INTRODUCTION TO BOARD REFORM PROPOSAL:
Why can’t we get this Board to make progress on improving the governance structure of Penn State?
If you put a group of lawyers into a room, to resolve an issue that they have differences about, and you ask them “What is the desired outcome of the meeting?”, if they are being honest they will tell you that the desired outcome is that their side – their client – gets want they want, while not giving up anything of importance to them. That – when the lawyer is hired by a client, is a reasonable response. That is their job, which is what they are trained and hired to do. They are hired to be professional advocates – and to “win”.
If you take a group of scientists, engineers, theologians, or physicians….and put them in a room to discuss an issue about which they have different viewpoints, and you ask them the same question “What is the desired outcome of the meeting?”, they will tell you it is to solve the problem, get it right, make it better, or get closer to the truth. It is a simple basic difference in the thought processes and training between contracted lawyers (advocates) and other professionals.
The differences in these thought processes helps to explain why, after years of discussion, this Board has been unable to make meaningful, beneficial reform. It also helps to explain the seemingly unexplainable. For example:
After sitting down for months of meetings, this Board resolves to eliminate voting rights from the Governor’s seat on the Board. This decision was reached – appropriately – because of the clear and significant conflicts of interest involved in the Governor-Penn State relationship.
Amazingly, at the same time, the fact that the Governor retains the ability to seat 6 trustees (or 9, depending on how we view the Cabinet appointees) that do continue to have voting rights on the Board remains un-remedied. Quite frankly, any high school civics class would immediately notice the dichotomy involved. And yet, this Board - after months of deliberation, after spending millions to procure the services of lawyers and consultants - apparently cannot see it. I would suggest that it is not that they cannot see it, it is because the “goals” they had going into the meeting were not to get it right, or make it better…..it was how do I come out of this meeting with what I want – without giving up anything of importance.
If we ever hope to achieve meaningful reform of the PSU Board, we must first change the paradigm. The petty bickering, the turf wars, the factional battles and the perpetual and all-consuming fight for control has to end. We – all of us – have to approach the issues from the viewpoint of what is “right”. We have to take a fresh look at Board governance, without being constrained to the failed structures of the recent past. If we restrict ourselves to making “modifications” to a jalopy, we will never produce the luxury sedan we need and deserve.
Let’s start at the beginning………………………..
Why do we have Boards of Governance?
Nobel laureate economist Kenneth Arrow's studies related to governance focused on the differences between "consensus" and "authority” based decision making. In broad terms, “consensus” based decision making relies on all stakeholder’s of the entity involving themselves with active decision making on the day-to-day activities of the organization. In order for “consensus” decision making to be effective, all of the stakeholders would need to be sufficiently, and relatively equally, informed of the issues at hand, and sufficiently invested in the decision making process. Even if this level of engagement and awareness could be achieved, for large organizations the mechanical and logistical difficulties would impede effective and timely decision making.
Conversely, “authority” based decision making relies upon the stakeholders bestowing authority to, and receiving accountability from, a central agency (a “Board”) to act in the stakeholders’ behalf. The Board becomes a central agency through which all relevant information is channeled. That relevant information must include the desires and the “mission” of the stakeholders, as well as entity specific information procured from the active managers (“Management”) of the organization. The Board thus serves as a two-way conduit for the merger of information and goals, and then processes the information and goals in order to direct, in a broad sense, the activities of the organization (i.e. to “govern”).
As succinctly as any other works, Arrow’s studies explain the rational for the existence of governance boards – whether that governance board be the PA General Assembly, a Church Council, the Board of Directors for Apple Corporation……….or the Board of Trustees for Penn State.
FWIW – Five of Arrow’s students have also gone on to win Nobel Prizes.
So, now that we need a Board, what characteristics must it have to be effective?
1. Good governance must be guided by the Rule of Law. Good governance must be composed within the applicable legal frameworks within which the entity is domiciled. The Rule of Law must be enforceable by appropriate regulatory bodies, for the full protection of all stakeholders.
2. Information and communications must be provided in a way that is readily available and easily understandable to all concerned parties. Governance must be transparent. Outcomes and decisions must be clearly communicated and explained in a timely manner.
