How Mediocre/High Performing? What makes your board effective? What is one thing* you wish your board
did differently/better? What is one thing that others could learn
from your board?
* Or two things, or three things, or eight things………
Questions and Thoughts
The Focused Work of Boards
Cost and Value Accountability, Transparency,
and Risk Student Learning
Cost and Value of My Institution/HE
Public My Inst Private My Inst Public HE Private HE
9%18%
48%57%35% 19%
10%6%
56% 63%
42% 37%
Too Expensive Underpriced Costs What It Should
Trustees on Affordability
Som
e in
road
s; cou
ld d
o m
ore
Need
to d
o m
uch
mor
e
Doing
all
it ca
n
Shou
ld cha
rge
mor
e
Alre
ady
low-c
ost
Outside
boa
rd con
trol
25%
13%
36%
2%
20%
4%
30%
13%
45%
2%10%
1%
Public Private
Trustees on Controlling Expenses
Public Private
37%51%
50%41%
12% 7%1% 1%
Does everything it can Does many thingsNeeds to do much more Is not trying to reduce expenses
Questions for Discussion
What do your trustees think about efforts to control expenses and make your institution affordable?
What type of information do you provide that informs their views?
What questions might they ask better to govern better?
Questions and Thoughts
Accountability, Transparency, and Risk: The Audit Committee
First line of defense for: Financial Reporting Internal Control Compliance Risk Management
Protector of your most valuable asset: Reputation
22
Growth in Audit Committees
Boards of Independent Institutions with an Audit Committee
23
Growth in Audit Committees
Boards of Public Institutions with an Audit Committee
24
Core Audit Committee Responsibilities
1. Internal Control2. Oversight of Internal Auditing3. Oversight of the External Audit4. Financial Statement Review 5. Risk Management6. Compliance
25
Risk Management
Committee should understand institution’s overall risk profile
Enterprise Risk Management (ERM) – move from an ad hoc to a holistic view of risk
26
Risk Management
Five Key Areas of Risk Strategic – Organizational strategic goals Operational – Day-to-day activities in pursuit
of these goals Financial – Organization’s physical assets and
financial resources Compliance – Internal and external reporting
requirements Reputational – Institution’s public image
27
Risk Management
Best Practice for Implementing ERM1. Define risk broadly
2. Recognize both the opportunities and downsides of risk
3. Develop a culture of evaluating and identifying risk at multiple levels
4. Look at the total cost of risk
5. Foster collaboration by Boards and presidents
28
Compliance
Recent addition to the audit committee role
Compliance: Recognition of and reporting under various federal, state and local laws and regulations
“Clusters” of Regulation Privacy Copyright Discrimination Campus Security Financial Transactions
Need to determine who owns compliance
29
Current Tension Points
Where does the CFO’s “loyalty” lie?
Does the audit committee need to oversee other board committees?
Delegation of authority for audit approval
Thoughts and Questions
Overseeing Educational Quality
The Role of the Board
Sufficient Time on Student Learning?
Yes39%Not
Enough62%
Time Spent: Money vs. Mission
57%
22%
3% 2%
Relative balance of time on academic and financial issues.
More Time and Attention (or Not)?
More at-tention
now53%
Less attention now1%
About the same31%
Don’t know15%
How has the board’s attention changed in the last five years?
Impediments to Overseeing Learning
Other priorities
Not enough time
Not the Board's role
No impediments
Lack of interest
64%
45%
22%
16%
13%
Impediments, if any, to the board’s understanding of student learning
outcomes
The Curriculum is the Faculty’s Responsibility…
Ensure that the institution has an appropriate set of learning outcomes statements
Ensure that efforts to determine the effectiveness of teaching and learning are in place and ongoing
Ensure that institutions use the data they collect for improvement
The Board’s Role is to Remind Them of This Responsibility
Peter Ewell. Making the Grade. AGB
Key Board Questions: Our “Product”
• How good is our product?
• How good are we at producing our product?
• Are our customers satisfied?
• Do we have the right mix of products?
• Do we make the grade?
Source: Making the Grade: How Boards Can EnsureAcademic Quality, Peter Ewell (AGB, 2006)
Impact Through Collaboration
Collaboration (in Higher Education)
E 1 8 -1 2 Tw o R h in o s .jp g
CFOs and Student Learning
Collaborate with CAO Cross-Walk
CommitteesRemind others of your commitment
Leverage Your Strengths
Thoughts and Questions
Thank You!43
Please visit agb.org for more governance resources, including the Effective Committee
Series.
To receive a copy of today’s presentation or to inquire about consulting or other AGB services, please email
For information from our presenters, please contact Peter Eckel ([email protected]) or
Rick Staisloff ([email protected] )