Trusteeship Podcast Episode 53: Board Independence and Neutrality

Welcome to the Trusteeship Podcast From AGB, the Association of Governing Boards of Universities and Colleges. We cover everything higher education leaders need to know about the challenges facing our nation’s, colleges and universities. More important, we provide the facts and insight you need to solve those challenges and to be the storytellers and advocates higher education needs.

Barbara McCuen Jones:
Today, we’re talking about the importance of board independence with AGB President and CEO Fram Virjee. Fram has led AGB since August 2024, following a distinguished career in the Cal State University system, where he held roles as executive vice chancellor, general counsel, secretary to the board of trustees, and most recently as the president of California State University Fullerton from 2018 to 2023.

I’m Barb McCuen Jones, AGB senior director of digital solutions, and I’m looking forward to our conversation with Fram today. Fram, thanks so much for joining me. You’ve been with AGB for about six months now. What’s the most surprising thing you’ve discovered in that time?

Fram Virjee:
Well, I think likely the amazing job that our AGB staff and team does to provide the amazing, robust, and rich content and programs to our members. As an outsider looking in, I’ve always assumed that AGB had a large complex staff of hundreds to ensure that all the work was getting done. Trusteeship magazine, podcasts, blogs, programs, institutes, peer-to-peer convenings, white papers, I mean, the whole kit and caboodle. In fact, we are a lean and mean active machine, a trim staff of about 45 that accomplishes so much. It makes me both very proud and a little bit amazed. The people I deal with at AGB are full of professionalism, acumen, commitment, and mission as well.

Barbara McCuen Jones:
Before you started at AGB, you were the president of Cal State Fullerton. How does that experience inform your leadership of AGB?

Fram Virjee:
Well, as president of Cal State Fullerton and also in my prior role as executive vice chancellor and general counsel and secretary to the board, I dealt regularly with CSU trustees and their collaborative relationships to presidents, all 23 presidents. I found that the interaction and collaboration and mutual support of trustees to presidents and chancellors, is key to success, governance, the understanding of the relative roles, the functions and charters in the overall governance and leadership of the institution. It’s essential. I learned in both my roles how to communicate, collaborate, and how to support each other as well.

Barbara McCuen Jones:
And as you get to know our members across the country, what are you hearing? What’s on their minds?

Fram Virjee:
Well, at this moment in time, most of them want to know what’s in store for higher education. They’re worried about accreditation, diversity, equity, and inclusion efforts, financial aid enrollment, foreign students, endowment and tax policy. They’re even more concerned with what we at AGB have identified as our members’ top strategic issues facing colleges and universities at this time period. That would be board independence and leadership, student success, the student experience, inclusion on campus, leadership, succession and support, and the business model, and innovation and digital transformation.

Barbara McCuen Jones:
You mentioned board independence is such an important issue. And that’s interesting because in a time where boards and institutions are the subject of some scrutiny from lawmakers, but when you talk about independence, you don’t just mean political independence. Is that right?

Fram Virjee:
Well, that’s definitely true. When I talk about board independence, I’m referring to the autonomy and the freedom of a governing board to comply with their fiduciary obligations, to hold fast to the mission, vision, and values of their institutions. To make decisions that are in the best interest of the institution that the board serves without undue influence from external parties or internal factors, as well. So that’s not just simply an issue of independence from political influence. Instead, at today’s colleges and university, it is freedom from all forms of undue influence and pressure, whether from donors, alumni, supporters of our athletic programs, and of course political influence, politicians and policymakers.

This idea, this concept of board independence is fundamental to effective governance in higher education because it ensures that trustees can act as fiduciaries, prioritizing the institution’s mission and long-term sustainability over any particular interest group or external pressure. It allows trustees to collaborate with institutional leaders and support them as their presidents, their chancellors, and to make strategic decisions that will secure the institution’s long-term future. Ultimately, board independence is about maintaining a governance structure that enables trustees to set policies and make decisions that are in alignment with the institution’s goals, free from external control or internal conflicts of interest. This autonomy, it’s crucial to fostering accountability, transparency, and for effective leadership within higher education institutions.

Barbara McCuen Jones:
Let’s talk a little bit about why board independence is important. Is it just about good governance or is there a tie to the larger mission of higher education as a whole?

Fram Virjee:
Can I say yes and yes?

Barbara McCuen Jones:
Yes.

Fram Virjee:
On the most basic level, board independence is ensuring that the right decisions are made for the right reasons in the best interest of the institution, not the preference of a particular trustee. But beyond that, board independence is foundational to the institutional autonomy and independence of our institutions. Again, we’re not just talking about politics here. We’re talking about institutions being able to offer and assure a neutral and open arena for discussion and discovery on the campus. The ability to assure that colleges and university campuses remain the crucible of ideas, the place where there is freedom to explore all aspects and ideas, to seek the truth and produce knowledge. Our nation’s institutions of higher learning serve not only as training grounds for particular locations, which they do, but also as incubators for discovery and the debate of new ideas, entrepreneurship, and innovation for our communities and for our nation.

This process is important. It takes root.

Barbara McCuen Jones:
Plenty of folks come to boards because they’re connected with the institution through various avenues like their alumni status, support for athletics, interest in a particular program or particular school. What does independence mean for them in real-world terms? What does independence mean for those board members?

Fram Virjee:
Well, you’re so right. Most trustees or board members come not with a lot of knowledge about higher ed, but with some portfolio. With this question, you kind of hit the nub on the head. As trustees with fiduciary obligations to the institution, not some other constituency or appointing authority, independence means that they assure that they focus on the mission, vision, and values of the institution that they’re serving.

