Governance Trusteeship Leadership Essential Roles for a Great University

1. Governance TrusteeshipLeadershipEssential Roles for a Great University Workshop Presentation for Lincoln University Board of Trustees March 23, 2012 President Patricia McGuire Trinity Washington University

2. Governance • In universities, governance is a system for decision-making that recognizes authority, responsibility and accountability among multiple constituencies, including the Board of Trustees, the President and senior executives, the Faculty, the Staff, the Student Body, the Alumnae and Alumni, and in various ways, depending upon the institutional identity, the state or local government officials, or a religious congregation or local ecclesiastical authority, or such other constituencies as may stake a claim on decisions affecting the institution. • Because higher education values inclusive collegiality, we often call the sharing of decision-making authority “shared” governance. • Legal authority is a factor determining the governance structure, but legal authority is not governance itself. Law establishes the framework, but governance describes the system.

3. Trusteeship • Trusteeship is the responsibility held collectively by that group of individuals who constitute the board of directors (or trustees) to steward the assets of the university effectively; to ensure effective university leadership; to establish the overall mission and strategic goals; to ensure effective policies that reflect compliance with all relevant laws , regulations and accreditation standards; to hold the president and faculty accountable for oversight of the quality and effectiveness of the academic programs; to ensure that adequate plans, personnel and resources are in place to maintain the safety and security of all people on campus. • Trusteeship can only be exercised by the group known as the board; no individual exercises trusteeship alone.

4. Leadership • Leadership in the university is exercised across multiple roles for many different purposes. The University President is the most visible leader, charged with the responsibility to articulate the vision, steward the mission, organize and direct the talent, use resources wisely and effectively, ensure institutional integrity, enlarge and extend the institutional reputation, while also raising capital, maintaining buildings and grounds, ensuring state-of-the-art technology, keeping the students under control, the faculty relatively content, and the alumni very happy particularly during March Madness. • Provosts, deans, faculty, other executives, staff and students also exercise important leadership roles in their zones of influence. • Trustees also provide significant examples of leadership in their collective action as well as in their personal generosity and attentiveness to the needs of the institution and its personnel.

5. Wisdom • “Management is the capacity to handle multiple problems, neutralize various constituencies, motivate personnel; in a college or university, it means hitting as well the actual budget at break-even. Leadership, on the other hand, is an essentially moral act, not --- as in most management --- an essentially protective act. It is the assertion of a vision, not simply the exercise of a style: the moral courage to assert a vision of the institution in the future and the intellectual energy to persuade the community or the culture of the wisdom and validity of the vision. It is to make the vision practicable, and compelling.” • A. Bartlett Giamatti, president of Yale University 1978-1986, in A Free and Ordered Space: The Real World of the University (New York: Norton, 1990)

6. Middle States Characteristics of Excellence Standard 4 The institution’s system of governance clearly defines the roles of institutional constituencies in policy development and decision-making. The governance structure includes an active governing body with sufficient autonomy to assure institutional integrity and to fulfill its responsibilities of policy and resource development, consistent with the mission of the institution.

7. Middle States Guidance – “Context” • Institutional governance provides the means through which authority and responsibility are assigned, delegated, and shared in a climate of mutual support and respect. The Commission on Higher Education expects a climate of shared collegial governance in which all constituencies (such as faculty, administration, staff, students and governing board members, as determined by each institution) involved in carrying out the institution’s mission and goals participate in the governance function in a manner appropriate to that institution. • Within any system of shared governance, each major constituency must carry out its separate but complementary roles and responsibilities. Each must contribute to an appropriate degree so that decision-makers and goal-setters consider information from all relevant constituencies. While reflecting institutional mission, perspective, and culture, collegial governance structures should acknowledge also the need for timely decision-making. • Whatever the title—board, directors, trustees, governors, or regents—the governing body is ultimately accountable for the academic quality, fiscal and academic integrity, academic planning, assets, and financial health of the institution. It should review institutional assessment results and participate in institutional planning. However, it should not manage, micro manage, or interfere in the day-to-day operation of the institution. • In financial affairs, the members of the governing body should confine themselves, as they do in academic matters, to a basic policy-making role, ensuring strong financial management by holding the chief executive officer responsible and accountable for internal operation. • Governing body members, regardless of how appointed, have primary responsibility to the accredited institution and should not allow political or other influences to interfere with governing body duties. • Members of the governing body act with authority only as a collective entity. Governing body members of higher education institutions normally have no financial interest in the institution. In cases where financial interests may exist, such as remuneration of board members or contractual relationships, the members of the governing body should be able to demonstrate that those interests do not outweigh the greater duty to secure and ensure the academic and fiscal integrity of the institution.

