WORKING WELL WITH THE BOARD TO GET GOVERNANCE RIGHT Association of Governing Boards.

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

[email protected]

For information from our presenters, please contact Peter Eckel ([email protected]) or

Rick Staisloff ([email protected] )