Educating boards

  • Date:01 Mar 2015
  • Type:Company Director Magazine
Domini Stuart examines the latest trends in school governance and discovers that globalisation and the search for diversity of skills are dominating boardroom discussions. 


When Glen McCracken FAICD joined the board of trustees of Toowoomba Grammar School, his tasks included checking every payment made by the school. “That was 25 years ago, when the fundamentals of school governance were not so well understood,” he says. “The role of directors was poorly defined and, if we couldn’t afford to employ someone with a particular skill, the job was generally taken on by the board.”

Since then, he has seen very significant changes. “Now I think it is widely understood that running a school is like running a sizeable business, and that directors, or in our case, board members, need a similarly professional approach to governance,” he says.

Anything less would leave them on dangerous ground. “Directors appointed to school boards and councils have exactly the same legal duties as directors of for-profit companies,” says Gary Seymour GAICD, director of Independent Schools Victoria and Chubb Insurance Company of Australia. “They must comply with the Corporations Act 2001 and can incur liability for breach of their fiduciary or legislative obligations.”

They are also under increasingly close scrutiny. “Parents, regulators and the wider community are all increasing their demands on governing boards to be more accountable,” Seymour adds. “They have become more vocal and less forgiving.”

Professional skills
“Like a corporate board, the school board is there to nudge management in the right places and at the right time,” says Mark Puzey FAICD, a management consulting partner at KPMG who recently retired after eight years on the board of St Hilda’s Anglican School in Perth. “Your role is to assess the capability of management, share your wisdom, provide food for thought, challenge in a constructive way and then help steer the course of action.”

This requires high levels of skills and experience. “All directors need an understanding of financial data, risk management and strategic thinking,” says Carolyn Anderson GAICD, director of Toorak College in Mount Eliza, Victoria. “They must also know how to attract, maintain and finance high-quality staff and develop succession plans for the board itself as well as senior management.”

In a school, the safety and well-being of the students are paramount. “Directors must be satisfied that all risks have been covered and that a comprehensive system of risk management has been established and is well maintained,” says Seymour who, during his time as managing director of global risk advisory firm, Willis Australia, helped to develop the Independent Schools Victoria insurance and risk management programs.

Puzey suggests that directors of similar schools discuss their risk-management strategies. “The issues are generally very similar and it’s a good way of ensuring there are no blind spots,” he says.

One of a board’s most strategically important tasks is appointing the chief executive officer (CEO) or, in a school, the principal or head. “The principal’s strengths must be aligned with the school’s strategy, and also its ethos and the type of education it is committed to providing,” says McCracken, who has appointed two principals in his 16 years as chairman.

“The relationship between the principal and the chairman is also critical. A school would struggle to function effectively if they had fundamentally different views.”

The board must then monitor the principal’s performance which, according to Anderson, is a major and ongoing challenge. “You have to be sure the directors have the requisite insight into the way the business operates to monitor the principal effectively and so safeguard the long-term viability of the school,” she says.

Funding
A recent surge in the number of births has created very strong demand for places for younger students, which should flow on for at least the next decade. “There is some general economic uncertainty overlaying that, though independent schooling does tend to be the last thing parents let go when times are tough,” says Bruce Linn FAICD, chairman of St Peter’s Collegiate Girls’ School and head of Bruce Linn & Associates, a governance and strategic management consulting business. 

As society as a whole becomes more consumer-orientated, schools of all fee levels are sharpening their focus on value. “They have become very conscious of their affordability, but the uncertainty of government funding means they must keep a close eye on sustainability,” says Dr Geoffrey Newcombe, executive director at the Association of Independent Schools of New South Wales. It’s very easy to fall into the trap of giving a lot of scholarships and bursaries then finding that the income stream isn’t sustainable.

Many schools are dependent on the generosity of the school community for the construction and maintenance of capital infrastructure. However, economic uncertainty and growing competition for the charity dollar could both have a negative impact on donations. “The board must develop and implement an effective fundraising strategy,” says Puzey. “Various groups within the school need specific roles, and it’s up to the directors to ensure there are no gaps or overlaps.”

Emerging challenges
Globalisation and digital technologies are driving rapid changes in education. “Directors need to keep abreast of what is happening globally,” says Anderson. “They must be able to sift through the constantly-changing educational trends and implement those which will make a difference to student learning outcomes. They need to keep abreast of technology, and should also be thinking about future learning needs and the kinds of spaces that will be necessary to cater for them.”