3. At its underlying core, the governing board must be accountable to the stakeholders it serves. The accountability process must be clear and equitable. The process must be clearly communicated to, and understood by, the stakeholders – such that the stakeholders at all times feel a sense of trust in the agency relationship between themselves and the board.
4. Active participation of all Board members is crucial. Free-riding board members detract from and reduce the efficiency of the Board’s decision making and responsiveness. Input from the stakeholders should also be solicited, and avenues established to make allowances for such input without impediment. Input should be informed and free from censorship. Communication between the Board and the stakeholders is critical.
5. Inclusiveness and equality of opinion. A Board should seek to include – not exclude – differing thoughts, viewpoints, and concerns in their deliberative processes. Certain interests and viewpoints should not receive preferential weighting.
6. Good governance requires processes that are streamlined and timely. Issues must be addressed, and responses communicated, within a reasonable timeframe.
7. Consultation and open dialogue – in an environment lacking self-interests - should lead to consensus. This does not imply unanimity of viewpoints and concerns, but rather the desired outcome of a collaborative process.
8. Good governance should operate with efficiency and effectiveness. Efficiently utilizing the resources available to it – human resources, competencies, financial resources, and intellectual resources – is critical to the success of the board.
9. The constitution of the Board should be done with an eye towards including individuals with competencies relevant to the entities mission. This is not to imply an inbred set of competencies, but rather a set of competencies developed through multiple outside professions and experiences that are relevant to the issues facing the board, but not limited to viewpoints that are already included within the entities management structure.
All right then. Where are we?
1 - We know we need a Board of Governance
2 - We know the Characteristics of an effective, productive Board
Where do we begin in constructing such a Board for Penn State?
This proposal is NOT put forward with the idea that it is chiseled in stone and brought down from the mountaintop. It is intended to provide a fresh, unencumbered look at reform. Reform based not on infighting, politics, and battles for control – but rather on creating a functioning, efficient Board for the benefit of Penn State University. It is intended (and hoped) that it will serve as a catalyst for debate – to initiate discussion free of the constraints of trying to operate within the failed structures and entrenchments of the past.
This proposal will cover four broad topics of relevance to Board Reformation:
1 – The support infrastructure to assist the Board’s mission……the proposed Board of Trustees Outreach Office.
2 - Board of Trustees Composition
3 - Stakeholder Enfranchisement
4 – The formation of Advisory Councils
Board of Trustees Outreach Office:
The Outreach Office will be led by a BOT Outreach Officer. The position will be an elected position. Election of the BOT Outreach Officer will be held periodically (every three years?) in conjunction with the annual Trustee election.
The Outreach Office will assimilate most of the duties currently performed by the BOT Director’s Office. In addition:
Roles and Responsibilities of the Outreach Office:
The office will publicize the trustee nomination and election process. The office will endeavor to utilize multiple communication channels (Penn State web-sites, newspaper and radio advertising throughout the state, social media, magazines targeted to the Penn State demographic, etc) to raise awareness of the timelines and procedures for the nomination and election of trustees.
The outreach office will be responsible for monitoring the trustee candidate nomination procedures. With the oversight of the Board, the Office will vet and tabulate the results of the nomination process.
The Outreach Office will provide a forum for the trustee candidates to disseminate position statements and campaign messages to the stakeholders of Penn State.
The Office will vet and enfranchise voters for the Trustee Elections. The existing process for vetting and enfranchising voters for the “Alumni Trustee Elections” provides a framework for this process – with obvious modifications necessary for the broader inclusion of additional stakeholders (as outlined later in this proposal).
The office will insure that all public meetings of the Board will be – when logistically possible - broadcast live via the PSU web portals. All public meetings – whether broadcast live or videotaped for the record – will have audio and video recordings posted for access to the public.
The Office will disseminate redacted transcripts of all “non-public” meetings of the board. While it is recognized that certain Board deliberations may contain discussion of privileged and/or confidential elements, the discussion of specific privileged or confidential information should not be used to drop a cloak of secrecy over the entire content of the meeting. When a “non-public” Board or committee meeting is held, a transcript of the meeting will be compiled by the Outreach office. After the transcript is edited to insure that the SPECIFIC privileged information is redacted, the transcript will be made available to the public.
