The ABCs of sitting on a school board

There is no place for well-meaning amateurs who only have the interests of the children at heart on today’s school boards. Domini Stuart explains how the boardroom challenges of schools have escalated over the past 15 years.

Over the past decade, there have been major changes in the boardrooms of independent schools.

"Schools have become more consumer-orientated and subject to an increasing burden of compliance," says Dr Geoff Newcombe, executive director of the Association of Independent Schools. "The compliance regime has moved boards from what I call a light-touch monitoring role to a formal supervisory role and the head is now expected to act as CEO as well as educational leader. Directors are also very much focused on high-level financial management, marketing, public relations, crisis management and information technology in education, which is very different from 10 or 15 years ago."

As a result, today’s school boards need to be extremely professional, with the same mix of skills you would hope to find on a significant company board.

"There’s no longer any place for a board of well-meaning amateurs who have only the interests of the children at heart," says Bruce Linn FAICD, managing director of Bruce Linn & Associates and chairman of St Peter’s Girls’ School in Adelaide. "Directors still need to have a passion for what they’re doing, especially as these roles are almost always unremunerated, but that is no longer sufficient."

There is also no place for directors who believe supervision and micromanagement are the same thing.

"There are some who sit on school boards who feel they have something to offer in terms of how schools are run," says Sarah Tipping, director of Gunnamatta Equestrian Centre and chairman of Yarra Valley Grammar School in Melbourne. "It is essential the chairman ensures all directors are crystal clear about the difference between governance and management."

In most independent schools, directors with the requisite range of skills could be drawn from the parent population. However, Linn feels strongly that there should be a balance between parents and independent directors.

"Where parents make up the significant majority of directors, personal interest can easily take over," he says.

On the other hand, directors who have worked only in the corporate world can have unrealistic expectations.

"Many directors fail to understand that industrial relations processes can apply very differently in a school setting from that of a private company or business," says Newcombe. "They might want instant change, whereas schools tend to move very slowly. And they may not be aware of the importance of confidentiality when dealing with very sensitive issues in the school environment."

Maintaining the bottom line

Most independent schools are very finely tuned businesses. As they are also responsible for the safety of young people, few would argue the need for high levels of compliance, accountability and risk management. However, as these burdens continue to increase, so do the associated costs of administration. In some cases, tight margins are being stretched to breaking point.

At the same time, the very nature of education is changing rapidly. There is growing pressure on schools from parents and educationalists alike to provide facilities other than the traditional classrooms. Failure to live up to these expectations can result in a loss of confidence and a consequent fall in enrolments.

"When there are fewer enrolments, a school is under pressure to cut costs and services," says David Minty FAICD, deputy chairman of Sydney Anglican Schools Corporation. "This can become a downward spiral that is very difficult to reverse."

Linn is concerned about the sustainability of the business models of schools.

"Any reduction in government funding will push fees to a level of unaffordability for a significant proportion of the people whose children are attending independent schools," he says. "It’s a very fine balance. At the moment, I’d say we’re at the threshold of pain in terms of the majority of people in independent schooling."

Appointing the principal

A change of principal is a stressful event for the board and the school as a whole.

"If a principal leaves suddenly for any reason, that’s a real crisis situation," says Mark Puzey GAICD, a partner at KPMG and a director of St. Hilda’s Anglican School for Girls in Perth.

Even with the luxury of time, it’s not easy to find someone who combines a passion for education with high-level management skills and an outlook that aligns with the ethos of the school.

"The values of the principal are particularly important as they percolate all through the school and dictate the culture," continues Puzey. "It’s a very tough job. You have so many different stakeholders to manage – parents, teachers, students, the board and whoever owns the school."

The principal must also be capable of forging a close working relationship with the chairman – another increasingly demanding role.

"I have been on the school board since 2001 and chaired various committees, but it was only when I took over as chairman last year that I realised the full extent of the chairman’s responsibility," says Tipping.

"As mentor and counsel for the CEO, you hear a lot more than you do as a director. You then have to decide what needs to be shared with the board to ensure directors are kept up to date and have all the information they need to do their jobs properly."

Despite the chairman’s filter, what directors need to know seems to be expanding exponentially.

"We’re seeing much stronger focus on accountability for public funding," says Newcombe.

