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Governance in New ZealandTertiary Institutions:Concepts and practiceStuart Locke aa University of Waikato , New ZealandPublished online: 03 Aug 2010.

To cite this article: Stuart Locke (2001) Governance in New Zealand TertiaryInstitutions: Concepts and practice, Journal of Higher Education Policy andManagement, 23:1, 33-48, DOI: 10.1080/1360080002004725

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Journal of Higher Education Policy and Management, Vol. 23, No. 1, 2001

Governance in New Zealand Tertiary Institutions: concepts andpractice

STUART LOCKE, University of Waikato, New Zealand

ABSTRACT The standard of governance of tertiary education institutions (TEIs) in New Zealand iscritical to the success of these institutions. However, enhancing the quality of governance requires carefulanalysis of the purpose of governance and competent analysis of alternative institutional arrangements.Unfortunately, research addressing governance in TEIs is sparse and there has been no signi�cant researchon this topic within New Zealand. This paper provides a background to TEI governance in NewZealand, which is followed by a discussion of key issues. An evaluation of governance practice in TEIsis followed by a description of a survey of current practice in New Zealand TEI governance and ananalysis of the results. The paper concludes with a discussion on how governance in New Zealand TEIsmay be improved.

Introduction

Perhaps the need for good governance of tertiary education institutions (TEIs) isconsidered as almost too obvious to warrant attention. However, recent reports andinvestigations conducted internationally have shown it is no simple matter and certainlysubject to variable quality throughout the world. There have been some signi� cantcorporate misadventures in recent years. The reports on corporate governance, fromCadbury (Cadbury Committee, 1992) through to Hampel, have focused on issues suchas the � nancial monitoring of companies, the presence and role of non-executivedirectors, remuneration policies for top executives and the length of their servicecontracts. The Hampel Report of the Committee on Corporate Governance went alongway to recognising that there is no single formula that can apply to all companies(Hampel Committee, 1998). This is echoed by the OECD (1999) which indicates that agood corporate governance regime is central to the ef� cient use of corporate capital.Good corporate governance, in the OECD’s view, also helps to ensure that corporationstake into account the interests of a wide rage of constituencies, including the communitieswithin which they operate, helping to assure the bene� t of society as a whole.

If there is a temptation to say that’s private sector stuff, then a quick recollection ofproblems, in New Zealand, with Accident Compensation Commission (ACC) Chief

ISSN 1360-080X (print)/ISSN 1469–9508 (online)/01/010033-16 Ó 2001 Association for Tertiary Education ManagementDOI: 10.1080/136008000200472 5

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Executives and Audit Of� ce and the Tourism Commission’s relationship with itsMinister, Hon Mr McCully, indicates clearly it is not just a private sector matter. Havethere been any similar problems in tertiary education? The failure to follow correctgovernance procedures resulted in a successful High Court challenge to the moves by theUniversity of Waikato to restructure in 1999. Massey University Council’s decision toreduce staff by 79 was released on 9 August 2000 and is subject to a legal challenge.

A broad de� nition of governance is taken as the domain for this investigation. Keaseyand Wright (1993, p. 294) explain that:

In situations characterised by asymmetric private information and boundedrationality, agents may have to be given incentives to motivate them to achievethe ‘goals’ of the organisation since it cannot be assumed that a commonalityof interests exist. The incentives have to overcome the potential for opportunis-tic behaviour and imperfect commitment. More particularly, issues of pre-contractual (adverse selection) and post contractual (moral hazard) oppor-tunism have to be dealt with.

In a general sense governance is concerned with the set of structural arrangements withinan organisation, promoting an alignment of the management of the entity with theinterests of its stakeholders. As a concept it is applicable to incorporated enterprises, smallbusiness, public sector organisations and voluntary not-for-pro� t entities. It might beexpected that at the voluntary level there may be a lack of skill, commercial acumen andinsight, which may cause hiccups in the way things are administered or run bycommittees. Smelt (1998) considers the issue of secondary school reforms and governanceis identi� ed as a key problem area. At the higher level of TEI activity one’s a priorisuspicions might well be that the talent and rewards available are more than suf� cientto ensure things are well run. The quantitative evidence available does not do a lot tocon� rm such naive faith.