8. American Council on Education Conflict of Interest Guidelines • At every higher education institution, conflicts of interest of trustees, faculty and staff should be addressed in written policy, whether in one policy or separate policies. • The policies should require, at a minimum: • disclosure of known significant financial interests a faculty member, administrator or trustee has in outside organizations that do or seek to do business with, or may otherwise benefit financially from association with, the institution, where the individual has actual or apparent influence over an institutional decision that may affect the organization; • review of disclosures by one or more institutional officials; and • procedures to address identified conflicts. • Trustees, faculty, administrators and staff should be notified of the requirements of pertinent policy at least annually. • One or more persons at the institution should be available to answer questions about the policies. • The institution should review and assess its policies and practices in this area from time to time.

9. Issues • Typical governance, trusteeship and leadership issues in higher education today: • Establishing Policy v. Directing Operations • Board Micromanagement • Board-President Relationship • Trustee Relationships with Staff • Investigating Complaints and Grievances • Whistleblower Policy and Processes • Strategic Planning Roles and Relationships • Personnel Decisions • Conflict-of-Interest Policies and Practices • Succession Planning

10. Roles and Relationships • Board sets the overall mission and strategic plan and adopts policies consistent with those decisions • President and management team implement the plans and policies and make specific decisions for operations • Board may review the president’s annual operating plan but should avoid micro-management of the details • A wise president keeps the board informed of progress, outlines top-level challenges, and creates an environment in which the board feels informed and consulted without feeling the need to interfere with operations • Boards hire the president; the president hires everyone else. • Boards may hire external advisors: legal counsel, auditors, but the president should be consulted in these decisions. • Board Chair must manage the board, maintain open communication and also ensure the discipline of board members who go outside of the boundaries of good board conduct.

11. When Good Governance Goes Bad:Roles and Relationships Chapter • Individual trustees encourage ‘back door’ conversations with faculty and staff about routine operational issues (trustees need to distinguish genuine whistleblowing --- and follow the rules for such reporting --- from inappropriate discussions) • Individual trustees fail to understand that they have no standing except when the board meets as a collective entity; there is no individual power of trusteeship • President and board chair do not collaborate to maintain an open, healthy environment of dialogue and communication with trustees • Board Chair loses control of the board, is unwilling or unable to manage meetings, refuses to address out-of-bounds behavioral issues of members • Board makes specific decisions directing curriculum and programs without faculty participation • Board members gossip about institutional and board business externally • Management complains openly about board members • Students become a secondary consideration to business discussions at board meetings • Board allows external entitites --- church, state, city, alumni, media --- to have undue influence in decisions that must be the board’s alone for the best interests of the university

12. Conflicts of Interest: Rules to Live By • Have a written conflict-of-interest policy, and be sure it works. Require annual disclosures in writing. • Review potential conflicts at least annually; assign this responsibility to a logical entity, e.g., Audit Committee, legal counsel • You are not on this board to generate business for your company or your friends; every decision you make as a trustee must be in the best interests of the university. Your “duty of loyalty” must be undivided when you sit as a trustee. Trying to steer business to the institution, suggesting that bid processes be waived, or otherwise suggesting abridgement of fair and open business processes violates the spirit and possibly the letter of the conflict of interest rules. • Alumni, public appointees, parents: See #3! • If you have a conflict, abstain from the discussion and vote on the matter at hand.

13. When Good Governance Goes Bad: Conflicts of Interest Chapter • A trustee has a real estate “deal” that he insists the university president and CFO should explore with his partners --- how should the institution vet potential business opportunities to avoid conflicts while also not missing potentially good business relationships? • A partner in the trustee’s law firm wants her spouse to get a position as an adjunct faculty member in the Business Department, so the trustee calls the head of the department to ask the faculty chair to interview the spouse --- how can the potential employment relationship be managed to avoid conflicts? • A trustee sits on the board of the university’s bank and in that position learns confidential negative information about the business interests of another member of the board of trustees --- what should the trustee do? • The president is invited to join the board of a major foundation that also provides grants to the university --- is this a conflict? Who decides? • A major vendor invites board members to participate in the vendor’s annual golf outing all-expenses-paid --- should the trustees accept?

14. Resources • Association of Governing Boards www.agb.org • Middle States www.msche.org • American Council on Education www.acenet.edu