"About 70 per cent of our boards are boards of public companies, so they come under corporations law. There’s a growing appreciation of just how much legislation applies to directors such as child protection, privacy and, in particular, occupational health and safety (OH&S) which, in New South Wales, falls under the criminal jurisdiction."

Directors who overlook an important aspect of the school’s compliance with regulatory or other requirements could face prosecution or fines, or damage the reputation of the school. With so much at stake, there’s a danger of becoming bogged down by the minutiae.

"Directors should invest some time in developing straightforward metrics," says Minty.

"These should be easy to review and should highlight that the school is either on track to achieve its strategic goals or where it might be going off the rails. This will enable you to focus on where the management team needs support and direction.

"If you should find you are getting too interested or involved in the management of the school, ask yourself whether the principal is doing his or her job or abdicating responsibility to you. If that is the case, you need to up-skill or replace him or her as soon as possible."

Reforms on the horizon

Imminent regulatory reform looks set to accelerate the already rapid pace of change. The Gonski report, amendments to international student legislation and recommendations from the Australian Charities and Not-for-profits Commission (ACNC) are all likely to have an effect on the way independent schools are managed.

"Directors need to ensure the management team is aware of what is going on and can articulate a response to it," says Minty. "Board members as a group need an awareness of activities in the public arena well beyond the education sector and may need to bring that to management’s attention.

"The board needs to set aside time to agree to the effect of the changes and amend policies or directives to management accordingly. You should communicate this to your school community as soon as possible, particularly if it is going to have an effect on the way you provide services or the price of those services."

Puzey believes that, taken as a whole, each reform would result in sensible outcomes.

"As always, the devil lies in the detail and there is a risk that politicians will cherry pick," he says. "This situation is also complex because a school is just one of many different types of charities. But all schools are in this together. There’s no point in each one reinventing the wheel – it’s much more productive if schools get together to work out what needs to be done. Industry bodies provide the perfect forum and are also invaluable when we need to exert some influence."

The mission of the school

Minty is concerned that, in the face of so many compliance and regulatory issues, directors might lose sight of the vision and mission of the school they help to govern.

"It would be easy to lose track of the quality of what the school is producing and the calibre of the staff who are delivering for you," he says.

"That can cause the school culture and ethos to be eroded quite quickly. A school is more than a series of academic classes. It needs to offer opportunities for social development and co-curricular activities for all the students committed into its care. Unless the school governors are having that conversation regularly with the management team, it is very easy to lose sight of the mission and vision for the school in the day-to-day delivery of services to students and their families."

Tipping agrees there’s a lot more to being a director of a school than reading the board papers.

"One could get carried away with dotting the i’s and crossing the t’s on the paperwork, but, at the end of the day, our responsibility is to make sure the students are learning and developing effectively in a totally safe environment," she says.

"In my first couple of years at the school, I rarely met a student during school hours, but a school is a very different place when it’s operational and just walking about can give you a very good feel for how it is travelling. I encourage directors to attend more daytime activities as well as the evening board meetings."

Due diligence

Despite the challenges, Linn believes a school board makes an excellent starting point for any would-be director.

"It’s a serious board of quite a complex organisation," he says. "You’ll get as good experience there as you would get anywhere."

There’s also an element of honour associated with sitting on a school board, particularly one that has centuries of history and is held in high standing by the community. Nevertheless, neither a new nor an experienced director should be tempted to skimp on the process of due diligence.

"You need to examine the finances, the strategy and the risk profile of the school with as much rigour as you would apply to a commercial board," says Puzey. "You need to know what skills are already on the board and to be honest about your own skills and what you can add. You must also be sure you have the passion and the time to do the job to the best of your ability."

A word of advice...

Geoff Newcombe: Undertake formal professional learning such as the Australian Institute of Company Directors’ Company Directors Course.

Mark Puzey: Run board meetings and sub-committee meetings professionally and manage the time efficiently.

Bruce Linn: Keep thinking strategically and keep the principal thinking strategically.

David Minty: Allow enough time to ensure the board discusses "what we ought to be looking at" and be ready to make a contribution there.

Sarah Tipping: Be aware of what’s going on in the school; stay in touch, even in small ways like reading the school newsletter.