Systems theory—generally associated with business management—can help trustees better clarify the roles of institutional governance, administration, and management. The authors explain how to use this discipline to increase the effectiveness of higher education leadership and governance during these increasingly turbulent times.
In more than two decades of helping college and university presidents and boards to better understand and execute their fiduciary roles and responsibilities, AGB Senior Consultant Joseph G. Burke has refined their leadership quandaries to three commonly asked questions:
- What is the proper role of governing boards in their relationship to the administration and management of their institutions?
- How can boards provide incentives for their members to become more engaged and productive?
- What is the most effective process to orient new trustees to the governance process?
Guiding leadership through these questions has become increasingly complex in recent years, as public skepticism about the value of higher education, turbulence in the legislative and policy sectors, and challenges to the business model have combined to alter long-accepted operational practices, demanding greater engagement by boards and new modes of collaboration with administration and faculty.
During Burke’s conversations with two leading management the-orists and practitioners—William Donaldson, management professor at Christopher Newport University and author of the book Simple Complexity: A Management Book for the Rest of Us: A Guide to Systems Thinking, and A. Paul Bradley Jr., president of The Bradley Group, LLC—the concepts of systems theory emerged as an approach to better understand and explain the role of higher education governance at a particularly uncertain time. The interactions resulted in three significant governance findings:
The proper balance between governance, administration, and management;
The importance of the development of annual board goals to ensuring a proper board work agenda and focus through-out the year; and
The crucial importance of adding four focal questions to every new board member’s orientation.
A FEW BASICS
Organizational theorists have long agreed that management is a discipline that can be taught and learned. In the 1950s, Lawrence A. Appley, working with Peter F. Drucker, George Odiorne, and others proposed what he called the “core concept of management,” which became the core of the management development industry. Today, every business degree program addresses the subject and each element: planning, organizing, managerial control, creating and maintaining a nurturing culture and climate, promoting learning and development, and leadership.
In his 2017 book, Simple Complexity, Donaldson addressed management as a discipline from a systems point of view, as explained by management expert Peter Senge:
Systems thinking [is] a way of thinking about, and a language for describing and understanding, the forces and interrelationships that shape the behavior of systems. This discipline helps us to see how to change systems more effectively, and to act more in tune with the natural processes of the natural and economic world…. It is the discipline that integrates the disciplines.
In his book, Donaldson offered the proposition that all enterprises are systems; in fact, they are systems of interconnected systems. He then demonstrated these systems using a construct called a “holon” that exists simultaneously as a self-contained whole and as a dependent part of another whole.
One other breakthrough idea in Donaldson’s book was identifying an element that Appley’s “core concept” did not specifically include: governance. In Appley’s construct, the element of governance was embedded in the element of leadership. Donaldson suggests that governance is, and should be considered, a separate, distinct element—a holon that affects and is affected by every other element and the entire system. In other words, effective management of the enterprise demands understanding not only the interaction of the traditional six elements of management but also a seventh element: governance, the purview of boards.
THE PROPER BALANCE BETWEEN GOVERNANCE AND MANAGEMENT
Our experience with boards tells us that members regularly ask, “What is the proper role between higher education governance and institutional management?” This question appears to become increasingly more significant and recurrent during turbulent economic and politically disruptive times in higher education around the world. One reason is the natural stresses that occur in a system undergoing change and the resultant uncertainty; another is the impact of technology, which, among other things, is revolutionizing content delivery, and has accelerated decision-making processes while providing timelier and more abundant trend data. But during our discussions about the board role in management, it seemed to us that this query is far too broad, and it would be more productive to address the issue with this question:
What is the proper role of board governance as it relates to each of the other managerial activities (holons): leader-ship, strategy development, organization structure, managerial control, culture and climate, and learning and professional development?
Here are some helpful descriptions of each of these elements:
Leadership: The board needs to model leadership by both its collective and individual behavior. One definition of lead-ership is “the process of getting people to want to do what they need to do.” The board has a significant role to play in this, nor-mally in partnership with the president.