Background

In considering governance practice in New Zealand TEI it is important to note thattertiary education in New Zealand is once again under review. A Tertiary EducationAdvisory Commission (TEAC) was established in April 2000 and has now released areport entitled Shaping a Shared Vision (2000). Prior to TEAC there was a White Paper,preceded by a Green Paper,1 and the entertaining of an introduction of other measuressuch as capital charging. These macro-reforms have a backdrop of both micro-management by the government and declining real funding per student for tertiaryeducation.

This is important because the government exerts considerable control over the tertiaryeducation through multiple instruments. The avenues of signi� cant in� uence include thefollowing.

· Enabling legislation, which created the universities and polytechnics, having beendrafted by government. As, at least, pseudo owner,2 the Crown exercises control overthe vision, mission and goals of non-private institutions through the requirements toprepare ‘Charters’ and ‘Strategic Plans’. This is not dissimilar to the ‘Statement ofCorporate Intent’ required of Crown Companies and State Owned Enterprises.

· Funding for universities and polytechnics comes principally from tuition fees andresearch income. The Crown controls the largest component of tuition fee income asa purchaser of student places. The input based funding of teaching services, which also

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Governance in NZ Tertiary Institutions 35

must provide sums for capital expenditure and most other running costs, is based oncost windows associated with Effective Full-Time Students (EFTS). The Crown buysEFTS. Research funds for most institutions come out of the public goods science fundand this is a Crown entity. Some private sector sponsorship and philanthropic receiptsare received but these are presently a minimal percentage of total revenues.

· Accreditation of academic programmes is in the domain of another Crown entity. Forthe polytechnics it is the New Zealand Quali� cations Authority and for the Universi-ties it is through the New Zealand Vice Chancellors Committee. However, it is theMinistry of Education that needs to � nally agree to accept any new programmes andbe prepared to pay for students who enrol in them.

· The Minister for Education also has the power to appointment a number of membersof Council for Universities and Polytechnics.

The continuing pressure from the Crown to reform the tertiary education sector raisesthe question of whether there are structural problems, governance problems, fundingproblems or some other set of problems.

When considering these issues of government policy it is appropriate to note that inestablishing TEAC, the government has explicitly stated its vision for tertiary educationas:

In order to become a world-leading knowledge society that provides all NewZealanders with opportunities for lifelong learning, New Zealand needs:

· a more co-operative and collaborative tertiary education sector;· a commitment to excellence in teaching, scholarship and research;· a greater sense of partnership between the key contributors to the sector,

including individuals, local communities and industry;· an environment where all those involved in teaching, scholarship and

research are committed to contributing to the nation’s future direction;· an environment where participation by all is encouraged, including by

Paci� c people, other ethnic groups, and people with disabilities;· an environment where Maori requirements and aspirations for development

are fully supported, and which gives recognition to the Treaty of Waitangiand its principles;

· a sector that fully supports regional and local communities; and· a sector that comprises a range of well-managed institutions and providers

that can work together across the whole system to meet the education andresearch needs of the nation. (TEAC, 2000, p. 1)

This grand view is to be contrasted with the more micro-governance of TertiaryOwnership Monitoring Unit (TOMU), whose functions include:

· reviewing audited � nancial statements;· monitoring budgeted and actual quarterly statements of all public tertiary education

institutions;· reporting to the Minister for Tertiary Education on � nancial trends in the tertiary

education sector and on any risks to the viability of speci� c institutions. The role alsoinvolves developing courses of action to remedy any material problems that have beenidenti� ed;

· undertaking ownership monitoring discussions covering the strategic and businessplanning of tertiary education institutions;

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· consideration of applications for capital injections from tertiary institutions;· processing investment applications;· assessing merger applications from tertiary institutions and requests for change in

status;· approvals under section 192 of the Education Act 1989 (e.g. borrowing, disposal of

assets); and· managing the appointment of ministerial representatives to councils of tertiary institu-

tions and the boards of central education agencies.

