Time to sound the alarm on integrity

21st July 1995 at 01:00
John Graystone looks at how to keep managements honest

A company in the United States (where else?) has invented an unusual clock. A buyer estimates his or her life expectancy; the clock calculates the number of seconds to this date and, when set, winds down second by second to zero. Apparently it concentrates the mind wonderfully.

The closure of South Thames Training and Enterprise Council and the reports on Wilmorton and St Philip's colleges had perhaps a similar effect on further education and sixth-form colleges.

The widespread public concern at the operation of quangos is well documented. Indeed "quango" has become a pejorative term. A more helpful term to describe a governing body of an FE sector college is "local appointed body".

According to a recent Rowntree Trust study, local appointed bodies are characterised by:

* responsibility for purchasing andor delivery of one or more public services;

* a degree of self-government and policy-making autonomy;

* operation over an area smaller than a region;

* the chair and majority of non-executive members are appointed by the body itself, another public agency or a Government minister - not being a local authority joint committee or joint board.

The Committee on Standards in Public Life chaired by Lord Nolan is now turning its attention to the governing bodies of further and higher education institutions where its main focus will be on principles underlying conflicts of interest, property and appointments.

Nolan's first well-publicised report made a series of key recommendations aimed at public bodies:

* appointments to boards should be made on the basis of merit; * the appointments process should be open; * the Government should review rules governing propriety and accountability; * openness and independent monitoring of bodies should be extended; * audit arrangements should be reviewed; * it should be mandatory to have a code of conduct for board members.

How do governing bodies of FE and sixth-form colleges match up against these? First, many governing bodies are now establishing clear procedures for appointing new members. They recognise that governors have financial and other responsibilities and that their appointment must be treated systematically.

Some, following the example of NHS trusts, are advertising for new members. Others have set up appointment committees with the job of identifying suitable potential candidates. Procedures need to be as open as possible to ensure that members are appointed on merit.

Second, the Further Education Funding Council's requirements (almost to the point of obsessiveness) on accountability and audit arrangements, and the monitoring role of inspectors and, ultimately, the National Audit Office, seek to ensure the highest standards of probity within FE. The deliberately wide distribution of the Wilmorton and St Philip's reports was a timely reminder to governors of what can go wrong in the absence of careful checks and balances.

Third, it is not mandatory for a governing body to adopt a code of conduct. Even two years ago, codes were a rarity. A sea change has taken place.

Initial interest came from the experience of community colleges in the United States where some trustees (equivalent to governors) have abused their position. Trustees have interfered directly in the management affairs of colleges - even to the extent of hounding individual teachers who may have given poor grades to a member of a trustee's family. Several college presidents have dismissed staff members for gross misconduct only for them to turn up on the board after local elections with the sole intent of reaping revenge.

These concerns led to many US boards adopting ethical codes. They also help explain the popularity of one UScollege management guru's ideas. The radical policy governance model of John Carver emphasises that boards concern themselves with overall policy and strategy and "stay out" of management.

In December 1992, the central recommendation of the Cadbury report on corporate governance was that all public companies should subscribe to a code covering the behaviour of their boards. Boards should include non-executive directors "of sufficient calibre and number" to bring "an independent judgment to bear on issues of strategy and performance". They should be free from any business or any other relationship "which might interfere with the exercise of their independent judgment". The view held by former Lonrho chairman Tiny Rowland and others that non-executive directors were "like decorations on a Christmas tree" overnight became outmoded.

In 1994, the Further Education Unit and the Staff College published a report recommending that governing bodies follow the example of Cadbury by adopting their own codes of behaviour. The FEFC (England) Guide for College Governors strongly commended a code of conduct with 12 statements to underpin the behaviour of board members. The FEFC has recently drawn up its own code covering corporate responsibility and members' individual conduct.

In a recent article in The TES (June 9), I referred to a survey conducted by the Further Education Development Agency showing that three-quarters of FE and sixth-form college governing bodies have drawn up - or are in the process of drawing up - codes of conduct. Roughly half have adopted the code set out in the FEFC guide; the other half are adopting the lengthier and more legalistic model adopted by the Colleges' Employers' Forum (CEF). And a number of boards have adopted a voluntary register of members' interests, open to public inspection. These cover financial and other interests which might conflict with the independent judgment of board members. The CEF is currently consulting its members on a proposed register.

From my own experience, the process of adopting a code of conduct is a useful learning experience. It enables members to clarify their own roles and responsibilities, their relationship with each other and with the principal. It can also bring to light underlying differences of view which need to be resolved if the board is to operate effectively.

The 7,500 governors in England and Wales might justifiably feel irritated by the amount of attention and scrutiny they are facing. They can sympathise with Sir Peter Hall who compared being director of the National Theatre with the statue of Nelson in Trafalgar Square - "you have a good overview of things but the pigeons take a great deal of interest".

The harsh reality is that they are unpaid custodians of more than Pounds 3 billion of public money and much is expected of them. And they don't need ticking clocks to remind them.

John Graystone is chief executive of the Association of Colleges in the Eastern Region.

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