To pay or not to pay?

I’m sure we don’t need any more reminders of how the changing world around us is affecting our respective universities but let us pause for a moment to consider how this is impacting our governing bodies.

Although many universities refuse to see themselves as businesses, our increasingly competitive environment requires every university, whatever its provenance, to be “business-like”. The debate of the student as a learning partner versus the student as a customer rumbles on but we do all seem to agree on the importance of offering our students a high quality experience and we care deeply about what our students think and say about us. This has led to a number of universities seeking to increase the business acumen on their governing bodies and trying to attract a different sort of person on Board/Council often prioritising customer-related experience and skills.

The recently revised CUC HE Code of Governance, now more aligned with the UK Corporate Governance Code, sees expectations of good HE governance set out in more detail and making clear the breadth and depth of responsibility of governing bodies. Additionally, there is currently an air of anticipation created by the recent HEFCE consultation proposing the location of specific responsibility with governing bodies for signing off assurance on an institution’s academic quality arrangements. In order to satisfy these expectations it will be ever more important to ensure the quality of information that we give to our governing bodies but also there is likely to be an increase in the time we expect governors/council members to devote to their role with us.

We come from a world where governors/council members have been generally happy to serve our universities for no financial reward for a whole host of reasons ranging from a passion for and commitment to education or the local/regional context right through to simple philanthropic interest. However, our changing world is making governance more complex and challenging, and the question of whether or not we should offer remuneration to members of our Boards/Councils is cropping up more frequently.

At the moment only a handful of universities have the facility to offer such remuneration and even fewer exercise the facility in practice.

So why would we choose to remunerate and, by doing so, what are we hoping to achieve?

The obvious argument hinges around the ability to attract and retain governing body members who have the right skill set and are prepared to commit sufficient time and energy to our universities in order for us to be sure that our governing bodies are effective and adding value. This might be particularly pertinent if we are trying to attract members who are looking to build up and maintain a non-executive portfolio, meaning that we are competing for their time with remunerated NED roles in, for example, the health and financial sectors. However we might argue that within such a portfolio there is surely room for a non-remunerated role or two for the “right sort of person”.

A further question being posed in these discussions is if we think we are looking to attract people who will be motivated by remuneration, how much will it take for us to look attractive and be able to compete for these people? A good question, and when we take a look at the NED salaries out there it seems that we might need to spend an awful lot of money to be competitive. In this context, we should also consider whether these bodies are better governed than the HE sector and the challenges of managing expectations of portfolio NEDs whose experience might lead them to believe that all Boards should operate on a PLC model.

Accepting that the sole reason for remuneration might not be about recruitment and retention then might it be about reward? Would we feel more able to make more calls on members’ time if we paid them? We have to consider here the motivation in the individual commitment of time and energy. Certainly at my university I believe this motivation is based more on a sense of belonging and pride, and an appetite to make a difference, rather than a desire for financial reward. There is still a great “for the public good” attitude around in our sector and this should not be under-valued.

So, pre-supposing for a moment that we decide to go ahead and offer remuneration what might be the questions for us consider:

• What is the constitutional position of the university in relation to this? In most cases choosing to go down this path will involve a change in constitutional documents, a perhaps lengthy engagement with the Privy Council and with the Charities Commission.

• What level of remuneration is appropriate? There is no formal data for the sector but of the universities that already remunerate, or are on the brink of doing so, there seems to be a significant spread ranging typically up to around £20k. NHS NED roles tend to attract between £6k and £15k and once we get out into the private sector, the sky is or course the limit.

• Is every member paid the same?  Do we remunerate at a blanket level or have different levels for key roles in our governance structures? Do we just remunerate the Chair? Do we pay an hourly rate for work over and above the standard involvement in committees? Again there is a variety of practice in the sector.

• Are there conditions on payment to individuals? As with the spending of any “public money” universities need to be able to assure themselves of value for money – how would we do this in this context? Do we need to introduce a formal performance review process and who would conduct the reviews? How do we ensure consistency and who actually makes the final decision that an individual is worthy of a particular figure?  Is this a basis for a contract between the university and an individual governor?

In reality the answers to all the above questions will be different for every university and will depend on the relationship it has with its governing body, the ease with which it can typically recruit the right people and of course its strategic direction.

One thing is clear, however, that a decision to offer remuneration comes with a number of responsibilities, accountabilities and challenges, which should not be dismissed lightly.

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