University Governance for the Longer-Term

Abstract

Corporate governance models are becoming more prevalent in many universities, despite concerns over the effects of corporate practices on the identity of universities as a unique institutional field. In Westminster university systems, governance practices have become highly professionalized along corporate lines, not least to ensure a good fit with the necessary regulatory regimes for a marketized university system. Examples of Australian practices are provided to illustrate the governance dynamics, as both Western and Chinese corporate governance practices will affect the culture of Chinese universities, despite the continuance of deeply-inscribed State influence. Professionalization of governance in Australia has brought benefits but also generated some ‘blind spots’ to sustaining the longer-term features of successful universities. Stronger academic governance could provide a counterweight, yet the relationship between corporate governance and academic governance is not yet as well-defined as it needs to become.

Introduction

Governance of universities, encompassing both the actions of university governing bodies and systems of internal control and regulation, needs to be designed to achieve longer-term scholarly purposes as well as shorter-term goal demands of the external environment.

The question then arises as to whether existing university governance arrangements and emphases in particular national or regional university systems adequately support the longer-term purposes of universities or, instead, whether the surface dynamics of local context could lead to an over-emphasis on short-term actions to promote legitimacy within such contexts. 1 That is, how does the interplay between university governance for the short-term and for the longer-term manifest itself at institutional level in different types of university system?

To address this question, I explore the extent to which university governance in Australia, as an example of the evolution of a “Westminster” university system, 2 is shaped by its marketized environment, possibly at the expense of attention to longer-term purposes. Details are provided of the ways in which governance practices in Australia universities have become more directly reflective of the norms of corporate (private company) governance. The core purposes of universities are used as a device to anchor the study of contemporary environmental impacts. The idea of a university is in constant flux around the world but we can identify common purposes of a university, rather than, say, an institution that merely provides higher education qualifications. Three key purposes are identity, integrity and innovation.

Echoing related concerns, 3 I suggest that, although experience with corporate governance practices brings benefits, it presents risks to the longer-term defining features of universities. A more explicitly trustee approach to governance, asserting the strengths of academic governance, may produce a better balance between the short-term and long-term governance aims in Westminster systems, coupled with a wider focus on knowledge systems for the 21st century.

Governance behaviors in the Westminster university system offer the potential for studies of comparative developments in other regional university systems and may resonate with current debates in particular countries. In China, there is a lively conversation about university identity for the longer-term. University governance is reforming but remains deeply interconnected with the State, although there is potential to re-negotiate governance practices within institutions. Corporate-style reforms may help to make Chinese universities more capable and resilient, as well as more attuned to the wider business environment locally or globally. As in Westminster systems, however, the introduction of new governance practices should take account the longer-term purposes of universities and potential challenges to their identity and their level of innovation.

International Trends in the Corporate Governance of Universities

In the context of this paper, governance is to be understood broadly as the processes through which universities (at system level) and university operations (at institutional level) are defined, controlled and ordered.

Over the past decade, there has been a dramatic increase in awareness of the characteristics of regional higher education systems and in university governance within these systems. 4 There is growing acceptance of the relativity of such systems and the ways they are shaped by regional cultures and, specifically, by changing theories of government and the role of the State. 5

Marginson, 6 for example, identifies the following regional higher education systems and describes relevant characteristics: Westminster (United Kingdom, Australia, New Zealand); United States; and Post Confucian (East Asia and Singapore). To this might be added an admittedly variegated European system and doubtless other regional systems about which more will become known.

One impetus for this explosion in knowledge of regional higher education systems is found in significant reforms of higher education undertaken by national governments over the past two decades, largely as a result of the growing links between higher education and social and economic well-being of nations. The nature and form of State governance of a higher education sector has been profoundly altered in many countries. State ‘steering’ has replaced State ‘control’ to a greater or lesser extent in many countries. 7 These developments have focused attention on the form and nature of governing councils or boards, which range from well-established (e.g. us and Westminster) to newly-established (e.g. Europe) or evolving (Asian countries).