EMCO (1997) identi� ed risk management as a key concern of governance. WhileTOMU provides oversight it is not developing governance competencies within TEIs butrather forcing managerial compliance with their framework.

Issues in TEI Governance in New Zealand

Given the grand vision of the government, and its multiple policy instruments, what isthe role of TEI governance? It is the interface between the concern of the majorstakeholders and where the entity is going that gives rise to the major issue points in TEIgovernance. If there was perfect omnipotence and good will, then there may not be anyproblems. However, TEI governors, in the majority, are something less than gods, andmanagement can’t always be relied upon to be angels. The result is that many aspectsof tertiary education activity give rise to potential challenges for Councillors.

Political processes inevitably produce divergent views on the best way to proceed andthe art of politics is woven on a fabric of consensus, compromise, and ‘the numbers’.Nevertheless, the majority of Councillors do discharge their roles with diligence and anearnest desire to see positive outcomes for their institution. Some issues are divisive butmany are harmonious. In all cases the core matters of corporate governance come tobear upon the activities of Council.

Within the framework of elected and appointed representatives contributing to TEIgovernance there may be a mid ground between disparate and warring factions andunanimity supported solidarity. There are many components of the work of TEIs’Councils that can be done in concert; however, from time-to-time staff representativesmay differ from student representatives or government nominees on speci� c matters.

The establishment of good governance at Council level relates to three key issues. Firstis the need for policy. Second is the need for procedures. Third is the need for checking.Policy is the starting point.

Policy as Key Driver

Governance requires a well-developed and well-maintained policy framework. In theabsence of policy covering an entity’s key functional aspects, there can be no systematicand maintainable sound corporate governance. It is the absence of a robust policyframework with associated procedures which most commonly puts an entity, stakeholdersand corporate governors at risk.

While reforms in tertiary education have required Councils to produce quite elaborateCharters, Strategic Plans and supporting documentation, these are not a substitute forpolicy frameworks. It is not suf� cient to say that Council will adhere to the requirementsof the Building Act or the Resource Management Act. How does Council know that it

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Governance in NZ Tertiary Institutions 37

FIG. 1. Aspects of TEI governance.

is happening? The � rst step, which is key to good practice, is to ensure that Council hasa clear policy statement for each area of governance concern shown in Fig. 1.

Independent advice is absolutely essential in many of these areas. Audit committeesare a useful illustration as is the appraisal of Chief Executives.

Audit Committees. It is generally recognised that having an audit committee is essential togood governance. In the corporate sector it is advised that non-executive directors shouldconstitute the committee and neither the Chief Executive nor the chief � nancial of� cershould be a member of the committee. Various international reports have stressed thatindependence is absolutely fundamental in this regard. The International Federation ofAccountants (IFAC) has a comprehensive discussion monograph covering public sectorgovernance, which cover among other topics how auditors should communicate concern-ing governance issues (IFAC, 2000).

The modern trend is to use external auditors as internal auditors on contract. Thisensures that the employee as internal auditor does not have a con� ict between being anemployee of the Chief Executive and reporting directly to directors. The same is verytrue in TEIs where the employee of the Chief Executive is not independent of the ChiefExecutive. When being an internal auditor is not seen as a lifelong career position, thenthere is an even more pronounced problem.

Appraisal of Chief Executive. Gone are the days when a couple of representatives ofCouncil can meet with the Chief Executive and talk through how things went last yearand make a recommendation for a continuation of contract. Appraisal of key manage-ment is absolutely fundamental to good governance. There is a need to know what tocheck, what to ask, and how to reconcile differing views about how things are, and howthings will be.

