AGB President & CEO Update: No Surprises

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One of the best pieces of advice to new board members and chief executives is “no surprises,” meaning that leaders should mitigate surprises by being timely and transparent if they’re going to work together effectively. If only we could always adhere to such a rule. As my colleague Carol Cartwright put it, “A commitment to ‘no surprises’ is more difficult when a campus protest event goes viral in the blink of an eye.”

Anticipatory preparation can minimize negative surprises. Surfacing the institution’s risk factors, paying attention, preparing for board meetings in advance, getting more information before the meeting if you need it, and asking questions—especially the “dumb” ones—are deceptively simple strategies.

Why it matters: Negative surprises shock everyone within and beyond the institution. Its reputation, confidence in its leaders and its future, and its access to resources take a hit. Bad news often divides boards, divides staff, and compromises trust. It is too easy to forget that preventing or preparing for what might happen is as important as deciding what will happen, and it goes well beyond what a risk management program may cover.

Consider these scenarios:

When asked to approve mortgaging the institution’s art collection to make payroll, the board of a small private college discovered that the college already had maxed out its credit with all three local banks, each thinking it held the college’s only loan. The news was a shock, even to the three bank representatives, who all served on the board. The president had been striving valiantly on his own, and he had finally run out of steam. True story.
A legendary, long-serving chief executive regularly shared financial reports with the board, showing a small but persistent decline in financial strength. Questions, suggestions, and problem-solving ensued. The board watched closely but was not overly concerned. One day, not long after the beginning of the fiscal year, the CEO asked the board without preamble to revise the current budget and authorize him to borrow millions of dollars. Stunned silence followed this unprecedented and unanticipated situation. Veteran board members were hesitant to ask questions, given the president’s track record. Finally, a new member, attending his first meeting and unburdened by years of history with the CEO, said, “Maybe. How would we pay it back?” The incident set off a chain of events that changed the institution’s future. Another true story.

The bottom line: Board members who prepare, pay attention, and develop a solid sense of their institution’s reality are well-grounded for any potential surprise. They can think on multiple tracks—logical and imaginative, or analytical and hypothetical—instead of scrambling to catch up on essential information. They can focus on future ramifications and alternative options that help the board make better decisions. Underpinning a great board are members who know the institution, the environment, and good governance.

Consider these recommendations:

Work to build trust and accountability so that the chief executive and board members can fall back on common ground and shared values when problems arise. Trusting and trustworthy partner-leaders increase the institution’s resilience to deal with rough waters. Build trust through transparency, shared governance, consistency, and regular, authentic communication. Build accountability through a code of conduct, mutually agreed-upon goals, and candid conversations.

Spend time improving board governance rather than focusing on management. Help new board members understand that despite their impressive backgrounds, they have much to learn about higher education governance before they can be fully effective. Help all members learn about higher education culture and how boards can successfully govern in that culture.

Spend time at every board and committee meeting and at least a half-day of an annual retreat helping the board and the chief executive improve their partnership for fiduciary governance and leadership.

Address good governance systematically. The first requirement is to have a dedicated board professional who serves as a project manager for the board.

The infrastructure of strong boards includes updated bylaws, annual calendars for the board and each committee, committee charters, a portal for all materials the board needs ready access to, and policies or procedures that spell out how the board wishes to conduct its own business. Revise as needed and fill in the gaps. Does the board have its own current policies on crisis communications, expectations of board members, and communication with staff?

Become the kind of board that, when faced with a nasty surprise, chooses to respond with courage, confidence, problem-solving, and accountability assessment, not blame.

Go Deeper:

Join me at the upcoming 2024 National Conference on Trusteeship (March 26–28), where I am leading a session on resolving and addressing board conflict.
Review An Anatomy of Good Board Governance, Principles of Trusteeship, and AGB’s board member orientation to ensure you have a solid understanding of your responsibilities to your institution.
Talk with your board about whether it makes sense to engage in AGB’s Board Performance Survey.

Questions for Board and Committee Chairs:

How are you preventing and preparing for surprises that could impact your board or committee?
What else can you do to support board members’ efforts to better understand the institution and address its risks?

Questions for Board Members:

What questions haven’t you asked about your institution, perhaps because of time limits or because of concern that others might think your question is unnecessary?
Does the board need greater focus on the future to help prevent negative surprises?

Questions for Chief Executives and Senior Staff: