Deal governance for Higher Education

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welcome to changing higher ed a podcast dedicated to helping higher education leaders improve their institutions with your host dr drum mcnaughton ceo of the change leader a consultancy that helps higher ed leaders holistically transform their institutions learn more at thechangeleader.com this episode of changing higher ed is sponsored by predia education a national leader in online student recruitment and enrollment services providing institutions enrolled students risk-free on a performance-based model with no long-term contract if your online programs could benefit from incremental online student enrollments visit perdiaeducation.com that's p-e-r-d-i-a-education.com and now here's your host drum mcnaughton thank you david our guest today is harry stever ceo of the association of governing boards of universities and colleges henry joined agb about 18 months ago coming from the national association of corporate directors and brings to hgb a deep understanding of the importance of citizen governance and a wealth of experience in building on the strengths of a member-focused organization henry graduated from the u.s naval academy my alma mater and served in the marine corps following graduation he earned an mba in marketing and strategy from the kellogg graduate school of management at northwestern university and serves as a trustee for the united states naval academy foundation's academic and scholarship programs well henry welcome to the show glad to be with you drum i've been looking forward to this i think we're going to have a great show talking about the future of higher ed governance big topic well it sure is i personally prefer the descriptor of the future of board leadership because governance in my view can be that word can be interpreted in different ways and can be implied in different manners and the key from my perspective of what we're talking about is strategic board leadership so i'm really excited to talk to you about strategic board leadership jerome sounds good well we'll change the topic to strategic board leadership which makes makes a lot of sense we both come out of the uh the background of sitting on boards before as well as the national association of corporate directors which i don't know about you but what i'm seeing is the board governance the board leadership for higher ed is changing it's it's not what it used to be you're right and it can be interpreted in different ways number one if you compare between corporate boards and trustees and board members of higher education their similar roles but very different on a public company board they're there and they are compensated financially and on board members of institutions they are not compensated they typically pay depending on how they got there whether they're appointed by the governor of the state legislature or the alumni association or they're elected by a private board or some combination of the two but their orientation is quite similar and that is in our quite to be direct and frank with you we changed our vision and our mission when i started here a year and a half ago in 2019 to focus on helping board members and empowering boards to serve as strategic partners with and for their presidents and their leadership teams so in the past agb has been focused primarily on strengthening governance and i mentioned to you before that the g word governance i prefer strategic board leadership in its place but i look at board service as a team sport and if you were the coach of a team and you only tried to coach a team to advance your objectives but you didn't teach the individual team players how to play that game or that play the sport you wouldn't accomplish your objectives so agb's focus is on helping board members and boards serve as strategic partners and that's the biggest change that we're seeing now is that presidents are asking us help me president or ceo of an institution learn how and understand how to leverage my board as a quote-unquote built-in consulting team not to rubber stamp the strategies and initiatives and plans that we have but really proactively engage with us as thought partners to create well informed more holistic strategies that are focused on two things one is on student success and two is long-term institutional vitality and in this current environment both are quite challenged the current environment with covet in in hybrid learning environments or distant learning environments both of those are challenged a from a learning perspective with students and b from an institutional vitality perspective so that is why boards roles are at an all-time high and i hope they actually stay at this all-time high even when we get past the pandemic in the future well i certainly would expect they would but it changes that type of focus fundamentally changes the way boards recruit people how they have the skill sets necessary if you're looking at the board as a high-powered consulting team many of the boards out there don't have the kind of skills on a board that's necessary to do that kind of thing right so just like i i learned when i was at nacd in the past and with public company boards most higher education boards also use a skill sets matrix and that's a quick you know it's a very simple document that can have people down one co on one axis and skills that are needed to reinforce and oversee the strategy and the execution of the strategy into the future so key focus here skill sets matrix should be used to oversee the strategy or excuse me to inform and build a composition of the board to oversee the strategy of the future not the strategy that we had in the past but of the future and you're right a lot of board members don't have but that's how agb really serves its mission is to help create knowledgeable well-informed thought partner board members on higher education boards because in corporate world you're recruiting board members that have strategy finance marketing technology market international geographic expansion diversity lots of different skill sets legal regulatory to lots of different uh skill sets that you need and in the past most higher education boards have not leveraged a strategic approach to building their board to be honest with you drum the biggest attribute that's been leveraged in the past again whether you're a governor appointing somebody or a private institution recruiting a board member it's from philanthropic capacity that has been the primary driver of your board seat and that is important but it's not the only attribute that needs to be sought after when i think about how things have changed over just the last eight months it's uh really around as i use the term strategic thought partnership and boards have met much more frequently than they ever have in the past i've spoken with some board members that have met 35 or 40 times in the last eight months that's almost once a week and quite honestly that's what's happened in some cases number two it's around boards leaning in and i want your listeners to understand make sure they understand what i mean and not mean i mean from an oversight perspective boards need to partner with their leadership teams as opposed to leaning in meaning doing the work of the management team clearly that is not the case for the listeners out there you may have heard this acronym called knife oh nifo nose is in fingers out so boards need to be listening to all key stakeholders on and off campus they need to be listening and working with their leadership teams asking insightful probing questions to discuss alternatives and either intended implications or unintended implications with potential strategic directions so that's the the second piece and that comes also before i move to the third i also reinforce the importance of shared governance with higher education boards and that is another difference between corporate boards you don't have this term called shared governance with public boards you use the term stakeholder engagement which is very similar to what shareholder and excuse me shared governance means but in higher education shared governance really means sitting down listening to and engaging with members of the faculty members of the administration the alumni things of that nature so shared governance is synonymous in concept with stakeholder engagement but it has much stronger implications if not done well in higher education because a board certainly can make decisions on its own without input from shared governance in the faculty and administration but the unintended consequences of doing that are horrific because the faculty can give the president a vote of no confidence can give the board a vote of no confidence and the last thing you want your students and parents and alumni seeing is a vote of no confidence for the leadership of the institution so that's the second piece is around strategic alignment and boards leading in to really facilitate and participate in strategic transformation and the third key important element that's changed it is not new but it's certainly been highlighted over the last six months around justice diversity equity and inclusion we at agb and others use the acronym j d e and i to me to kind of give us the short answer around justice diversity equity and inclusion so i can tell you drummond and your listeners that i personally have learned a lot about the importance of all those key critical values probably started 35 years ago when i was in the marine corps the military certainly is was probably one of the leaders in the united states at least to really leveraging diversity to build more well-informed high-impact teams and corporate america as well has leveraged jd eni they typically call it esg environmental social and governance it's uh three simple words in many many volumes behind those three words but jd and i is a big deal with higher education while lots of work has been done with administrations on campus most boards have not really leveraged the values of jd eni into their strategic policies and strategic decisions moving forward if you look at this from an optics perspective the student bodies and enrollments of most institutions has become very diverse over the last several decades however faculty composition board composition has not evolved to align with their quote unquote customers so that's the d e and i piece or the d piece what i also reinforce is around boards engaging proactively to develop crisis communication or strategic crisis communication playbooks because you don't want crises to happen on campus but like it or not they're going to happen whether it's about who's the the new elected phil in the blank leader on campus whether it's about something in town something in the country or around the world students are becoming more kind of in a state of unrest and boards and leadership teams need to be prepared on how to establish justice and also really importantly around equity the coven pandemic is exacerbating existing levels of inequity if you think about it from a first-time attendee from a rural minority student potentially or those who may not have traditionally attended college higher education institutions have made great strides over the last couple of decades to improve that lots of room to go but the coven pandemic has put it in reverse because those communities unfortunately have been overweighted in the impacts the negative impacts of the pandemic so anyway a lot going on there but if i summarize these points drum it would be around strategic partnership and engagement number two around proactive strategic transformation with the board and the president with shared governance and inclusivity and number three the board's involvement from a jd e and i perspective to ensure that their policies are manifest throughout campus and all programs and with all these points the basics of their fiduciary duties hasn't changed it's just in some ways how they need to apply those fiduciary duties i mean i always go back and when i talk with boards i talk about the example of bluebell the ice cream and how the board and delaware supreme court said the board was responsible in many respects and so when i talk to boards i say folks you've got a duty to make sure that the students are getting the learning that they should you know the students should be first and foremost in your mind sustainability of the institution should be first and foremost of your mind but at the same time you need to make sure that you are doing your duties and i like your acronym nose in fingers out to make sure that we're not getting micromanaging you know the board's job is to be the strategic oversight for the institution and you can't micromanage when you're doing that yeah no doubt about it but you're right around fiduciary duties the fiduciary duties of a board member whether you're on a higher education board or corporate board are no different the three new fiduciary duties of care loyalty and obedience are the same they have different implications in different ways to apply them from a strategic perspective fiduciary duties are the same across all boards and that's what's really important back to the shared governance piece i actually prefer the term collaborative governance and i know aaup and ace and agb alphabet soup family here wrote a document in 1966 and actually aaup wrote a document on shared governance in 1910 or maybe it was 1920 but a hundred years ago the essence hasn't changed but the applicability has changed and how it's leveraged so clearly the faculty is involved in shaping forming and delivering world-class academic programs no doubt about that and the board needs to oversee academic quality just like in a corporate board if i was the product manager and you were a product manager drum the board would not be saying we need more blue things and more round things or more of these things that's but the board needs to say what are our objectives what are our strategic priorities or maybe i should start out with what is our vision our vision our mission our key strategies and key outcomes then that that's where the kind of the the lines of bifurcation emerge because you have the product leaders and if you consider faculty the product leaders they are the experts in creating academic curriculum no doubt about it and the board is not does not need to get in there and that's clearly a knife oh thing you want to have noses in fingers out and understanding what is the access i.e how many people are engaging in which curriculums what are the outcomes what are the workforce preparation expectations from employers and that actually is another point drama i'm sorry for going on and on here but different stakeholders i.e parents and students and faculty members have different viewpoints and that's okay to have different viewpoints and that's the beauty of a strategic relationship is listening and actually hearing not just listening but hearing why those views are different so if i as a parent and paying fifty sixty thousand dollars a year to send my kid to go to school i'm certainly looking for some roi out of that deal and or if you are an individual student borrowing that much you need to look at some outcomes so more and more people are looking for workforce preparation outcomes at the same time we do need to make sure that we are creating lifelong learners for creating the ability for our graduates to become lifelong learners and very collaborative participants in society and what's very interesting is the importance of a liberal arts education versus a pure call to stem education what i've learned is that frequently a liberal arts major may exceed the outcomes of a pure stem major or a non-liberal arts major because he or she has the capacity to engage with and build great teams great service great brands and great followings that the non-liberal arts may not be able to do so you think of it kind of in a very technical perspective it's drama if you were a technical coder and for example my son is a uh he's a blockchain engineer he is a amazingly smart kid i'll never know what he knows about blockchain and technology but i know a hell of a lot about leadership at the end of the day the combination of technical expertise and leadership capacity that's what builds fantastic organizations and you need the two but if you could infuse those two things in a single brain in this single person then you have a fantastic outcome and that's the beauty of higher education you need the workforce expectations you need to deliver around around employers in students and parents needs but also the faculty's desires to create lifelong learners that are creative collaborative and insightful when they do leave campus and go enter into a job of some sort they need to be able to do that in a wonderful way so i think the benefits of shared governance can be applied in this context because you're creating lifelong wonderful learners well i think the the higher ed boards and the higher education executives have probably the toughest jobs of any board members and any executive team because you don't have one product or you do in some ways you have a student who is your product but there are so many different manufacturing processes that you can use i.e different curriculum and you've got multiple customers you know when i talk about positioning with teams you know positioning answering a question what's the one thing that's unique different and better about us in the eyes of the customer versus the competition in the marketplace that has them doing business with us now if we parse that down in the eyes of the customer higher ed has three different