Strategy Development: According to Ram Charan, the author of Boards That Deliver: Advancing Corporate Governance from Compliance to Competitive Advantage and many other books, the board should play a role in four types of decisions related to strategy.
First, he states unequivocally that only the board can make a “strategic bet,” which defines a decision that essentially involves “betting the farm.” One example of this is Cornell University’s decision to build a tech campus in New York City. Charan notes that the administration, faculty, and others can offer advice and support, but the board should make the final decision.
A second dimension is what Charan calls “portfolio planning,” wherein the organization determines its “core products and programs” (e.g., majors, degrees). Here he suggests that the board should rely heavily on the administration and faculty for data and analyses (though board members may also play an active role in investigations). While board members most likely will engage in serious dialogue, they may simply affirm the administration’s decision unless it entails a “strategic bet.” For Keuka College (when led by Dr. Burke), the decision to establish programs at several Chinese universities exemplified portfolio planning, as was the development of graduate education and an accelerated degree program called “ASAP.” The board clearly was involved in these decisions, including some of the negotiations, and approved the initiatives, but the president and his staff did the heavy lifting.
A third dimension of strategic planning is “program planning” (Charan’s label is “business unit planning”). Here the board’s role is to assure itself that the various “business units” (i.e., the divisions, departments, and key support staffs or offices) are both developing and executing plans. This should lead to periodic board committee, and perhaps full board, review of documents and possible presentations by various business units, especially when they hold primary importance or face challenges.
The fourth dimension is what Charan calls “operational planning,” focused on assuring the efficiency and effectiveness of administrative departments, and programs not directly related to the curriculum (e.g., career counseling, diversity activities, sports). Again, the board’s role here is not to participate in the planning, but to assure itself that meaningful planning is taking place and to get involved if problems occur.
Some other areas where boards should be involved in university and college planning include discussion and agreement with the mission, vision, and core values. These areas always are within the board prerogative, though the documents generally are developed by others and presented to boards for discussion, comment, and final approval.
Managerial Control: The measure of effective control is the achievement of planned results. The four strategic decisions listed above should help define a structure for such oversight. Thus, the board’s role in managerial control is to insist on execution and clear, regular reporting in the appropriate committee, and—if there are overarching issues such as enrollment, finances, or fundraising, or serious deficiencies in an operational area—to the board itself. (One exception to the board’s maintenance of distance in monitoring is in the audit, where direct oversight with help from external organizations is both appropriate and legally required.)
Organization: The purpose of organizing is to achieve synergies among departments of the organization. This typically is a role assigned to the president. The board only becomes involved when consultation is requested. But board members need to be observant and declare when they see “noise” in the system, usually because of failure to achieve planned progress, or evidence of organizational friction between departments, schools, or colleges.
Learning and Development: The board’s role is twofold here: orientation and ongoing training of members and making sure that others at all levels of the institution, including the president, have opportunities for growth and development. For instance, many boards have their governance committee oversee the member orientation process in collaboration with the administration. Other boards provide funding for the president and board members to attend national conferences and work-shops. Few boards maintain close oversight of the growth and development of others at all levels of the institution, but when they do, a committee generally accomplishes such work.
Culture and Climate: Any organization can be aided or impeded by the “tone at the top,” which primarily is established and maintained by the board and senior management. A clear responsibility for the board is to clarify the culture and climate it expects and to periodically monitor them. Vehicles such as “360-degree feedback” of administrators and/or “best places to work” surveys can provide insight and help identify issues.
The overall role of the governing board may fluctuate due to other variables, including whether an institution is public or private, large, medium-sized, or small; primarily has a teaching or research mission; and/or has a liberal-arts, professional, vocational, or other orientation. Institutional culture and history are also important.
To maintain peak performance, governing boards need to periodically utilize the seven managerial elements to review their role in relationship to the president and senior administrative staff. Rather than addressing the specific impacts, our conversations concluded that the best way for a governing board to determine the most appropriate governance-management balance is to discuss and determine what appears to be the most effective mix in each of the seven institutional areas identified above. This review process will do much to clarify the governance-management relationship and greatly enhance overall board effectiveness. An annual retreat is probably the best set-ting for this work because progressing area by area during sequential board meetings requires more time and patience than most members will exhibit. Representatives of the president’s cabinet or senior administrative team should also be included in these review sessions.