Engagement of an independent consultant to report to a subcommittee of Council,preferably consisting of Councillors who do not have extensive day-to-day contact with

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the Chief Executive, is important. Not only is such a consultant trained in the necessaryhuman resource management competencies, independent and needing to do a good job,but they also have the added advantage of dealing with similar matters multiple times.

Procedures as a Key Driver

It is essential that clear and transparent procedures be promulgated so that Councillorsand management know their own governance and management practice. This facilitatesthe quick and smooth incorporation of good ideas for improving Council performanceand provides a sound basis for dealing with complaints and problems that arise.

Procedures must de� ne the responsibilities of Council members, the Chief Executiveand the staff of the institution. Council members must be clear about the boundaries oftheir responsibilities and how they will action the responsibilities they have. This requiresCouncil to be very speci� c concerning who will do what tasks, when they will do themand how the performance will be evaluated. It is particularly important that whereCouncil have committees these committees focus on the key governance issues identi� edin Fig. 1 and do not get into detail which is rightfully the responsibility of management.Councillors need to know the decision making cycle and be aware of the important tasksto be attended to between meetings. Chief Executives have to have clear procedures fordealing with both Councillors and their own staff. Staff need to understand Council goalsand the strategies and procedures being pursued to achieve those goals.

Checking as a Key Driver

Through establishing that there will be regular reporting by management on key itemsand periodic reviews of other areas the stage is set. There are four separate areas whichneed to be covered: overall performance, � nancial performance, planning and processes.

Performance. The Chief Executive Of� cer should formally report at each regular meet-ing. This report needs to include suf� cient information to allow Councillors to ful� l theirgovernance role. There needs to be no surprises in the information coming out. CEOsshould be on individual contracts and the monthly report can be in terms of keyresponsibilities as per the contract.

Financial Information. Financial information needs to be provided to regular meetings.This should include reports covering the current period, year to date and outlook. Acomparison with budget is essential. A separate � nance committee of council would seemprudent.

Planning. The planning of Council activity is an ongoing challenge. Council needs toensure that both strategic planning and operational planning is creative, thorough andtimely. It is very easy for organisations to have a burst of enthusiasm for planning activityonly for it to be forgotten as � re-� ghting activity displaces long-term thinking.

Processes. Council processes need to be benchmarked in much the same way as � nancialperformance indicators are calculated and compared with best practice.3 Council needsto know if their practice is of a high standard or whether it is less than satisfactory.

Best practice governance is being re� ned in ‘Codes of Practice’, especially for privatesector directors, through organisations such as the Institute of Directors (IOD, 1996–

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1999). The applicability of such best practice to public sector organisations, in NewZealand, has increased. The Crown company Monitoring Advisory Unit (CCMAU),which among it roles assists in the selection and development of Board members ofpublic sector organisations, utilises similar best practice concepts to the IOD. CCMAUdomain, which includes State Owned Enterprises, Crown Companies and a number ofstatutory organisations, does not extend to TEI Councils. Of real signi� cance, however,is the gap that remains in the picture between the perceptions of what ought to behappening and how participants see it actually occurring.

It is important to identify the major sources of dif� culty experienced by those involvedin governance. An analysis of the impact of the perceived dif� culties upon goodgovernance will assist in developing programmes designed to advance competency inknowledge and abilities to overcome the perceived dif� culties.

TEI governance is the process, structure and relationship through which Counciloversees the functioning of management, while management is the process and structurethrough which managers attempt to achieve the goals of the institution.

Evaluation of TEI Governance

The broader relationships of TEIs are depicted in Fig. 2. It is from these that keyoperative issues are deduced. These are in essence similar to those that will be faced byany organisation as it endeavours to develop a governance framework. The evaluationconsiders the � ve key areas that determine the way governance is worked out withinrespective local authorities. The primary foci of attention relate to whether there is aclear framework, of which individual Councillors are aware and which is relied upon inrelation to:

1. how Council is organised and operates;2. how Council determines its broad direction;3. how Council directs its strategy and structure;4. how Council delegates to management; and5. how Council handles its responsibility to Crown, students, staff, community and other

stakeholders.

