Boards are in the Spotlight
Higher education leaders and the fiduciaries that govern colleges and universities are operating in a new environment where risks are becoming more complex and interconnected.
A recent URMIA and Deloitte blog and webinar showcased the importance of risk management as a tool to help boards navigate these challenges.
One key takeaway is reflected in this quote:
"Given the increased scrutiny of higher education institutions, the role of trustees in risk management will be increasingly important. How trustees engage with institutional leaders will be paramount in responding when risks manifest."
So, what are these risks?
Key Risks
Financial Instability: Declining enrollment and increasing tuition costs are fueling college closures and students "stopping out."
Campus Political Climate: Pressures to balance community needs with potential financial or reputational backlash from various stakeholder groups.
Disruptive Technology: AI and its impact on maintaining academic integrity
Labor Market Alignment: Ensuring that degree programs are relevant and meet the needs of the labor market to support student success.
Lack of trust: Gallup reports that 68 percent of Americans "do not believe that higher education is on a positive path." The Chronicle of Higher Education published an article with a similar sentiment, "The Public Is Giving Up on Higher Ed."
Role of the Board
As John Kroger states in his article in Inside HigherEd, "Trustees, not presidents, faculty, or alumni, are the ultimate legal authority on campus. They are the long-term stewards of the university's values and finances."
Richard Vedder further emphasizes in his article, "The optimal leadership model for schools varies, but generally ultimate control must almost always reside in the institution's governing board."
In summary, Board members guide the institutional strategy with senior leadership, evaluate the performance of their institution's operational and financial goals, and develop and oversee external engagement. They help pave the way forward.
The Road Ahead
One of my favorite quotes is, "If you do not change direction, you may end up where you are heading." — Lao Tzu
Is this quote reflective of the current sentiment surrounding the American Higher Education system?
If yes, then what changes need to be made?
A Harvard EdCast reveals how higher education resists change and offers insights and solutions.
Board Actions are Key
Boards can enhance institutional resilience by:
Embracing Change: Adapting to new risks and supporting evolving educational models can meet labor market demands and enhance student success.
Increasing Engagement: Understanding and proactively addressing the communities' needs can help mitigate reputation risk.
Leveraging innovation: New tools and partnerships can enhance strategies to combat financial and operational challenges and reduce student costs.
Incorporating risk management: By proactively identifying emerging risks, Boards can formulate better mitigation strategies to steer institutions through challenging times.
Any of these actions can also help rebuild Trust, and trust is one theme that keeps recurring.
Risk Management's Role
Risk managers can support boards by:
Identifying Risks: Being the "eyes and ears" for emerging risks and trends can inform Boards of potential threats and help prioritize resources to manage the risk landscape.
Developing Mitigation Strategies: Creating proactive measures are essential especially when dealing with times of crisis.
Facilitating Dialogue: Risk Managers are embedded in the campus community. By gathering feedback, data can be leveraged for strategic planning.
Fostering a culture of transparency and accountability: Building robust governance practices is essential for today's regulatory environment.
Bottom line:
Governing boards are integral to overseeing and reforming universities as part of their fiduciary duties. By incorporating risk management, boards can find innovative ways to control costs, mitigate reputation risk, and rebuild trust in the American higher education system.
Dive Deeper? - The Trust Factor
Out of all these risks, restoring trust is essential for the success and sustainability of the American higher education system. Declining public perception and heightened activism reflect the deep divide in American society.
For differing perspectives on how to rebuild trust, consider these articles and insights:
Inside Higher Ed on Rebuilding Public Trust
Steven Mintz states, "Failure to address higher ed's trust gap is a big mistake. But as the popular adage about addiction and mental health puts it: The first step to recovery is to recognize that you have a problem."
Richard Vedder's analysis of higher education divides.
"Some things governing boards could insist on are cheap and easy to implement. Two examples: First, a "campus political neutrality" policy that says the university will not itself take positions on political issues even though individual campus community members are encouraged to civilly debate them. Second, governing boards can allocate modest sums to sponsor regular campus debates on contemporary issues featuring prominent national proponents of opposing viewpoints."- Richard Vedder.
Final thoughts:
Identifying common themes beneath the political rhetoric can reveal shared understanding and agreement. I listed a few below.
Higher education must align academic programs with workforce needs to ensure graduates have the skills to be successful in today's job market.
Institutions must explore innovative financial aid solutions, cost-control measures, and other partnerships and initiatives to make higher education more affordable.
Building collaborative relationships with a variety of stakeholders can lead to shared understanding.
What else can be done to rebuild trust.. that might be another article!
