HEPI and Lloyds Bank recently brought together a range of vice-chancellors, board chairs, finance directors and other sector leaders to discuss the financial challenges facing universities.
The backdrop was the recent publication of the Augar review and the enormous current political uncertainty. One theme that shone through was the need for universities, as autonomous institutions, to set their own weather as much as they can.
Responsibility for this is a shared endeavour between governing boards and institutional managers, and the role of both has changed in recent years.
For example, in the past, when there was a less competitive sector, English universities would be told how many students they could take and then receive substantial grant funding from HEFCE to educate them.
Now, there is something more akin to a genuine market. Institutions compete more ferociously for students and there is a greater prospect of institutional failure, with managers and governors both in the firing line.
Meanwhile, the Office for Students looks for boards to do things that HEFCE never expected and to take the initiative via self-reporting and league tables have, rightly or wrongly, become ever more important in determining an institution’s position.
Has the quality of governance risen to meet the extra demands of the new environment? Is the quality of university governance as high as in other sectors? At the HEPI roundtable , concerns were expressed that some university boards were not fully ready for changes they have experienced and for the world in which they are now operating.
One prerequisite for success was agreed to be full transparency between managers and governors. But are governing bodies always getting sufficient information from managers? Is it understandable, up-to-date and useful? Are honest conversations taking place when any warning signs show?
Diversity was felt to be another urgent challenge. In part, this is about who becomes governors but it is also about who feels empowered after becoming a governor. While the student voice can be very important to governing meetings, student governors can often feel overwhelmed and can have incredibly short tenures.
Where there are problems, vice-chancellors need to do more to ensure their boards include the right people by carefully shaping their make up. Getting the balance right can be challenging. Head hunters can help, and possibly even payment of governors, but neither is a failsafe.
Later this year, HEPI hopes to build on this discussion by publishing two reports on the challenges faced by governors in the new environment. This thursday, we will also be hearing from an experienced chair of governors at our annual conference…
I would estimate that about 10 to 15% of Universities lack the right Governance and are in danger of failing financially.
The figure is likely to be higher in FE institutions.
Over high salaries of the senior management and foreign expansion will most likely be the cause.