distinctive customers one you've got the student two you've got the parents and three you've got the people who are going to employ your students part of the challenge that i have seen with boards is boards really one they don't know who their customers really are second they don't have the skill sets there to be able to understand what's going on i mean i've seen multiple boards who especially in christian higher ed is made up 80 percent of pastors and it's great from that perspective but you don't have the marketing you don't have the higher ed expertise on the boards to be able to do that oversight those fiduciary duties that are necessary and you talked about the [Music] need for boards to be more proactive from a street strategic communications when a you know what we call a whoops happens how can they be right there and have planned ahead if you don't have those skills on the board then how can you go ahead and have a plan that's going to make sense unless you've taken the full input from the administration and that puts things backwards it's one of those conundrums that i see and i'm i'm not sure how boards are are answering this adequately at this point yeah so let me try to dissect your commentary there because i think you had about three or four things kind of bundled in there sorry about that no no no they're all good i think they're all good top discussion areas the first thing you mentioned is the difficulty or the challenges of the incredibly challenging role of a president of an institution now you said president and boards but i'm going to break them into two different buckets because you're right they both have challenging roles the role of a president has never been more difficult than it is today even in i'm going to use the term peace time i.e pre-covet or in a non-crisis environment we go through these crisis we had 9 11 and we had the great depression and et cetera and then we have a pandemic in conjunction with a social crisis so if you're a ceo of a company the company call it will shut down on friday afternoon okay and your employees go home for the weekend well as a president of a university or college your employees or your customers your students in the old days didn't go home because there's a residential campus and you have faculty and staff and students are all there 24 7. so the job of a president is harder i believe than any job on the planet unless you're in a in the military and you're in a war time situation and you're on call 24 7. so a president is on call 24 7. he or she is facing unrest or can face unrest 24 7. and you've read stories about how students have you know sit down on the front lawn of the of the president's house or they they occupy the administration buildings and things of that nature that doesn't happen in corporate america but anyway so you're right the job of a president has never been more challenging at the same time the roles of and expectations of board members have never been more challenging as well because when a president and ceo of an organization is confronting major challenge he or she needs significant help and that's why i said before agb is focused on helping board members and boards serve as strategic thought partners with their presidents in order to create favorable outcomes within the context of student outcomes and long-term vitality that was that first piece the second piece you mentioned was around customers it's interesting that different people have different views on this depending on the type of institution so if you think about the carnegie classification about r1s r2s etc some institutions say you know what our primary role is research secondary is teaching others flip that around primary could be teaching now at the end of the day the commonality is students and we're trying to create lifelong learners that are competent capable and willing to be favorably engaged in creating a creative outcomes with organizations that they become employed with makes a lot of sense so just like we were talking about shared governance and stakeholder engagement in the prior part of our conversation parents and students and alumni and community leaders are also i wouldn't call them a customer i would call maybe a maybe they're the customer but the student is a consumer now it's interesting on that piece customer versus consumer we at agb talk about that quite a bit because agb has 40 000 members who are primarily board members across 2000 institutions and our presidents are our primary customer and they are i.e they're making the buying decision so i'd say the parent if they're making the paying the bill they're the customer because they're paying the bill board members for us and students are the consumers and because they're the ones that are absorbing the content so board members absorb content from us and that's our focus is on orienting them filling their knowledge banks and helping them serve as strategic partners at the same so they're a consumer of our value at the same time students are a consumer of the institution's knowledge so that they become lifelong learners and favorably contribute to society but you're right so your students and parents and employers they're all stakeholders in there and some were but i think it's interesting to kind of look at people who is the customer meaning making the buying decision and paying the bill versus somebody who is the consumer like in our case board members are our consumer presidents are consumers as well as of our knowledge as our board professionals board professionals are incredibly important role with us and for boards presidents have a very hard job today and we as organizations that serve them need to realize the roles responsibilities and expectations of our customers and our consumers you and i both enjoy talking about board leadership and governance and all these things i think we could probably talk for another hour and