In addition to the dissemination of meeting records, the Office will provide a communication channel (website?) for Trustees to provide updates on topics of interest to Penn State’s stakeholders, and to solicit input from those stakeholders. This will include the opportunity for Penn State stakeholders to express specific concerns and comments to the Board (as a whole, or to specific committees, or individual members) in an accessible, thorough and open manner. It will also allow the Board to respond to those concerns in a timely manner. This will greatly enhance the opportunity for Board/Stakeholder communication (currently limited to the “30 minutes a month” rule for Public Comment).
Composition of the Board of Trustees:
Well-reasoned and well-intentioned people can reasonably debate many aspects and parameters of Board Composition:
· How many members should be included on the Board?
· How often should elections be held?
· Should there be term limits?
All of these questions, and many others, are appropriate topics for open and thoughtful discussion. What is not debatable – at least among well-intentioned and well-reasoned people - is whether or not the Board of this or any other entity should be accountable to the stakeholders of the entity.
The core of my proposal with regard to Board composition is that ALL members of the Board must be authorized by – and accountable to – the stakeholders. ALL board members must be elected through the same process – there is no room for the fracturing of the Board into various “factions”.
For 34 months now, our debate on “Board Reform” has focused on how many “Business and Industry” trustees should sit on the Penn State Board? How many “Agricultural Trustees”? How many “Governor Appointed”, how many “Alumni Trustees”?
The answers to all of these questions should be obvious….and the answer to each question is the same. The answer is ZERO.
The idea that the Governing Board of Penn State University should be comprised of anything other than PENN STATE Trustees in indefensible. Should we not have a panel of trustees, all of whom are democratically elected by the stakeholders of Penn State, accountable to the stakeholders of Penn State? Anything else is contrary to the very reasons for the existence of this or any other governing board. How in the world did we ever devolve to the point that we are arguing anything to the contrary?
My proposal with regard to Board Composition is simple:
1. Fifteen member Board
2. Three Year Terms
3. Annual elections on a staggered basis (5 positions per year)
4. No restrictions on candidates with respect to Alumni/Non-Alumni status
5. Two non-voting ex-officio members, the President of the University and the Governor of the Commonwealth
6. All voting members elected through the identical democratic process
Aside from Item 6, all of these parameters are reasonably debatable. I – for one – would welcome open and honest debate on these and other parameters.
Upon the realization that any properly functioning Board of Governance must rely on the authority granted to it by the stakeholders, the most critical remaining issue becomes: “Who are the Stakeholders?”
This issue is critical, and discussion and debate should be open, honest, and thorough. A University, particular a University of the scope and reach of Penn State, effects – and is influenced by – so many people and organizations. I will propose (and include my rational) a plan for stakeholder enfranchisement. I do not presume that this plan is etched in stone and brought down from the mountaintop. I do, however, feel that we have to start with a clean slate – and not be influenced by or restricted to the failed “factional” processes of the past.
[INSERT: It should also be noted that “Benchmarking” is by definition a failed process with regard to determining proper stakeholder enfranchisement. Unless the question is “How do other organizations function?”, benchmarking does not provide any answers. On the other hand, benchmarking is often used as a disingenuous tool to support a preconceived position. It would be easy enough, with a few hours’ time and access to the internet, to compose a “benchmark” or a profile of stakeholder enfranchisement among various organizations…..and structure that composition to support any position we might wish to defend (For example, the most common enfranchisement structure among Big Ten institutions is as follows: An eight member Board, all of whom are selected through a democratic statewide election. This is the process in place at Michigan, Michigan State, and Nebraska. That being said, it also shows that eight other Big Ten institutions - ten, if we consider Rutgers and Maryland – have different processes. What we should see, is a tremendously divergent spectrum. In and of itself, this would be reason enough to reject benchmarking as anything other than an academic exercise. The question we face is not “How do other organizations function?”, but rather, “How do we implement a proper governance structure for the Pennsylvania State University?”]
Several potential stakeholder groups where considered for enfranchisement. Some of them are listed below, and there may be others we should consider.
· Current Penn State Students
· Current Penn State Faculty
· Penn State Alumni
· Citizens of the Commonwealth of Pennsylvania
In order to evaluate the proper inclusion of stakeholders, one should re-examine the purpose of the Board [INSERT: Discussed earlier under “Why do we have Boards of Governance?”]
