It was clear from the Skills for Jobs White Paper, that oversight of colleges was only going one way on the department’s agenda, and that was up. This focus is likely to only increase post the ONS review, with excellent governance being viewed as an essential facilitator for the aspirations of education and skills development.
Externally facilitated reviews of governance are likely to continue, with a requirement for more transparent reporting on how governing bodies plan to address recommendations and gaps in capability through recruitment, training, and development.
Whilst corporations remain as self-governing exempt charities, the Skills & Post-16 Education Bill saw greater powers awarded to the state to intervene when governing bodies are not perceived to be sufficiently delivering on meeting local skills requirements. Could we also see more Notices to Improve being issued for more general governance missteps such as weak oversight and poor internal scrutiny? How far down this road government goes, will be interesting to observe and to what extent such intervention may link with recent speculation on the development of larger college groups and the introduction of a top tier of ‘governors’ to oversee such.
Looking at the structure of multi academy trusts (MATs), it begs the question of who would fulfil the role of ‘members’ in a similar FE college structure – externally appointed governors or government appointed members? Together with a tightening up on governor terms of office, an increase in focus on structures and composition seems inevitable. This is somewhat frustrating as research clearly shows that what a board does and how it behaves has a far greater impact on organisational performance than how it’s structured or the competencies of the individuals around the table. After more than a decade of MATs trialling models such as sharing local governing bodies, clusters and hubs, regional tiers, and other innovative structures, through experience most have returned to the ‘one school one committee’ model, and there is much to be heeded from this journey if a move to consolidation is to be considered.
Compliance will increase in order to meet new requirements such as managing public money. Whilst boards have always been mindful of the public money aspect, there will be further hoops to jump through and permission requirements to be sought – senior pay being one such item.
Yet the case must be for less regulation not more, in order that FE colleges remain agile and do not become hamstrung – this is essential as they must innovate to survive.
The recent Institute of Directors’ Centre for Corporate Governance Public Inquiry into Governance and Innovation, found that the cumulative effect of regulation on boards in highly regulated sectors, has indirect adverse impacts on innovation – something I’ve witnessed as a Board Reviewer. The first adverse impact is that many boards spend a disproportionate amount of their time dealing with compliance issues at the expense of strategy, innovation, and other matters crucial to the current and future performance of the organisation. The second is that the focus of compliance has tended to make boards more risk-averse, a trend that becomes self-reinforcing as it informs the selection of new board members whose mindset and skill sets may not enable them to contribute to cultivating an innovative culture.
Compliance is a reasonable process to protect value created, but strategy and innovation are about growing value. If boards cannot spend most of their time on forward-looking analysis, the value to students protected by regulation and compliance, will simply erode. Such a result will be more a failing of government than a failing of governance.
This article originally appeared in The Mark, December issue.