Obsessing About Governance: What does Penn State have to do with my institution?

Theresa A. Shubeck,  Executive Vice President

Theresa A. Shubeck, Executive Vice President

by Theresa A. Shubeck, Executive Vice President
Reprinted from September 2012 Netlinks

With great anticipation, Louis Freeh (Freeh, Sporkin & Sullivan, LLC) issued the report of the Special Investigative Council regarding the actions of Penn State University.  I recommend that every non-profit executive and Board member read this report issued publicly online July 12, 2012.  Voluminous, minutely detailed and deeply disturbing, it is perhaps easier to disregard than to mine the specific insights and advice that form a useful overlay for a strategic evaluation of the governance structure of your own institution.

Through more than 30 years of experience serving non-profits, I’ve had the privilege of working with extraordinarily dedicated, well-meaning and generous Board members and administrators.  Unfortunately, however, I also observe a cursory understanding of best practices in governance and frequently a casual regard for following them.  Flagship institutions (across all sectors) may be perceived by smaller organizations as “having it all together” and different enough to operate in a rarified air without the challenges experienced by the other 98 percent of non-profits.

But, when we acknowledge that it is one such nationally lauded university that was so deeply flawed in its oversight, we open up the probability that that institution’s governance challenges, rather than being the exception, are not uncommon.  Consider a few of the key points from the Freeh report’s executive summary along with some of my initial questions for your consideration and reflection.  I believe they highlight issues of universal interest and concern:

  • “…over-confidence in (the President’s) abilities…a failure by the Board to make reasonable inquiry…”
    • What is the frequency and content of the CEO’s reports to your Board?
    • How timely are potential problems brought to your Board?
    • What charisma or personality influence does the CEO wield?
  • “A President who discouraged discussion and dissent.”
    • Are Board executive sessions utilized to make further inquiry to your CEO?
    • How does your Board evaluate the effective collaboration of senior staff?
    • How might founder’s syndrome be negatively impacting your Board and institution?
  • “…a culture…resistant to seeking outside perspectives”
    • Do Board members receive reports about industry best practices in their non-profit sector?
    • Does the CEO provide comparative benchmarks for the institution vis-a-vis these best practices?
    • Has pride of association (Board and/or staff) stifled dynamic discussion and individual dissent?
  • “…decisions (made) to avoid the consequences of bad publicity.”
    • What are the prevailing principles of decision making?
    • Is there a crisis management plan in place?
    • Does the organization go “off mission” in dealing with critical issues, or is the reaction to tough situations both virtuous and informed by your ethos?
  • “…standard personnel practices…ignored or undermined”
    • Do any administrators, because of their achievements, have authority beyond question?
    • Are position descriptions in place?
    • Is there a process for performance review and evaluation?
    • When hiring, are appropriate background checks done and are they regularly updated?

As might be expected, the Freeh report had a wide range of general and specific recommendations across many areas of the university.  A prevailing message to the Board dealt with increasing public (and constituent) confidence and transparency.  Indisputable measures of Board structure, composition, eligibility requirements and term limits were emphasized.  Adoption of an ethics and conflict of interest policy was stressed and, once again, that is a useful and non-negotiable point on every Board’s checklist of best practices.

In summary, “What does Penn State have to do with my institution?”  I would answer, “Everything!”  At the beginning of autumn, when energy is revived and Board interest is at its peak, I recommend an evaluation of your institution’s governance process.  It may begin with a preliminary review of the areas mentioned above.  Depending upon the diagnosis of your governance strengths and weaknesses, addressing them may be rather straightforward or more complex.  In the end, however, they are a mandate to protect the future of the institution and individuals you serve.

Ruotolo Associates works collaboratively with Boards to facilitate self-evaluation, retreats, orientation and training.  If you would like to confer confidentially about your governance needs, please feel free to contact me at tshubeck@ruotoloassoc.com or (201) 665-4572 (cell).