FIG. 2. TEI governance framework.

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FIG. 3. TEI governance task.

The initial model of the relationship is important in terms of any study of governancerelationships. The perspective accepted is depicted in Fig. 2, where the TEI is acceptedas a self-governing organisation with multiple stakeholder interests.

In this approach the primary issues for Council relate to the policy of the institutionin the context of multiple stakeholder relationships. Figure 3 presents this situationdiagrammatically.

The government may choose an alternative structure or to consider TEIs as Crowncompanies. There is a well-established model for this in New Zealand with the CCMAU,participating in the selection of directors and their training, in monitoring performanceof directors and the organisation, and as expert advisor to the Minister. The governanceissue concerns, according to Margaret Blair (1995), include the whole set of legal,cultural, and institutional arrangements that determine what the entity can do, whocontrols them, how that control is exercised, and how the risks and returns from theactivities they undertake are allocated (p. 3). The basic model involves the governmentappointing two ministers as shareholders. The CCMAU recommends directors and helpsprepare a statement of corporate intent that spells out how the company will deliver whatthe shareholders want. The performance of the company is monitored by CCMAU onbehalf of the shareholders. A pictorial presentation is shown in Fig. 4.

The initial model of a self-governing TEI was accepted as the basis for the empiricalstudy.

Governance Survey and Results

The approach adopted was to develop a questionnaire instrument asking electedCouncillors for their view on each of these � ve major themes. The questionnaire wasthen mailed to each member of the council of a university, polytechnic or wananga inNew Zealand. The responses were tabulated and analysed. A similar study of these issueswas undertaken for local government in 1999 (Locke & Scrimgeour, 1999) with a 60%response rate. No signi� cant issues arose with the administration of the instrument,which was � rst trialled on a regional study (Scrimgeour & Locke, 1999). Ethicscommittee clearance was sought for the project and care was taken to ensure that no

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FIG. 4. Crown company framework.

data matching was possible and privacy of respondents was maintained. A few responseswere not used in the analysis as signed consent forms were not returned.

The initial questionnaire was approved by the Ethics Committee on 25 November1999 and posted out on 29 November. In two instances the published list of Councillors,in the TEIs’ Of� cial Calendars, was out of date. After contact with the intuitions arevised mailing was undertaken. One university refused to provide a list of names ofCouncil members indicating this was con� dential. After some delay the Ministry ofEducation was able to � nd a list. The close-off date was set at the end of March.

Results

The results of the � ve themes are presented in order. Table 1 reports the � rst set ofanswers concerning how Councils are organised and showed concern over aspects of theoperational level of governance. In particular the power of various groups within Counciland the way in which reporting, monitoring and evaluation occurs.

Table 2 reports the second set of answers relating to the broad direction of Council.The way in which the stated mission is translated into operational tasks is not done well.There appears to be a lack of method which indeed is potentially re� ecting a degree ofad hocary in the way proposals come forward without strong linkages to previouslyagreed strategic outcomes.

Table 3 reports the third set of answers highlighting the strategy and structure aspectsof Council. The major dif� culties again lie around the way in which policy is imple-mented and supporting structures to ensure there is ef� cacy in this implementation. Theextent to which management may do its own thing without accountability is apparentlya substantive matter to be addressed.

Table 4 reports the fourth set of answers relating to delegation to management. Theadministrative minuting appears satisfactory with larger levels of concern over account-ability for results. Performance monitoring is not as strong as needed.

Table 5 reports the � fth set of answers that relate to Council and its externalrelationships. Responses in this area indicate that signi� cant work needs to be done toimprove the framework.