University governance is a product of the constant influence of the shaping forces of academia, the State, markets, global competition and also, in many countries, the constituents of civil society. 8 Despite differences in the effects of these forces, in those countries most studied, the “dominant international trends in university governance are towards greater institutional autonomy, strengthened institutional leadership and an improved capacity for strategic management so that institutions can be more competitive in an imagined international higher education marketplace”. 9 At the same time, the direct and indirect influence of State regulation appears to be increasing rather than diminishing, despite more formal institutional autonomy. 10

Most commentary on internal university governance has centred on the adoption of New Public Management or managerialist administration models. Within institutions, the rise of managerialism, centralisation of authority and use of hierarchical authority are not only the most obvious manifestation of changes in governance but also the most contested. However, multiple subtle and interlinked changes in the external environment of universities have contributed to a re-framing of university governance as being very similar to corporate governance.

In the first place, moves away from State control necessarily place greater emphasis on the internal governance of universities, so localized governance and management becomes more obvious as an influence in many systems. Secondly, in seeking examples of good governance from which to borrow, or analogies for use in university governance, corporate governance provides the most obvious and well-developed source of advice. In many Western countries oversight by a ‘lay’ board is a feature of public sector authorities, incorporated associations, and many other forms of civil organization. Nonetheless, board governance of for-profit firms has gradually become a dominant reference point, not least due to the attention given to new governance regimes when there are high-profile crises and collapses of companies.

Moreover, the widespread acceptance of the role of human capital in economic development has fuelled instrumentalism in higher education and a dominant capitalist logic in Western and developing nations, where young graduates are most likely wanting the outcome of their university experience to be waged employment, rather than education per se. These developments in turn drive governments and universities towards business-like approaches to the production of graduates in mass higher education systems. In Australia, the impact of large numbers of international fee-paying students has been powerful: competition for students has engendered large marketing and consumer satisfaction sub-industries. Where there is status competition among globally-referenced ‘world class universities’, isomorphic mimicry of governance forms and practices, mostly based on American private universities, is powerful. 11

Further, when governments view their role for higher education systems as being, in large part, to set fair conditions for market-like competition, universities inevitably must participate in wider systems for fair conduct, disclosure, and monitoring of standards relating to all of their activities. These systems that are themselves becoming ever more layered and scrutinized, 12 so the outworkings of this development have produced a growing embeddedness of universities in the meshes of national and supranational regulation and review. That is, universities in many systems are “increasingly organized around rituals of conformity to wider institutions”. 13

Taken together, these transformations do much to explain the steadily increasing influence of corporate governance practices in Westminster university systems. They also point to many of the concerns not only because they are an uneasy fit with the academic enterprise of universities, but also because such corporate governance practices have a chequered history of ensuring the success of private companies throughout the world.

University Governance Practices in Westminster Systems

The Australian university system offers a case study of the extent to which university governance has been and continues to be reworked in corporate form. Some markers and indicators of current practices are highlighted below. While experience in the United Kingdom and New Zealand differs in some respects, many of the features described above are evident in their university governance arrangements. 14 , 15 , 16 , 17

University Governing Bodies

Since the 1980s, there have been demands by the national Government for the governing bodies of Australian universities to become more like corporate boards. 18 In effect, these calls were for more active oversight and steering by the governing body, greater accountability from management, and more ‘efficient’ processes to replace previous models of democratic stakeholder input and ‘dignified’ lay participation. 19 They were enforced, to an extent, by mandatory governance protocols, subsequently replaced by a voluntary code of practice. 20

The direction of change for Australian universities has been fairly consistent with these demands, influencing not only the appearance of university governing bodies but also the definition of what needs to be governed. Governing boards now have well-established audit and risk management committees, with their profile increasing as greater attention is given to moving from traditional oversight of financial and safety risks to interest in controlling much broader reputational and academic risks.

University governing bodies have been reduced in size, external membership is preferred, and an absolute distinction between governance and management roles is insisted on. Formal delegations of authority, financial and managerial, have been codified. There appears to be an increase in the appointment of expert members, i.e. persons with professional experience in financial management or law. 21 Politicians and public servants no longer are members simply by virtue of their office, although they may be members as individuals who have insight and influence in the corridors of the State.

