I recently met with AGB’s Council of Board Chairs to discuss current and emerging issues spanning the pandemic; financial sustainability; cyber risk oversight; strategy development oversight; activism; mergers and acquisitions (M&A); shared governance; workforce preparation; and justice, diversity, equity, and inclusion (JDE&I). With topics such as these, you can only imagine the energy in the virtual room.
The purpose of sharing my key takeaways from this meeting is to inspire board chairs to serve as strategic partners with their presidents and leadership teams through insights that can shape future board agendas and discussions. For clarity, these men and women are leading from the front and inspiring from the rear—a phrase I learned during my service in the U.S. Marine Corps 30-plus years ago. Board chair leadership is essential to help ensure colleges and institutions bolster their abilities to serve their students, faculty, alumni, researchers, and other members of their communities with distinction.
- The primary discussion was financial sustainability. How can and should board members oversee the financial health of their institution? While volumes have been written on this topic, a suggested first step is to understand historical and future net tuition revenue trends—both in absolute and per full-time equivalent (FTE). Another key metric is to understand expenses per FTE trends. For institutions with shared medical centers, for example, it is important to exclude faculty compensation from medical services. The primary outcome of this exercise is for boards and board members to ensure their institution establishes and executes a plan that is financially stable—i.e., revenue is aligned with expenses. Sounds basic, but unfortunately, many institutional budgets were not stable even before the pandemic struck. This brings me to our second discussion topic.
- Strategy development oversight. Our council members suggested that boards step back and evaluate their institutional missions to discuss the relevance of their current mission within the context of current and anticipated market and student demand. One member mentioned that some employers are requiring “shovel-ready graduates”—an interesting way of referencing workforce readiness. While the faculty is responsible for academic quality, development, and delivery, the board is accountable for everything that happens or fails to happen across the system, institution, and campus. The key takeaways from this part of the discussion were to ensure the board and president work collaboratively to develop and maintain a strategy that is current to reflect anticipated, future outcomes of the institution and to ensure that strategy is the foundation of all board agendas and meetings.
- Our strategy discussion evolved into a conversation about shared governance. I mentioned that I have heard that some leaders prefer the term “collaborative governance” to more effectively articulate that institutional leadership is a partnership—the faculty being responsible for academic quality, development, and delivery while the board, president, and leadership teams are responsible for strategy and financial health of the organization. As mentioned above, the board is accountable for collaborative oversight and delegates responsibility to the president to develop and execute. Notably, many council members shared that the pandemic is an accelerant to change, and accelerated change is causing friction among boards, leadership teams, and faculty. I strongly suggest boards and leadership teams leverage faculty insights as they review and refine their missions while shaping their new strategies and consider using collaborative governance to frame the board, president, and faculty partnership.
- Throughout the discussion JDE&I were also discussed. We probably could have discussed these topics during the entire meeting, for these board chairs recognize that creating a sense of belonging within and across their communities is essential to building trust and distinction as their boards oversee institutional vitality, risk, and student success. Further, these board chairs discussed AGB’s Justice, Diversity, Equity, and Inclusion Initiative to understand our strategic rationale, outcomes, and next steps. Our council members supported our strategic direction to weave JDE&I as a thread throughout all of our programming, and they supported the need to create JDE&I board policies that manifest across campus.
- Cyber risk oversight was also discussed, and I mentioned a conversation I had in August with Keith Krach, the under secretary of state for economic growth, energy, and the environment at the U.S. Department of State—as well as a roundtable we conducted with board members and Krach. These discussions referenced this letter from Under Secretary Krach to board members regarding threats to academic freedom, intellectual property theft, and financial exposure. I encouraged members of our Council of Board Chairs to ensure this topic is on future board agendas and to ensure presidents have their chief information security officers and chief information officer/chief technology officer teams proactively manage cybersecurity. Cyber risk was woven into discussions about oversight of financial exposure and intellectual property theft via cyber, especially since issuers that do not follow U.S. GAAP will be delisted from U.S. exchanges in 2021.
This was a lively discussion, and the overall key takeaway is that our council members are asking themselves, their board members, and their presidents: How will we survive into the future and what will we look like in 5-10 years? Many are considering M&A—from both sides of the coin. Strategic governing boards should always be asking and discussing how can we collaboratively strengthen our strategies to focus on key priorities, and what should we be doing more of, less of, differently, and better to build trust across our vibrant communities now and into the future?
This council will meet again in December, and we will discuss these topics and more during our the upcoming Foundation Leadership Forum (January 25–27), the Board Professionals Conference (April 6–8), and the National Conference on Trusteeship (April 12–14). Registration for these virtual events is now open and I look forward to seeing you there.
Henry Stoever is the president and chief executive officer of AGB.
- “The AGB 2020 Trustee Index,” an AGB report
- Top Strategic Issues for Boards 2020-2021, an AGB book
- “College at a Crossroads: Closures and Mergers” by David Tobenkin, Trusteeship May June 2020