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TABLE 1. How Council is organised and operates

ISSUE NO % YES %

Is there a clear framework, ofwhich you are aware and which isrelied upon, that: Miserably Poorly Well Very well

De� nes the scope of Council’s 5 1 16 45 33powers, roles and responsibilitiesSpeci� es the powers andresponsibilities delegated to 21 2 21 38 18individual CouncillorsSpeci� es the power of the 16 0 19 44 21ChairpersonSpeci� es the power of the 25 1 12 43 19Chairpersons of Committees 11 1 7 41 40Establishes, maintains anddevelops reporting and meetingprocedures for Council and itsCommitteesReviews regularly the quality of 50 3 15 23 9Council’s decisions, advicereceived and its actions

TABLE 2. How Council determines its broad direction

ISSUE NO % YES %

Is there a clear framework, ofwhich you are aware and which isrelied upon, and how is it done,that: Miserably Poorly Well Very well

Establishes an accepted set of 12 1 12 47 28values, mission and objectivesagainst which policies anddecisions are checked forappropriatenessRequires reviews of Council 44 1 14 28 13actions to check that they areconsistent with the vision,mission and values

Councillors have responded to the questions in a frank and timely manner. There isconcern over the level of governance currently in place and, given the degree ofco-operation received in this survey, a desire to improve matters. A number ofCouncillors telephoned to comment and provided a few anecdotes on their Council’sgovernance arrangements. These ranged from the humorous to the very sad yet providedsome realism to the general trend in concerns that have been expressed. Perhaps one ofthe recurring themes that came through in these unsolicited additional responses was thesense of frustration felt in terms of getting improvements in governance practice. There

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TABLE 3. How Council directs its strategy and structure

ISSUE NO % YES %

Is there a clear framework, ofwhich you are aware and which isrelied upon, and how is it done, that: Miserably Poorly Well Very well

Facilitates review and evaluation of 16 21 31 32present and future opportunities,threats and risks in the externalenvironment; and current andfuture strengths, weaknesses andrisks relating to assets of thebusinessFacilitates determination of 13 16 37 34corporate and � nancial strategicoptions, review and selection ofthose to be pursued, deciding theresources, contingency plans andmeans to support themFacilitates the determination of 11 13 53 23operational strategies and plans toimplement the strategic planEnsures the organisation’s structure 20 15 46 19and capability is appropriate forimplementing its chosen strategies

TABLE 4. How Council delegates to management

ISSUE NO % YES %

Is there a clear framework, ofwhich you are aware and which isrelied upon, and how is it done,that: Miserably Poorly Well Very well

Ensures that senior management’s 27 23 37 13successes and failures arecommunicated to Council andensures that appropriate rewards,sanctions and training areimplementedDetermines performancemeasure 17 1 18 40 24and systems with which Councilmonitors the implementation ofstrategy, policies, plans and legaland � duciary obligationsEnsures internal control procedures 13 17 43 27provide reliable and validinformation for monitoringoperations and performanceRecords the delegation of authority 10 2 20 40 28to management and monitors,evaluates and reports upon suchdelegation

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TABLE 5. How Council handles its responsibility to Crown, students, staff and other stakeholders

ISSUE NO % YES %

Is there a clear framework, ofwhich you are aware and which isrelied upon, and how is it done,that: Miserably Poorly Well Very well

Takes into account the legitimate 18 2 19 31 30interests of groups and individualswho have an direct interest in theactivities of the organisationEnsures that the communication 16 1 9 47 27with citizens and otherstakeholders is effectiveMonitors government and other 21 22 37 20stakeholder reactions to policiesand decisions by the prescription,use and evaluation of appropriateinformation

is a need, at least in the view of some Councillors, to provide them assistance on waysand means that they can improve their governance frameworks.