Governing bodies expect to receive detailed analytical reports on university performance, including marketing, at each meeting and their range of strategic options has expanded to include multiple campuses, global online projects, transnational education, networked partnerships and re-branding.

The chairs of university governing bodies (chancellors) have become less reticent about their particular roles. Since 2007 there has been a formalized University Chancellors’ Committee, now under the auspices of Universities Australia, similar to the well-established Committee of University Chairs in the United Kingdom. Governance charters are prominently displayed on websites.

Members of university governing bodies are quite likely to be required or urged to take programs in company directorship, such as through the Australian Institute of Company Directors, to become aware of their obligations. Continuing professional development for members, unheard of a generation ago, is now an expected practice, as is a review of the performance of the governing body every few years.

Internal Governance Practices

Key features of internal governance changes in Australian universities were identified some years ago by Marginson and Considine. 22 Over the next decade, the trends have been mostly in the direction of a recasting of the university as a corporate entity rather than, say, as a large professional services firm. “Today, even the smallest universities are comparable, in financial and other terms, to some of the most considerable corporations in Australia”. 23 Hierarchical authority continues to be reinforced, in academic teaching and through the directorships of research centers as well as in administration. The relentless flow of new policy guidelines and elaboration of existing policy and procedures continues apace.

Academic staff/faculty are firmly established as ‘employees’; 24 merit-based appointments have for nearly two decades replaced collegial traditions of electing deans and heads of department from among academics; workload models and performance management are mandatory for academics as well as for administrative staff (in Australian the latter group is often now referred to as ‘professional’ staff). Academic governance is increasingly directed by professionals in learning and teaching practices and reshaped as ‘academic quality assurance’. Normative expectations of ethical action are overlaid with formal codes of conduct 25 and new roles to advise on and monitor appropriate professional behavior. More subtle exercises in governmentality and self-censorship are pervasive. 26 , 27

Internal university cultures are muddied by relentless external advertising extolling the benefits of the institution, while academics and professional staff alike are exhorted to adhere to the university’s style guidelines, to stay ‘on message’ with institutional branding. Public reporting of internal university affairs has been reduced, not least by codes requiring academics to comment only on matters on which they have expertise, and by reinforcement of supposed risks to institutional reputation from any airing of internal grievances.

Externally, the audit and review of universities extend well beyond those of auditors-general, the national Government quality assurance regulator, the Tertiary Education Quality and Standards Agency, and the national research quality assessment exercise. The growth in regional anti-corruption commissions with wide powers has become a major reference point for Australian universities. Not only is alleged misconduct by vice-chancellors (presidents) referred to such commissions but even cases of academic misconduct are now reported and investigated externally. Continuous disclosure principles increasingly are being adopted as a management strategy: some vice-chancellors keep lists of ‘who to call’ when issues arise. Add to this the substantial national and local legislation on privacy, charitable foundations, workplace health and safety, child protection and numerous other matters, and it becomes evident that very substantial management expertise is needed to ensure that an Australian university does not run afoul of one or more external demands. Very considerable effort therefore has been expended by these universities to establish their legitimacy within a business-like marketized environment.

Given the highly regulated external environment, intense competition for international students, and a performance management culture, there may be risks that institutional governance focuses more on short-term environmental fit than on the continuity of the academic enterprise over the longer-term.

The Purposes of Universities over the Long-Term

The institutional ‘field’ of universities may look pretty much like a constant: one of the most marked features is ability of the field to adapt to changing times while staying more or less intact. While ideas of a university have deepened and gained more color and nuance as more and more universities in different systems become known, the basic purposes remain, namely, the preservation, enrichment, transmission and generation of knowledge.

There are some defining features of a university that, although potentially shared by other forms of higher education institution or even other organizations, are particularly significant when taken together. These are the features that we observe over the centuries in long-established universities and they can be described as:

• Identity (they are the ‘keepers’ of knowledge; their credentialling function assumes perpetual succession)

• Integrity (they preserve, protect and renew ethical conduct and openness in the pursuit of truth; they uphold the moral code of academia)

• Innovation (they generate new ideas, new modes of learning and new ways of being; they contribute to the world’s development).

