Higher Education and corporate governance

Office of Students register and press bluster is failing to reassure the public over UK University/HE sector finances and corporate governance.

Since its recent foundation, the UK Higher Education regulator the Office of Students (OfS) – and its eponymous Chair Sir Michael Barber ¬– have made and given good headlines about the Higher Education sector in Britain.  

Despite the progress and the existence of the OfS register, University of Exeter Council member, Gerry Brown, corporate governance expert and author of ‘The Independent Director’ (www.theindependentdirector.co.uk) continues to have anxieties about the state of British University corporate governance.  

Recent reports of OfS proposals that threaten to lower the fees of approved providers and levy higher fines (up to £500,000) upon education providers who fail to widen participation to poorer students, remains a concern.

Brown notes, “While few doubt either the ambition or the need for wider access and greater student diversity, this OfS carrot and stick approach appears to be another classic example of government and regulators seeking to attack symptoms rather than the root cause of the issue: which is – and remains – the governance of universities and the unwieldy size and ineffectual inadequacy of the University Councils.  Worse still, though a small number of for profit suppliers have publicly failed to gain acceptance onto the OfS register, laudable reminders about the need for wider access isn’t going to get anywhere while financial precariousness and – putting it politely – ineffective university council strategic/operational decision-making continues to hampers the higher education sector generally.”
 
“Sadly, there is even methodological inconsistency at the heart of OfS registrations,” continues Brown.  “Although the mood music conducted by Sir Michael Barber has loudly crescendoed in the fanfare of statements about ‘not’ bailing out financially failing educational institutions, the brute fact that many university balance sheets and revenues streams still teeter on the brink of disaster surely somewhat calls into some question the surety of the kitemark offered by the current OfS register?  Especially in an environment where so many approved educational providers still remain a financial risk as well as continue to struggle with their institutional governance and decision-making in the context of this instability in their financial positions.  In its present form, the OfS register appears merely to give us a snapshot of educational institutions with finances about to possibly crash rather than offering any safety net or prompting change in their approach to corporate governance.”

Though always open to credible thought leadership balloons floating free of the launch pad, Brown suggests that a healthy dose of independence amongst non-executive directors serving upon University Councils could quickly help ameliorate the wide variety of poor governance matters afflicting the UK Higher Education sector, enable better decision-making and also accomplish more far quicker than greater OfS supervision, headline seeking interventions and accompanying government regulation.  

According to Brown’s methodology outlined in ‘The Independent Director’  (www.theindependentdirector.co.uk) ineffective University Councils could move forwards immediately by addressing various obvious but necessary corporate governance best practice standard metrics including Board size, composition and diversity; the amount of time directors commit to their role; recruitment, selection, induction, remuneration and evaluation of directors; and Board and director behaviour.