The primary function of the Board is to provide oversight (“governance”) of the day-to-day management of the University, with the goal of assuring the management of the University is congruent with the mission of the University.
Of those who are attuned to the mission of the University, perhaps no group is more so than the alumni. Alumni, through their experiences and actions during their matriculation at Penn State, have in many ways defined the mission of Penn State. We all have experienced the tremendous loyalty and love that our Alumni base expresses to their Alma Mater. We all have heard many times of the unrivaled support and involvement of our Alumni as evidenced by the massive enrollment in our various alumni groups, and their undying support for their University (even at times when many Alumni do not feel particularly supportive of certain leadership elements of the University).
We also should be cognizant of Penn State’s status as THE Land-Grant University for the Commonwealth of Pennsylvania. We should recognize that the Commonwealth does support (maybe not with as many dollars as we would like) the mission of the University. With this in mind, I feel it is appropriate that citizens of the Commonwealth – particularly those citizen’s who expressly make their desire known – ought to be enfranchised in the election of the Board.
1. All Penn State Alumni, with the same qualification parameters utilized for the current “Alumni Trustee” electoral procedure.
2. All Registered Voters of the Commonwealth.
Logistically, as outlined earlier under “Board of Trustees Outreach Office”, we can build upon the framework existing for the “Alumni Trustee” elections, and implement a similar procedure by which all concerned citizens of the Commonwealth can petition the office for a ballot. Commonwealth voters would have the identical “one-man, one-vote” weighting as the Penn State Alumni voters. In many cases, of course, the Commonwealth voters will also qualify as Alumni voters. Obviously, in these cases, the individual will be eligible to cast one vote – not two votes under different demographics.
A few important notes regarding other groups:
The faculty of the University are most certainly a critical component (maybe the most critical) of the educational mission of the University. They also likely have valuable and unique insights to the challenges and opportunities surrounding this mission. With that in mind, I believe it would be both appropriate and beneficial to include Faculty among the Advisory Boards (Note: Advisory Boards discussed below).
In addition, most Penn State Faculty will likely be enfranchised – either through the Registered Voter in the Commonwealth, or possibly through the Alumni channel. In those roles, they should not be excluded. However, given the clear conflict of interest of Faculty as a unique demographic (Faculty are indeed employees of the University), Faculty membership alone should not qualify for voting status. Again, please refer to the Advisory Board section for details on the inclusion of Faculty in helping to shape the educational and academic mission.
Faculty should also be permitted to run for elected seats on the Board itself. While a conflict of interest exists for Faculty as a demographic (with respect to voting rights in the election process), running as an individual candidate for that office falls under a different set of parameters. An individual faculty member, who is willing and able to hold him or herself out as a candidate, and express his or her “platform”, allows for the stakeholders to determine on an individual basis whether or not that candidate – in their totality – is an appropriate trustee candidate.
Similar to faculty, current students have a unique and valuable perspective of the University’s educational mission. They also, similarly – as a demographic - have a clear conflict of interest. Many, but not all, students will – through the Registered Voter of the Commonwealth channel – be enfranchised. They should not be excluded from that channel due to their dual status as a student.
Students should also be a vital component of the Advisory Boards (outlined below), and should be eligible – as individuals - to pursue a candidacy for the Board (for the same reasons outlined under the Faculty notes).
In item 9 under the characteristics of an effective Board section, I stated:
“The constitution of the Board should be done with an eye towards including individuals with competencies relevant to the entities mission. This is not to imply an inbred set of competencies, but rather a set of competencies developed through multiple outside professions and experiences that are relevant to the issues facing the board, but not limited to viewpoints that are already included within the entities management structure.”
At times it may be beneficial for any Board, whether it be comprised of 9 members or 90 members, or any number in between, to solicit advice and input from concerned people with specific areas of expertise. To further this goal, I propose the establishment of Advisory Boards in specific areas. This proposal will discuss several advisory boards. Other boards, with other missions, might very well be appropriate.