Succeeding generations throw up challenges to these purposes, particularly to the exclusive rights of universities to claim each of these features as their sole prerogative. 28 New forms of knowledge generation and circulation, 29 proprietary rights that imprison discoveries, 30 cheating, and limits on openness, are ever-present trials.

If these three purposes are indeed, collectively, key features of the field of ‘universities’, then governance mechanisms need to be designed to help achieve them. Much of the contestation about internal university governance is about the power to control. It should not be forgotten however that although governance signifies control, governance mechanisms are designed to enable an institution to fulfil its goals. University governance is not an end in itself, but rather a mechanism for ensuring that universities achieve their purposes, according to their defining features. To this end, governance aims to achieve coordination (among actors), consistency (in performance) and congruence (with goals).

So, in addition to the political discussions over who has the power to set controls, it may be possible to apply some tests of how well particular governance mechanisms support the defining features of identity, integrity and innovation. Although it may never be possible to show that any particular type of governing body or governance practices are better than others in this regard, 31 we can summarize the strengths and potential weaknesses of corporate governance practices evident in Australian universities today.

Reaching the Limits of Corporate Governance Practices?

There is little doubt that Australian university governing body members, on the whole, have become more diligent, informed and mindful of their oversight responsibilities over the last twenty years. 32 They are much more sensitive to their university’s involvement in wider societal and business contexts. The ongoing roles of ‘lay’ governors provide for a diversity of inputs and perspectives that may suggest fresh ways of managing and help universities to remain responsive to yet separate from any one sphere of control.

At the same time, some of the old informal relationships and connections among governing body members and university academics and others may have been declared taboo. The politics of governance now occur behind closed doors, with less of the permeability formerly provided by reports to the wider university community from internal members. To some large extent, university governing bodies are now much more dependent on what they hear from management than they were previously.

The use of corporate governance models and practices arguably has ensured that universities have invested adequately in the management positions, tools and mechanisms needed for effective coordination of a large and complex institution and for monitoring of consistency in execution of core business. Clarity of requirements has improved for staff and students, as has the sheer amount of information and guidance that is supplied. Sophisticated business intelligence systems ensure a reflexive self-awareness of many dimensions of activity and, potentially, mean that students experience many systems and processes within universities that are similar to those they will encounter in their working careers.

There are dangers, however, if corporate governance practices are adopted uncritically and wholesale without deep reflection on how these practices might affect the longer-term conditions for maintenance of identity, integrity and innovation. “There is nothing wrong, and everything right, with increasing efficiency, monitoring expenditures, cultivating resources, expanding markets, and replenishing inventories, so long as these and other bottom-line strategies are understood to be in the service of a project they neither contain nor define”. 33

Perhaps the clearest example of such a danger is a focus on short-term performance, for example, annual targets for research publications or for revenue from international students. Too great an emphasis on meeting arbitrary targets encourages conduct that may threaten academic integrity or limit risk-taking for innovation. Over-concentration on the individual performance of the university ‘firm’, including rankings, may mask a lack of attention to more diffuse global flows of knowledge into and out of the institution 34 that would fuel future developments.

Similarly, the tendency of internal bureaucracies to over-elaboration as more and more issues are identified as being in need of control may contribute to a form of organizational passivity, where self-discovery is limited by always having reference to ‘the official policy’. The hollowing out of the professoriate through growing contractual academic employment, although efficient financially, is likely to exacerbate this trend.

There remain limits to the extent to which corporate governance practices are likely to fully colonize universities in Westminster systems. Unlike for-profit companies, there is no imperative to maximise returns to particular shareholders, although local stakeholders continue to play a strong role in universities that primarily serve a particular area of the country.

Some aspects of institutional governance are highly permeable to the environmental context, others less so, producing some interesting issues in governing body attention. In general, governing bodies in the Westminster and American systems continue to take a hands-off approach to academic governance, focusing on technical aspects of institutional compliance rather than on the broader picture of global knowledge systems, their enabling technologies or on core questions such as the university’s stance on openness and dissemination of information. 35

Few governing body members bring their own deep knowledge of higher education production processes or of competing business models. For this reason, and notwithstanding the rise of massive global corporations in the private sector, few university governing bodies in Australia have considered the implications of large-scale multinational and multi-institutional partnerships to produce global corporate universities, with their inevitable challenges to conceptions of identity and to national government interests.

