Allan Schofield reviewed the research on effective governance across a multitude of commercial and not-for-profit organisations in a 2009 paper for the Leadership Foundation for Higher Education called What is an Effective and High Performing Governing Body in UK higher education? (bit.ly/ASchofield).
“[It is] important for members of a governing body, and those working with them, to think about what effectiveness means to them,” the report states. “It can also be helpful to discuss the concept within boards in order to reach some broad agreement before trying to measure effectiveness using governing body member surveys or some other means.” It adds: “To move from looking at poor governance to identifying what is effectiveness in action, we need ways of thinking about and defining effectiveness and its component parts.” To identify what effective governance looks like, Schofield sets out five perspectives based on lessons from other sectors.
1. Management perspectives
The “policy governance model” was developed by John Carver in the 1970s and is based on a rigorous separation of governance from management. The board is responsible for governance and concentrates on organisational “ends” (or mission) while managers are left to concentrate on the “means” to achieve them. In this approach, the main involvement of the board in relation to “means” is to define what a chief executive must not do: “means limitations”. The model is based on avoiding too much delegation to committees to avoid confusion about who is responsible for what. The purpose of the board is to ensure that stakeholders’ wishes are fulfilled. Carver’s model prescribes that the position of board chair and chief executive must be separate and board membership must be suitably skilled. The approach generally requires small boards.
2. Agency perspectives
So-called “agency theory” was a dominant approach in parts of the not-for-profit sector – for example, charity boards – over a number of years. The idea is based on ownership being separate from the control of an enterprise, with the assumption that the stakeholders of an organisation will have different interests from its managers. As the stakeholders do not have control over daily operations, the role of the board is to act in their best interests. The model suggests that too close a relationship between governors and leaders should be avoided. There may be little trust between board members and managers – and, therefore, they robustly hold them to account.
3. Stewardship perspectives
In contrast, “stewardship theory” is based on the idea that the interests of the stakeholders and managers of an organisation are shared – and managers will act in the interests of the stakeholders because such actions are also in their own interests. This theory does not anticipate problems arising from a close relationship between managers and governors. It highlights a board’s role in improving strategy and decision-making. The model also suggests that governance works best when the chief executive has complete control over an organisation.
4. Political perspectives
This model argues that an understanding of external relations is crucial to effective governance. Schofield says members of the boards of respected cultural institutions are carefully selected to be drawn from “recognised professional, social or cultural interest groups”. “How this is done, and the way that those interest groups are then involved (or not) in governance may be a highly political process, and any attempt to assess the effectiveness of such boards must – at least – acknowledge such a dimension,” he adds. Because of the strict rules that surround the appointment of governors in further education, this model may not have as much bearing on colleges.
5. Partnership perspectives
The partnership model offers a collegiate perspective on effective governance and the retailer John Lewis is one such example of this in action – although cooperatives also share elements of this. Schofield says this structure can be successful for a number of reasons: “A concentration on ‘core business’; a consistent implementation of defined core values; high-quality products and services; the absence of shareholders seeking to maximise share value; strong institutional loyalty amongst partners (partly because of progressive employment policies); and an absence of diversity in organisational structure.”