This idea, it is broad and grand in concept, but it might be actually harder to follow in practice. Maybe if I give you an example, that might make the point. Think about a student trustee or a faculty trustee or an alumni trustee who may be appointed through a process that gives them a sense that they will be representing their constituency. But actually, once these folks are on the board, they owe the same fiduciary obligation to the board and the institution as any trustee. To listen, engage, and make decisions from a perspective of what is best for the institution, not for a particular constituency or a particular group, using the mission, vision, and values of the institution as that guide, as the lens through which they make those decisions.

As general counsel, I had these conversations repeatedly with student alumni and faculty trustees. As trustees with a fiduciary obligation to the institution, I would tell them you are bound to consider issues not from the perspective of students or alumni or faculty, but from a perspective of, what will be best in serving the institution in the long term and help to actually preserve and achieve its mission?

Barbara McCuen Jones:
So how can they ensure they aren’t inadvertently driving a particular agenda when trying to be an engaged member of the institution’s community?

Fram Virjee:
Again, very important and fundamental question, with actually a fundamental and a straightforward answer. The real answer is, leave your perceived representative status and resulting biases at the door. Rather than a trustee simply reviewing an issue from a position of preconceived notions and the inherent biases that come from that preconceived perspective, trustees should review and engage on issues from a position of neutrality. They should approach each issue and each decision with a desire and an intent to learn all sides of the issue at hand. Asking questions, challenging notions, and seeking to achieve and actually engage in listening to all who are present and their positions on an issue before coming to a conclusion. For example, trustees shouldn’t simply accept the administration’s recommendation, but should probe, ask questions, be curious. This can be especially true when there seems to be a divide on the board about an issue. A good trustee that is seeking to assure board independence and neutrality won’t simply dig into their position and their preconceived notion of it, but will seek mutual understanding, look for common ground.

Barbara McCuen Jones:
Whose responsibility is board independence? Is the president expected to say something when it looks like a board member or the board as a whole is pushing a particular agenda? Or does that responsibility rest with the chair? And can AGB help an institution navigate this kind of thing?

Fram Virjee:
Well, at the core, board independence is the primary responsibility of the board itself as an entity, of each individual board member in the collective. Governing boards are expected to preserve institutional independence and autonomy, to demonstrate their ability to govern as established in their charter, their state law, their constitution, their policies and procedures. And this includes maintaining independence from undue influence, whether external or internal. That said, the board chair plays a crucial role in ensuring board independence by setting the tone for governance and addressing any issues that might arise regarding board members pushing a particular agenda. The chair should look out for that, be aware of that, should facilitate open discussions and the presentation of all views on all issues before moving to decision. And in doing that, ensure that the board’s focus remains on the institution’s fiduciary obligation to maintain the mission and strategic objectives of the institution.

As for the president, well, while he or she is not primarily responsible for board independence, it can play a supportive role by communicating concerns to the board and to the board chair if they observe actions that may seem to compromise the board’s independence. The president can provide valuable insights and work collaboratively with the board to address those challenges as they arise.

Now, as for AGB, we can do this and do this regularly. We assist institutions in helping board members to both understand their rules as independent fiduciary agents of the institution and then navigate the challenges relating to board independence. We share toolkits, best practices for navigating these challenges. We offer template policies and board rules that support and encourage this important approach, and we offer tailored consulting to assist in assignments and assessments for particular plans of action.

Barbara McCuen Jones:
How does the issue of board independence intersect with the increased skepticism we see around the value of higher education?

Fram Virjee:
Well, we are certainly seeing that skepticism today. Today, as never before, higher education finds itself in the headwinds of that skepticism. It finds its offerings under the public microscope with an insistence that higher education institutions demonstrate the value of what they provide. Boards have to ensure these days that their institutions deliver outcomes worth the investment that’s being made by students and their families and the public and other funders. Board independence is essential to this effort because it allows boards to act as fiduciaries without undue influence from any constituent group or economic interest externally or internally. The independence enables boards to focus on strategic goals, evaluate performance using data, make decisions that enhance institutional values and transparency. By doing this, boards can help address public concerns about the cost and effectiveness of higher education and begin to rebuild trust and demonstrate the sector’s value to society. Board members are also better positioned to ensure long-term sustainability by addressing financial challenges and delivering high-quality education at a lower cost. This strategic focus can help counter skepticism by showing that higher education institutions are committed to meeting societal needs, maintaining fiscal health, and building a better tomorrow.

Barbara McCuen Jones:
You mentioned our toolkits and best practices, our tailored consulting approach, what other resources does AGB have available for boards that want to ensure they’re taking an agenda-neutral approach to governance?

Fram Virjee:
Well, you look at our publications such as AGB Board of Director Statements of Influence, Impacting Governing Board Independence and Leadership, our toolkits located at agb.org/influences, our upcoming marquee events, including the Foundation Leadership Forum at the Board Professionals Conference, and of course our National Conference on Trusteeship and our consulting services. Altogether, AGB offers guidance and best practices that help boards maintain their independence and effectively govern at their institutions. That’s what we do. That’s what we’re all about.

Barbara McCuen Jones:
Fram, thanks again for joining me today. These are terrific thoughts for our members and leadership from you and from AGB. We appreciate it. Again, please see agb.org/influences for more help on this. We look forward to our members joining us at the Forum at the end of January, and again at the Board Professionals Conference and the National Conference on Trusteeship in late March and early April this year. Thank you, Fram.