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
and
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
And
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:
Trustee Elections:
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).
Communications:
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.
Enfranchised
Stakeholders:
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.
Proposed Enfranchisement:
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.
The infrastructure for such a
process is already established.
Expanding the enfranchisement would not be an insurmountable task.
A few important notes
regarding other groups:
Faculty:
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.
Current Students:
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).
Advisory Boards:
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.
Student Affairs:
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).
Academic Excellence:
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.
Intercollegiate Athletics:
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.
Summary:
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?