Notwithstanding the apparently relentless progress of additional layers of review and reconstitution of the academy as a ’firm’ or ‘company’, many or perhaps even most internal aspects of academic practice continue to be determined by academics: 36 the incursions of managerialist practices are quietly subverted or given lip-service. And even if there is some weakening of traditional academic governance constructs within universities, external academic governance exerts a very powerful force on internal activities and practices, especially through professional bodies and peer review of research.

Therefore, current conventions and countervailing forces currently produce limits to the spread of purely corporate governance practices within universities. At the same time, it seems likely that these limits could be eroded internally, and thus could threaten the conditions for longer-term university continuance, if they are not protected or reinforced. That is, we do not know where the limits of corporatized governance practices might lie, especially if governing boards were to take a more active role in oversight of academic operations or if a ‘global corporation’ model became more prevalent for well-established universities.

Ways Forward for University Governance in Westminster Systems

The current Australian university system appears well-governed and generally well-managed, increasingly adopting tools and ideas from the corporate sector, which, it should be noted, often began life as academic products of university business schools.

There continue, however, to be concerns that pressures from the marketized Australian system are tipping universities into simplistic emulation of corporate governance behaviors, to the detriment of their unique identity and the creation of new ‘blind spots’. In reaction, writing over the past decade has suggested the need to reaffirm a commitment to academic governance in the light of risks from the ongoing effects of rampant commercialisation, as academic governance is the carrier of moral values. That is, academic governance is viewed as the most important counterbalancing force to address known hazards of private company operations, as indicated in Table 1.

table 1

Corporate governance risks and academic governance norms

However, the relationship between corporate governance and academic governance in universities is not yet as well-articulated as it might be. While coordination among diverse groups is usually achieved, there remain incongruities and conflicting demands. Rather than a deep integration of governance practices, where different systems and techniques are acknowledged for the part they play, corporate and academic governance live in uneasy co-existence.

It is therefore timely to ask how academic self-regulation could actually be strengthened. Unfortunately, there has been more discussion around the governance power (or lack of it) of academics than there has been of the practices and discourse that could produce optimal academic governance within the contemporary university and national context.

Academic governance, although also aiming to provide coordination, consistency and congruence, traditionally has used different methods to those of corporate governance, notably peer review and discursive evolution of normative approaches. Such methods arguably involve a wider tolerance for ambiguity and variety than corporate techniques. Technologies of corporate management appear more precise and certain, and may assume a primacy if their impact is not carefully evaluated or if other governance mechanisms are unable to present convincing alternative or adjunct practices. The option is present, of course, for academic governance to appropriate and assimilate existing corporate discourses and techniques, for example, requirements for continuing scholarly development.

One way forward may be for university governing bodies, management and academic leaders to recognize more explicitly the multi-actor and multi-level nature of university governance 37 and to adjust practices accordingly, with the aim of governance synthesis and genuine ‘shared governance’ rather than the perpetuation of longstanding governance disjunctures.

University governing bodies in the mostly public Westminster systems are less invested in the survival of a particular university than the trustees and philanthropists who oversee private colleges and universities in the usa. A more explicitly trustee approach to governance in Westminster systems, asserting the strengths of academic governance and other non-corporate forms of governance practice for identity, integrity and innovation, may produce a better balance of governance mechanisms to support long-term purposes. To this end, the almost minimal role of alumni in university governance in Westminster systems may need rethinking. 38 Internally, experiments with refreshed academic governance through explicit collectives or professional partnerships 39 may be able to be trialled.