never talk about the same thing twice three takeaways for university presidents and for board members what are the three key things that you think they should be looking at now and going into the future sure thanks so much drum i'll wrap it up three key takeaways number one strategic transformation and i'll come back i'll give you 30 seconds on the back end strategic transformation is number one justice diversity equity and inclusion is number two and board engagement is number three so they all work together so strategic transformation i don't believe higher education will be the same even when we are in a higher in a healthy environment the population has declined the average number of kids in a household has declined so the if you think about higher education from a supply and demand perspective demand is not may not be what it has been for those seats whether they're virtual or physical seats so it's important for boards and presidents to think about strategically transforming their institutions for the future the second one around justice diversity equity inclusion they need to be part of every conversation every board meeting agenda every strategy needs to be you know in it needs to incorporate jd and i so that it's manifest throughout campus and number three around board member engagement critically important you're not there board members are not there just because the governor appointed you or the board selected you you are there to serve a specific role it's not an honorific position it is a role that requires significant time hundreds of hours on an annual basis and i urge all board members to step it up from an engagement perspective and lean into agb because we're here to help you very good well i couldn't i couldn't have said it better well that that brings me to one last question what's next for you henry or agb what are you guys looking at what's the future look like our strategic priorities we have three of them one is jd and i j d e and i we have made that our number one priority because we realize that the future of our economy our future of our society the future of our democracy hinges on our ability to create a society where everyone is treated with respect and dignity and so if you read the first line of our jd e and i initiative it says we aspire to a world where everyone is treated with dignity and respect and i'm a and we aspire to a better world for everyone and i believe that not only education or that higher education is not only the one key enabler but so is the military and other organizations in corporate america we collectively are working on this as a partner what's interesting is that our board members of higher education serve in either as executives or board members of other companies so our board members our agv's 40 000 members are forced multipliers in society not just for higher education but for their companies and so we think about what we're trying to do so that's number one number two is we are going to continue to focus and create more practical easy to consume resources for our members and those are focused on what we call the principles of trusteeship probably by april of 21 of 2021 we're going to launch a resource called the principles of trusteeship and the principles of trusteeship are focused remember earlier i said board service is a team sport and the team members are caller board members and so this is the first resource that agb has created in its 100 year history focusing on the individual attributes and the individual behaviors that world-class effective board members can utilize to create amazing strategic leadership boards that's where we started strategic leadership and the third piece is around engagement in strategic transformation this is a long-term project creating institutional strategies that are uniquely distinct i know those words are synonymous but they're uniquely distinct from their peer sets their competitors so that i.e from the institutional perspective they're distinct from their other similar institutions so that i as a customer or consumer when i'm considering attending this group of institutions for college for my learning i can the board and i can create a distinct value proposition so that the students select us as opposed to somebody else so those are my three things jdeni strategic engagement and the principles of trusteeship those sound great well henry well thank you for being on the program that's been very informational i'm sure the listeners are going to really enjoy hearing your perspectives and where agb is going you guys provide such an incredible service and thank you so much for taking time to be with us thank you drum been a pleasure joining you [Music] thanks for listening this week and a special thank you to this week's special guest henry stever ceo of agb and for his sharing his thoughts on the future of higher education governance i also want to give a special shout out to our sponsor perdia education visit perdia education that's p e r a education.com to learn how they can help grow your online student enrollment through a performance-based model with no risk or long-term contract for your institution our next guests are steve ferguson and jay patel of slr 67 a new and innovative way for students to pay for their education this is something that's brand new just coming out and you don't want to miss this one changing higher ed is a production of the change leader a consultancy committed to transforming higher ed institutions find more information about this topic along with show notes on this episode at changing changinghireed.com if you've enjoyed this podcast please subscribe to the show and we would also value your honest rating and review email any questions comments or recommendations for topics or guests to podcast at changing highered.com changing higher ed is produced and hosted by dr drum mcnaughton post-production by david l white you