· Development and Philanthropy
· Student Affairs
· Academic Excellence
· Intercollegiate Athletics
· Career Development and Student Placement
The specific composition of these boards, and – in fact – the specific number of and mission of the boards, is an issue that should probably be debated and discussed at length. I do not propose that the list of advisory boards included here should be an end point – but rather a basis to initiate discussion.
Development and Philanthropy:
From time to time, the current structure of the Board (and the inclusion of “appointed positions”) is defending through acknowledgement that certain Board members having given so much of their “Time and Treasure” to the benefit of the University. Certainly, especially with the financial challenges we currently face, we appreciate all of those who give so generously to the University. The record breaking gifts to the University – both in terms of sheer number and in terms of dollar value – are critical to the growth and excellence of Penn State.
Just as certainly, any gifts which are accompanied by requirements that those gifts carry with them the ability to “pull strings” – either through appointment to the Board or through preferential access – are not needed or desired. We all know who made the famous statement “We need your money, but we don’t need your two cents”. This may seem harsh, but it is accurate. We all value and applaud those who give so generously, but it must be clear to all that the mission of the University is not for sale to the highest bidder.
With that, it is appropriate that the University and the Board of Governance maintain and enhance relationships to those who can – freely and willingly – support the philanthropic goals of the University. Whether that support is in the form of financial donations, or through the application of their expertise in furthering the efforts of the Development Office.
For the purposes of this proposal, I recommend that the Board of Trustees establish an Advisory Board for Development and Philanthropy. The Board could be chaired by the Vice President for Development and Alumni Relations, and composed of volunteers interested in furthering the Philanthropic goals of the University.
To aid in the communication of student related issues, an Advisory Board for Student Affairs should be established. The Board could be chaired by the Vice President of Student Affairs, and composed of various student leaders (Greek Life, Undergraduate Student Government, Graduate Student Association, etc).
Issues surrounding the challenges and opportunities present as Penn State strives to achieve and maintain the highest standards of academic achievement, may be put forth by an Advisory Board on Academic Excellence. Chaired by the Provost, and composed of faculty from various Colleges throughout the University, the Board could provide valuable insight to the Trustees.
At a university such as Penn State - with a broad-based, successful, high-profile intercollegiate athletic program – it is important that the Board of Trustees be aware of the challenges and issues faced by these programs. The Advisory Board could be chaired by the Director of Intercollegiate Athletics, and composed of Coaches, Administrators, and Student-Athletes from a broad range of athletic programs.
Career Development and Student Placement:
In the practical, and competitive, world into which we send our graduates it is appropriate that we do all we can to assist our students in their transition from college to professional life. This Advisory Board might be Chaired by the Director of Career Services. Ideally the board would be composed of volunteers representing various industries within which Penn State students are often seeking employment, as well as faculty representatives who influence the curriculum design within their colleges. Bringing together those who recruit and hire Penn State students, and those who develop the educational parameters used to develop students for their post-college life, this board would also be given access to the Trustees – so that the Trustees could consider their input in directing the mission of the University.
It would be easy to look at a this draft proposal – see that it puts forward positions that are significantly different from our current situation – and run away out of fear of change. For many, it is much easier to limit the scope of their options to minor variations of that to which they have become familiar – even when they recognize that those familiar things are not effective (and even harmful).
Being affiliated with one of the nation’s premier academic institutions, one would hope that we would not be so intellectually lazy. One would hope that we can – as a group – open ourselves to discussion based on what is right, without restricting ourselves to what is politically expedient and familiar.
Two years ago, in a letter to several congressmen, I pointed out that the one silver lining in the entire sordid, horrific situation we found ourselves in was that we may be inspired to truly examine our structure and our processes. As a result of the Sandusky affair we might, among other things, reap long-term benefits from improving our governance structure. Sadly, to date, we have not. By chaining ourselves to the restrictive bounds of our current parameters, we have instead wallowed in our own backwash.
Let us all take a step back and examine where we are. Let us be free to envision where we should be, and let us be unafraid to travel the path to achieve what is right.
I hope this proposal initiates – rather than terminates – discussion. I hope that upon reading it, people will comment about what they find appealing, what they disagree with, and – most importantly – share their ideas for improvement.
We will NEVER have a better opportunity to create a better Penn State. Isn’t that the legacy we want to leave behind?