Improving TEI Governance in New Zealand

The key question to consider is: how can these observed de� ciencies be addressed? Theresponses come in two parts. First, there appears to be some systemic problems, which� ow from the very structure of TEIs in New Zealand. The legislative frameworkcombined with the interaction of the Ministry of Education, New Zealand Quali� cationsAuthority, New Zealand Vice Chancellors Committee, including the NZVCC Com-mittee on Academic Programmes, Foundation for Research, Science and Technology,Tertiary Education Commission, and TOMU and the Minister, and Associate Minister,with TEIs raises concerns for the prospect of improving governance in TEIs. When aMinister sees TEIs as their extended department for delivering goods and services to thepublic, then the model is very different from that arising from autonomous TEIs inpartnership with central government. Similarly, if the Crown is purchaser and TEIs areproviders, then clear separation is necessary to ensure that the transactional economicadvantages are not lost in murky agency relationships.

Second, it is appropriate to focus on the potential for TEIs, to improve governance,given its current relationship with central government. This is the fruitful part of thestudy, at least in the short term, and the evidence points toward three necessary actions.These all stem from a clearer grasp of public policy framework, analysis, delivery,monitoring and reporting by Councillors and management.

De�ciencies in Governance

In examining areas of governance, in practice, the survey responses were broken downinto four groups:

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· those which were poorly handled;· those which were less than satisfactorily handled;· those which were satisfactorily handled; and· those with no obvious problem in handling.

The speci� c de� ciencies detected are set out below. The areas that indicated a poor levelof performance, i.e. less than 50% indicated satisfactory or above, were those where thereis no clear framework that Council relied upon that:

· ensures Council reviews regularly the quality of their decisions, advice received and itsactions; and

· requires reviews of Council actions to check that they are consistent with the vision,mission and values.

The less satisfactory areas were de� ned as those where a considerable proportion ofCouncillors felt that it was not working. The selection range was where between 51%and 60% of Councillors indicated the achievement level was satisfactory or better. Thisarose where there is no clear framework that Council relied upon that:

· speci� es the powers and responsibilities delegated to individual Councillors;· records the delegation of authority to management and monitors, evaluates and

reports upon such delegation; and· monitors government and other stakeholders’ reactions to policies and decisions by the

prescription, use and evaluation of appropriate information.

The satisfactory areas are taken as those indicated by a satisfaction rate between 61% and70%. This arose where there is no clear framework that Council relied upon that:

· speci� es the power of the Chairperson/Chancellor;· speci� es the power of the Chairpersons of Committees;· facilitates review and evaluation of present and future opportunities, threats and risks

in the external environment; and current and future strengths, weaknesses and risksrelating to assets of the business;

· ensures the organisations structure and capability is appropriate for implementing itschosen strategies;

· ensures that senior management’s successes and failures are communicated to Counciland ensures that appropriate rewards, sanctions and training are implemented;

· determines the performance measure and systems with which Council monitors theimplementation of strategy, policies, plans and legal and � duciary obligations; and

· takes into account the legitimate interests of groups and individuals who have a directinterest in the activities of the organisation.

The no problem areas are taken as those that had a well or very well score above 70%. Thisarose where there is no clear framework that Council relied upon that:

· de� nes the scope of Council’s powers, roles and responsibilities;· establishes, maintains and develops reporting and meeting procedures for Council and

its Committees;· establishes an accepted set of value, mission and values against which policies and

decisions are checked for appropriateness;· facilitates review and evaluation of present and future opportunities, threats and risks

in the external environment; and current and future strengths, weaknesses and risksrelating to assets of the business;

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46 S. Locke

· facilitates the determination of operational strategies and plans to implement thestrategic plan; and

· ensures that the communication with citizens and other stakeholders is effective.

Improvement

The key element of change required is to address the process by which Council debatesitems on the agenda. In many instances a Committee does the substantive work. Thesame rigorous level of analysis has to be applied at the Committee level as in full Council.

The key steps are to ensure that policies are analysed in the context of the desiredoutcomes Council has established, through its Strategic and Business Plans. Each policyproposal needs to be referenced back against these strategic result areas and/or key resultareas. These principal documents give the frame of reference and minimise the risk ofissues producing haphazard decisions arising out of the forcefulness of speeches orrandom compromise. Instead the policy advice provided by of� cials should bed theoptions suggested � rmly in Council’s own strategic intent. The necessary steps to improveperformance are as follows.