The current key performance measures used by most Australian universities reinforce an institutional ‘business as usual’ view of university performance, dominated by measures of selective entry and research output. Governance thinking for the longer-term would not only address the impact of potentially disruptive change, 40 including multi-university partnerships, but might start to govern to achieve richness in the flow of ideas as part of a worldwide knowledge system and contributions to the global public good. 41 There is much thinking yet to be done on how university governance practices might be better oriented towards longer-term sustainability in a world of “liquid modernity”, 42 where governance controls struggle with sometimes unpredictable national and global transformation.

Implications for the Governance of Chinese Universities

Reform of Chinese university governance has been proceeding since the 1990s 43 , 44 , 45 and was given further impetus in 2009, through the ‘2020 Outline’ for modernising and improving university governance. University governance is evolving in interesting directions, especially for the Project 985 universities 46 and in southern provinces. 47 Consequently, there are many lively conversations taking place about university identity and the balance between academic and utilitarian cultures, 48 conversations that have become muted in Westminster systems. In particular, academics/faculty point to a need to strengthen academic governance, through developing academic councils and other means, to counter administrative authority 49 , 50 and promote integrity and innovation across all activities. 51 While the strategic trajectories of individual universities—including permission actively to engage in research—may be set by the State, there is room for locally-negotiated flexibility and some willingness to experiment with new governance practices internally.

The traditional and deeply inscribed influence of the State and Chinese Communist Party on universities, particularly through the Party Committee as governing council, now encounters the potential role of other stakeholders and experts, and more assertive academic leadership. That is, the distinctive university governing body structures of Chinese universities are now subject to at least partial challenge from those who advocate for trustee or at least more broadly consultative models.

This account of corporate governance practices in Westminster university systems offers some lessons and the potential for comparative reflection. At one level, Chinese universities may take simply some ideas for professionalizing their governance and management functions, noting the need for appropriate upskilling of administrators. 52 Corporate governance practices in universities have certainly modernized universities in Westminster systems, contributing to better fit with their external environments, notwithstanding the problematics of an over-reliance on highly such practices. There may be a lower risk in China of identity challenges from corporate governance practices, given the direct counterbalancing influence of the State, 53 but weak academic governance would be a concern.

At another level, those leading Chinese universities may ask themselves whether emerging and characteristically Chinese forms of corporate governance, especially those that provide for strong internal influence, are likely in future to be introduced to the universities, by fiat or by mimesis. They may care to speculate on the effects of these arrangements on academic activities.

A growing volume of comparative evidence suggests that ideas about the ways in which universities should be positioned in wider social fields are reflected in ideas about the form that university governance should take. These shaping forces differ by country and region, not only in the extent of their influence but even in how such forces themselves are conceived, reflecting underlying and pervasive cultural themes, worldviews and values. Logically, therefore cultural differences need to be taken into account in designing governance practices both in the corporate world and in university governance. 54 , 55 , 56 , 57 There seems little doubt that both Western and Chinese corporate governance practices will in future start to exert more influence within Chinese universities, producing tensions as well as organizational learning.

More profoundly, the successful adoption of “capitalist mechanisms within a socialist framework” 58 in Chinese universities will present similar challenges as in Westminster systems to sustaining the longer-term features of successful universities. As in Australia, there is a need for further analysis and reinvention of academic governance practices. The potential exists for a fresh blending within universities of Statist influence, Chinese corporate governance, and fresh academic governance regimes.

Conclusion

The institutional field of universities is located within wider social and economic fields. Universities have become endlessly adaptive organizations, balancing a range of models and interests but continuing to reflect the underlying values base of academia. This paper provides just one example, from Australia, that may help university governors and managers better understand the ways in which universities are necessarily embedded in their wider social, cultural and economic environments, and how these environments may influence internal governance choices.

The analysis however also points to ways in which university governance needs to maintain a degree of ‘dis-fit’ or deliberate misalignment with market and other forces if their defining features are to be sustained over the long term. No one believes there will ever be complete hegemonic closure around the idea that a university is just a form of business corporation but corporate governance practices seem likely to continue to dominate thinking in Westminster systems for some time to come, unless and until academic governance practices find a new and convincing voice or new models for coordination, consistency and congruence that better safeguard the unique features of universities. In China, whether the path towards corporate models will be taken or whether a distinctive but new form of university governance will emerge remains to be seen.