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The Reshaping of Board Governance for Higher Education Institutions

The age of technology has far-reaching effects in relation to how we live, work and play, and in virtually every other facet of our lives. No industry has been untouched, including the long-standing customs and traditions of academia. Issues like online education and student loan debt are causing higher education professionals to question how educational advances and costs are affecting the quality of education, their future economic stability and the job outlook for graduate students.

The scope, pace and complexities that are taking place within higher educational systems are forcing colleges and universities to take a closer look at whether their boards of directors have the skills, abilities and structures in place to fulfill their responsibilities. Poor governance decreases public trust, leaving the general public to wonder if the costs of higher education will ever pay off in career salaries.

The Forces That Are Reshaping Governance in Higher Education

Several other forces are at work that are causing a shift in higher education governance and accountability, in addition to public policy, regulatory matters and technological advances. These forces stem from consumer choice, politics and economics.

Educational Opportunities Online

One of the biggest issues affecting colleges and universities is that technology has advanced to a point where students can take college classes virtually, right in their homes or anywhere else they happen to be. Large numbers of students are taking a hybrid of classes online and on location at a college or university. Colleges are seeing reduced attendance at brick-and-mortar schools because of the convenience of online degrees.

Political Scrutiny

Politicians at the state and federal levels are also looking at changes in higher education. They are concerned about how much money schools are getting and where they apply that money. Additionally, they are concerned about misleading recruiting and marketing tactics, poor graduation rates and a poor outlook in the job market.

Student Loans

Rising costs for college tuition are creating a burden of student loan debt for graduates. By the time they graduate, they have so much student loan debt to repay, it reduces their ability to buy much of anything else. High student loan debts across a grand scale have the potential to reduce their spending power, which hurts the overall economy. To make matters worse, graduates can’t reach a high enough salary level to pay their loans down, causing many people to wonder if higher education is worth the cost of tuition.

Do Changes in Higher Educational Institutions Mean Changes for Boards?

New regulatory changes in corporate governance require a higher level of engagement from the board of directors. Boards of directors for colleges and universities are made up of a board of volunteer trustees. Historically, most of the true decision-making has come down from senior academic leaders. The board role has long focused on fundraising and supporting the decisions of college senior-level leadership.

Boards of directors for higher educational institutions shouldn’t be one of the risk factors. However, they are becoming a risk by default, because many boards have not changed the culture and duties of their boards in keeping with all the responsibilities that go with the new regulatory requirements. What’s left is a woefully unprepared board that could be a sitting duck for liability.

Colleges and universities have long tried to increase their revenues through fundraising and other means to cover the costs of offering higher education. Changes within the economy and the industry weigh heavily on finding ways to manage costs without compromising the quality of higher education.

Findings of a National Commission on Governance

The Association of Governing Boards of Universities and Colleges established a 26-member commission to assess the need for governance changes in higher education. One of the notable findings is that boards are often caught up in petty squabbles, which inhibit the work of strategic planning. The group detailed their findings in an official report called Consequential Boards: Adding Value Where It Matters Most.

The consensus of the commission was that boards of directors of higher educational institutions will need additional skills and competencies to be effective and reduce risk. They will need to dually focus their time on long-term strategic planning and crisis management.

The report noted that universities such as Yale, Duke and NYU are leading the pack by establishing global footprints. Boards will need education about mergers, acquisitions and business development, and will need to devote additional time to these issues.

The metrics for measuring the quality of education for online learning are vastly different than for brick-and-mortar classes. The board directors of today need to understand marketing practices and management systems and how they correlate to the quality of education. Commission members also discussed the possibility of compensating board members because of the increased time and skill that today’s governance environment demands.

The report concluded with seven recommendations:

  1. Boards must improve value in their institutions and lead a restoration of public trust in higher education itself.
  2. Boards must add value to institutional leadership and decision-making by focusing on their essential role as institutional fiduciaries.
  3. Boards must act to ensure the long-term sustainability of their institutions by addressing changed finances and the imperative to deliver a high-quality education at a lower cost.
  4. Boards must improve shared governance within their institutions through attention to board president relationships and a reinvigoration of faculty shared governance. Boards additionally must attend to leadership development in their institutions, both for presidents and faculty.
  5. Boards must improve their own capacity and functionality through increased attention to the qualifications and recruitment of members, board orientation, committee composition and removal of members for cause.
  6. Boards must focus their time on issues of greatest consequence to the institution by reducing time spent reviewing routine reports and redirecting attention to cross-cutting and strategic issues not addressed elsewhere.
  7. Boards must hold themselves accountable for their own performance by modeling the same behaviors and performance they expect from others in their institutions.

Some Concluding Thoughts About Transitioning Governance for Higher Education

With the changing times, it’s vital for colleges and universities to evaluate their board composition and culture, and make sure they can manage the demands and responsibilities of today’s governance successfully. The good news is that if they get it right, there will be a positive trickle-down effect. Solid board governance should equate to increasing numbers of students that can access higher education, increased graduation rates and a high-quality education. Boards that successfully control costs will help keep down student loan debt, which will help the economy and allow educated students to earn higher wages. Having high numbers of people who hold advanced degrees will ultimately help the United States compete with other countries. There’s a lot at stake.

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