Strengthen the quality of policy advice provided to Council. This will be enhanced through thedevelopment of professional guidelines on the submission of policy papers to Council.Cabinet has a detailed protocol regarding how papers are to be submitted and a keyelement of this is the provision and analysis of options followed by a recommendedcourse of action. The extent of consultation and impact on Maori, gender, and otherspeci� ed needs also to be explicitly indicated. Such a process would have two immediateeffects. First, an informed debate by Council with all necessary information beingprovided. Second, the necessary upgrade in policy analysis skills among of� cials willcreate and support a learning organisation culture in TEIs. The provision of free andfrank advice by of� cials is absolutely essential and in the absence of an acceptedframework this will not, in general, occur. To this end Council should:

· adopt a Council Of� ce Manual similar to the Cabinet Of� ce Manual used by thegovernment;

· give Councillors a brief induction into how the policy cycle operates;· provide Council Committees with skilled Chairs and provision of training at a national

level; and· clearly de� ne and resolve the executive authority of Chairpersons where Committees

want to rely on executive action.

Monitor management in its role as the provider of advice and implementers of decisions requiresstrengthening. The Council should include on a regular cycle the Chief Executive reportson all major policy areas and the undertakings and achievement of key performanceindicators. It is a pivotal requirement for Council to ensure that what it has sanctionedis happening. An extended internal audit and evaluation committee is necessary toundertake this role on a regular basis. To the extent that the services of an of� cial arerequired it is likely that these will be better obtained through an outsourcing of this role.This should not be seen as an added expense but an absolutely essential role in Councilgovernance. There are plenty of evaluation organisations, preferably members of theAustralasian Society of Evaluation, that could be contracted for, say, two years and thenreplaced. An of� cial who is an employee of the Chief Executive cannot be expected toundertake unbiased and timely evaluation. To this end Council should:

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Governance in NZ Tertiary Institutions 47

· establish an Audit and Evaluation Committee;· employ external professional advice;· maintain a committee appraising Chief Executive contract and performance agree-

ment using external support from an appropriate agency; and· maintain a strong commitment to continuing education and professional development,

especially in policy analysis for of� cials.

Communication with the key stakeholders, mainly the public, will be enhanced through regularreporting of policies adopted and results achieved. Essential components of the public policyframework are accountability, ef� ciency and transparency. The regular advising of issuesunder consideration, decisions made, programmes implemented and results achieveprovides the external dimension of the internal policy cycle. To this end Council should:

· establish a Communication Committee which is nonpartisan and has a nonpoliticalterms of reference;

· base communication activities around the framework of Council’s strategic intent; and· have a regular news release.

Conclusions

The standard of TEI governance can be improved by individual Councils addressing theissues identi� ed in this study through the collective effort of Councils, the aim being toprovide a formal set of processes to ensure that Councillors are:

· provided with quality policy advice;· con� dent in and comfortable with the policy process being suf� ciently robust to

encourage monitoring and reporting; and· assisted by concise and supportive governance structures such that they clearly provide

the framework in which management both operates and is evaluated.

NOTES

1. The Green Paper (1997) states, ‘The Crown does not have suf� cient mechanisms to in� uence governancedecision-making, though this is a key normally associated with ownership’. ‘Councils lack clarity of purposeand focus, which is exacerbated by the large, representative nature of the governing bodies themselves’(p. 50).

2. The Tertiary Ownership Monitoring Unit (TOMU) established in 1998 ‘is responsible for managing thegovernment’s ownership interest in the thirty-eight public education institutions designated as Crownentities’. ‘Ownership monitoring is essentially a governance accountability mechanism’ (TOMU website).

3. The National Association of Corporate Directors (1994) developed a sample board policy that could bemodi� ed and adopted by a board that sets out its primary role and responsibilities.

Correspondence: Stuart Locke, University of Waikato Management School, Private Bag3105, Hamilton, New Zealand.

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