Strategic governance: measuring what matters beyond financial pressures

In today’s higher education landscape, governing bodies (GBs) face the complex challenge of balancing the immediate financial pressures of running an institution with the long-term strategic vision necessary to be a sustainable organisation in the context of their vision and strategy. 

Turbulence and volatility appear to be a constant in the sector which place enormous demands on governing bodies. Issues like Brexit, the Covid-19 pandemic, global political turmoil, rising operational costs, economic uncertainty, regulatory changes and a rapidly evolving competitive environment continue, to create short-term challenges and demand governance and leadership attention. While undeniably important, the focus on long-term strategy, such as defining the institution’s future size and shape, modernising its curriculum, operating model and forging international partnerships, has arguably become even more pressing. 

The short-term focus is necessary to ensure operational stability and regulatory compliance. However, it often consumes the bandwidth of governing bodies, diverting attention away from strategic goals that will determine the institution's long-term viability. This dynamic can be dangerous for institutions as they navigate this balance, so two critical questions arise: 

-           Is the GB in reactive mode, responding to the present crisis without building a resilient foundation for future success, risking vital longer term strategic planning?

-           Is the GB receiving the right information to manage both immediate concerns and long-term strategy effectively? 

The importance of long-term strategy

Despite the pressing financial and regulatory challenges, long-term strategic issues demand urgent consideration. Strategic options, choices or opportunities about the future of the institution are financially and reputationally critical. 

Advance HE’s Measuring what Matters report asserts that, “The ultimate goal is to help boards understand and make sense of their context so that appropriate strategy and risk responses can be deployed”. This hints at a need for scenario planning over different time periods.  For example:

• Institutions must reconsider their offerings in light of rapidly changing student expectations, technological advancements and global competition. The rise of new delivery models, such as online education and the increasing demand for inter-disciplinary and globally relevant programs.
• Long-term strategic thinking must consider institutional resilience in the face of financial volatility, changing student demographics and a shifting policy environment.
• Ensuring financial sustainability and innovation in research must go hand in hand with making bold decisions in the context of competition and the changing educational ecosystem.

The quality of information presented to governing bodies

Evidence from Advance HE’s Governance Effectiveness Reviews raises concerns that the quality and relevance of the information governing bodies receive is part of the problem. All too often, board papers are long, complex and filled with jargon, which can overwhelm and distract from strategic discussions. The sheer volume of information, particularly in the post-pandemic world where operations are in constant flux, can leave GBs bogged down in routine updates and regulatory compliance issues rather than engaging with critical strategic matters.

Governing bodies, especially external lay governors, have voiced concerns about the lack of discipline in how papers are presented, the consistency of information over time and the timeliness of data and information. To ensure that GBs can engage with what truly matters, it is vital to move away from lengthy prose and towards clearer, more strategic summaries, enhanced with dashboards, key performance indicators (KPIs) and visual aids like diagrams that convey information more effectively.

Furthermore, the quality of information should be assessed using a three-step test to determine its relevance to the board. Specifically, does the information directly link to the institution’s strategy, address regulatory or statutory requirements, or materially affect the institution’s value or reputation? If a board paper or report does not meet these criteria, it should be reconsidered for inclusion in the agenda.

Defining and measuring strategic success

Many institutional strategies are published with ambitious goals - such as offering world-class teaching, research excellence and sustainable financial growth, often with strong civic missions. However, these strategies often lack the specificity needed for governing bodies to undertake effective strategic oversight of performance. To evaluate the institution’s success, governing bodies need concrete, measurable objectives that tie directly to institutional performance.

In this context, it is essential that GBs focus on ensuring the strategy is distinctive and aligned with the core mission, and that Boards should review key performance metrics that reflect the areas of strategy they deem most critical.

The Measuring What Matters report asks some key questions about this: 

• Does the board have a holistic framework to regularly review and understand performance against the strategy, and is this based on data and information over time and suitably benchmarked?
• Is it clear where, when and how all aspects of performance are being measured and scrutinised in the governance structure? Is there an assurance map or other ways to bring performance oversight together to enable the board to have a holistic view?
• What data and information might the board need to consider innovative or more radical strategic options to create more stability and a more sustainable future for the organisation?

Risk and strategic adaptation

A key responsibility of GBs is to understand the risks that could affect the institution’s long-term success. Clear, honest and comprehensive risk information which considers both the internal and external context of the institution is essential for informed decision-making. Without a solid understanding of the risks involved- whether financial, operational or reputational - governing bodies may be hesitant to take bold actions that are necessary for future success.

Governing body members tell us in Governance Effectiveness Reviews that they have confidence in the process of risk management in their institutions, but that they would like to have a more sophisticated conversation about risk at the board, including integrated risk and risk appetite. This would, in our view enable the board to have a more dynamic approach to strategic and performance oversight. Indeed, with better risk and performance information, the GB should have the authority and flexibility to refresh, refine, or even change the institutional strategy when circumstances demand. Institutions must be able to adapt their strategic direction in response to new challenges or opportunities in the wider sector, such as shifting policy trends, global competition or evolving student needs.

Finally, ensuring that the GB understands the needs and interests of all stakeholders, particularly staff and students, is essential information for short-, medium- and long-term decision-making. This feedback can help illuminate the strengths and weaknesses of current strategies and provide insight into where the institution needs to evolve or pivot quickly to remain sustainable in the long term.

Conclusion

Higher education governing bodies are tasked with a complex balancing act. The demands of immediate financial concerns and regulatory compliance cannot be ignored, but they must be weighed against the need for bold, forward-thinking strategy. To make this balance work, governing bodies must ensure they are receiving the right, well-presented information and engaging in rigorous, strategic discussions that drive long-term institutional success. 

With the right focus, tools and mindset, governing bodies can guide institutions through a period of immense change and ensure they remain adaptable, competitive and resilient in an increasingly volatile world. 

The questions raised in this provocation will be explored in more detail at our workshop on 27 March. Find out more.

Aaron Porter is Advance HE’s Associate Director of Governance. Find out more about Aaron.

Alistair Jarvis CBE is Pro Vice-Chancellor (Partnerships and Governance) at University of London and an executive member of the Association of Heads of University Administration (AHUA). Find out more about Alistair.