Boards must also prepare for new kinds of competition. “Over the next five years, I expect to see some serious competition from charter schools, or independent public schools,” says Newcombe.

“In the US, they have picked up the DNA of the independent schools and have started to take enrolments from them, and that could easily happen here. I’m also getting calls from for-profit schools with an interest in coming to Australia. These are quite lean and mean, so they could present another challenge,” he adds.

The US also has a growing number of online schools. “Some Australian schools are already offering online courses and, in the future, some parents may decide to buy their children’s education course-by-course rather than from a particular school,” Newcombe continues.

However, he believes the overarching challenge for directors will be ensuring that their school continues to provide education of the highest quality. “It will help if the directors know something about education,” he says.

“That may sound ridiculous, but many do not. I am not suggesting they need to become educators, but a basic understanding would surely help them to make sound decisions about, for example, how resources can best be used to improve student outcomes.”

Skills and diversity search
A school board is no less time consuming than a corporate board. “In the extreme, a chairman of one of the larger schools could spend 15 or 20 hours a week on school business at particularly busy times,” says Chris Duncan, assistant director, governance, at the Association of Independent Schools of NSW.

“Many people who would make excellent directors are just too busy with their own careers and families to be able to take on the role.”

People who offer their time may not be suitably qualified or, if they have children at the school, could find it hard to put the long-term future of the school ahead of their children’s well-being. So, while the most prestigious schools may have the luxury of choice, they are very much in the minority.  Smaller, regional and developing schools can find it difficult to put together a board with the skills and diversity they need.

There may also be specific barriers to diversity. For example, the majority of the directors on the board of many faith-based independent schools are appointed by the synod, the diocese or another church governing body.

However, St Peter’s Girls’ School is unusual in being part of the Anglican Diocese of Adelaide yet having a fully self-appointing board.

“That means we are able to review a skills matrix and make appointments to suit the school’s needs at the time,” says Linn.

“This has worked very well for us and I believe it has been fundamental to our strength in governance and the success of the school.”

He believes this is a model that works well. “I would encourage all boards to move towards this model, but it can be a difficult journey. We have had to work hard to achieve and maintain self-appointing status in the context of our relationship with the diocese, which is also very important to us,” he says.

Independent grammar schools face similar limitations; McCracken describes them as “independent with qualifications”.

“We have a board of seven members, four appointed by the minister for education and three who are elected from a database of donors to the school,” he says.

“Some years ago, the minister filled a casual vacancy with someone unknown to the board who was actually a teacher at another independent school. That wasn’t a success on either side. Fortunately, the legislation has since been amended and, these days, the minister’s decision is largely based on consultation with the school.”

A good place to start?
Some see a school board as a good starting point for a would-be director, though it would be a mistake to see it as an easy option.

“A school board is at least as challenging as a corporate board and the position is generally unremunerated,” says Linn. “If you don’t have real passion for the job you will struggle to do it well.”

Linn is coming to the end of the maximum 13-year term as both a director and chairman of St Peter’s Girls’ School. He describes serving on a school board as a privileged opportunity to create better outcomes for society.

“At the end-of-year speech night you get to see those who came in as little more than babies graduate as fine young adults, well prepared to make their way in the world,” he says. “That’s my motivation, and I believe that is the kind of passion you need.”

Homework tip sheet
When considering a school board

Geoff Newcombe: Take due diligence as seriously as if it were a corporate board. Do not be tempted to skimp even if the school is well known and has a sound reputation.

Chris Duncan: Always meet the chairman and principal together. Their relationship will tell you a lot about the school and the culture of the board.

Bruce Linn: Be prepared to work hard. If you join a board purely for the kudos you will soon be found out.

When appointed to a school board
Carolyn Anderson: Insist on a thorough orientation, which involves both the board and the school principal.

Mark Puzey: If you’re struggling with a general issue, such as increasing red tape, uncertain funding or changes to the curriculum, join with other schools and take a collaborative approach to lobbying. Your voice is much more likely to be heard.

Gary Seymour: Take advantage of opportunities to improve your skills. For example, Independent Schools Victoria runs regular governance sessions for new and existing school directors and publishes information on the Independent Schools Victoria website.

Glen McCracken: You can only make sound decisions if you understand the underlying ethos of the school as well as business matters and the board’s strategic direction.