We spend a lot of time talking to current and prospective university governors.
It’s an enriching experience as, for the vast majority of them, they’re committing significant amounts of time and energy – for free – to help universities be their best. It’s an uplifting experience, and a good reminder of the value that universities bring to society and the wider public: these highly-talented people give up their time because they think it’s worth it.
We should recognise that they give up their time for a return too. Being associated with a university remains a prestigious appointment. Many of the candidates we see would like to gain experience as a non-executive director and see universities as a way of enhancing their CVs. There isn’t anything wrong with that, but sometimes it feels like the discussion expects all giving on the part of the governor with nothing in return. And this is where the debate gets bogged down in an unhelpful binary between those who see remunerating governors as a natural and obvious thing to do, and those who think the exact opposite.
Consider the options
We have commissioned a short report, Regulation, responsibilities and rewards: supporting university governance, to see if we could find some more nuanced ways of thinking about the burdens placed on governors, what might be done, and where pay fits in that equation. For me the most interesting prospect is a menu of options when it comes to recognising governors’ commitments. It’s no longer possible to avoid this question: universities must think about governor remuneration.
It has always been assumed that for a lot of people on boards, particularly those who’ve retired on healthy pensions, a payment of £20k or less annually doesn’t result in any material difference to their lifestyle. Lots of governors, already in the 45% tax bracket aren’t going to take on these roles for the money. But what about giving them a fund to donate within the university? Imagine the opportunity where students could bid for a few hundred pounds to support a project or initiative. It could bring the governors closer to the operation of the university at – in the grand scheme of things – very little cost.
That said, more and more people are telling us that the payments would make a material difference. The idea of a portfolio of non-executive activities is more and more prevalent, and our candidates increasingly argue that not only with a payment make a valuable contribution within this framework, but it would also enable them to priorities the university within the context of competing demands for their time. This is particularly the case now in recruiting to Chair appointments.
There are also people out there who aren’t retired, or not on large salaries, who’d be great on boards. Younger candidates, and those with portfolio careers, might well be willing and able to take on the role of governor for an honorarium amounting to few thousand pounds a year. Creating the contract is seen by some board Secretaries and Chairs as a way of formalising the commitment, making sure that the university takes priority when other demands arise. If universities allowed themselves the flexibility to consider the candidate’s circumstances, it gives another tool to those recruiting governors to secure the best appointments.
Happily for the sector, a number of businesses see getting their staff on boards – supporting them to participate within their working time – as a form of corporate social responsibility. This can mean universities get the benefit of high-level professional expertise, and the employee has some sanctioned flexibility to allow them to balance their work and board commitments. Should we also allow the possibility – where a company couldn’t afford the time – for the university to buy out the time from another business? The governor would be paid the same, but the business compensated for the time. Again, some flexibility here could be the deciding factor for a candidate.
Not one size to fit all
As the English HE sector settles in to its new regulatory regime, there are important choices to make. Should universities adopt the practices from the public sector such as more open models found in the NHS where boards have rigorous accountability through NHS Improvement? Should they take some of the freedoms offered by the marketised HE system and behave more like businesses? It’s not obvious – from the conditions and incentives presented – which way universities (and their boards) should go to achieve the best they can. It’s from a clear understanding of the nuances here that board recruitment, development and activities can flow.
I feel positive about the current and future state of university governance. We have great quality people, a fierce commitment to promoting universities and the HE sector generally, and widespread ambition for “good governance”. Let’s not assume, though, that what we have now can’t be improved. Let’s, at the very least, continue the debate.