ANNUAL BOARD GOALS
Last fall, AGB published An Anatomy of Good Governance in Higher Education, the product of two days of discussion by leading governance experts from across the country. The deceptively short and cogent book sets forth an objective standard for good governance, based on the continuous discernment and synthesis of three fundamental board functions: right focus, right composition, and right relationships. It builds on AGB’s authoritative Effective Governing Boards and the 2014 national commission report, Consequential Boards: Adding Value Where It Matters Most, and provides guidance that is particularly ger-mane to a systems approach to governance.
Anatomy suggests a discipline guiding the development of the board’s work agenda, focused on the most significant and strategic agenda issues required for long-term institutional success. For this to occur, boards should spend time at the beginning of each year:
- affirming the mission, vision, and core values;
- identifying key institutional strategic objectives for the year, and perhaps beyond; and
- determining which committees can best address each strategic objective, either exclusively by one group or collaboratively by the board or the president and the administration.
This joint review exercise most likely should result in the identification and prioritization of the most important and consequential institutional tasks (right focus) and a far better understanding
of which people on the president-administration-board team have the greatest capacity (experience, skills, contacts, etc.) to achieve success (right composition), and move the institution toward its strategic objectives and goals. The board executive committee should then assign key board tasks to appropriate standing committees or establish temporary joint or special committees to oversee successful accomplishment of the tasks (right relationships). Finally, the board should assign to the appropriate standing committees any other significant tasks and timelines.
The systems theory approach to this goals exercise emphasizes the interconnectedness of differing types of institutional activities and avoids undue concentration on a single-issue area. It also provides boards with a better perspective to determine how goals and objectives can be linked together across multiple committees and allows for a better synergy and integration of board efforts.
Goals integration also helps to prioritize and organize a board’s work agenda. At the same time, it allows each committee and individual board member to better understand the overall institutional missions and strategic goals while supporting committee goals. It is extremely important for a successful board. In addition, it will ensure that all board members have a keen understanding of their own duties. This will result in greater overall engagement and commitment.
BOARD MEMBER ORIENTATION
The final questions frequently asked by boards include “What is the role of a governance trustee?” and “How do we effectively orient new trustees to governing board vision, values, processes, and expectations?” Donaldson’s Simple Complexity text provides context and solutions to these fundamental questions through four basic questions for all new employees and board members:
- What am I expected to do?
- Where do I fit in?
- How am I expected to act?
- How do I add value?
These questions form the foundation for an effective board member orientation program.
In basic “systems theory,” all elements of an organization are interrelated; a change in any one of them causes change in all. Therefore, it is imperative for each governing board to develop and maintain at least a moderate understanding of the major components of the institution (i.e., the “governing holon”), which can be accomplished through foundational documents such as board and committee policy manuals/handbooks; organizational charts and strategic plans; a mission, vision, and values statement; and board and committee minutes, among others.
These written documents should be accompanied by a series of meetings and discussions with both board and administration leaders and the president, thoroughly addressing the four questions and including a primer on the fundamental roles and responsibilities of trustees as fiduciaries.
FINAL THOUGHTS
The authors’ discussion of systems theory and its value in better understanding higher education governance can be used to address three frequently asked questions about governance:
What is the proper role of our governance board in relationship to the administration and management of our institution?
How do we make our board members more engaged and productive?
What is the most effective process to orient new trustees to our board?
Preliminary analysis indicates that the discussion is just the start of developing a deeper understanding of lessons that systems theory can provide regarding the complex nature of higher education governance and its relationship to management. Further work into this relationship in turn will lead to a better understanding of the governance element. This in-depth understanding will allow a greater capacity to leverage all elements of the system to increase institutional productivity, achieve greater levels of sustainability, and improve overall educational quality.
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