Feature: Back to school

Is a school board right for you? Domini Stuart investigates the ABCs of venturing back into the school yard.

Joining a school board

• The legal duties can be the same as other boards
  
• Running schools can be extremely complex
  
• Financials are always very tight
  
• Due diligence before joining is essential
  
• School are demanding more professional directors
  

In some ways, the business of running an independent school is very different from that of running a for-profit corporation. In other ways, particularly for private schools outside the Catholic system, it is very much the same.

“The way a school board operates, and the issues it has to consider, have many things in common with a commercial board,” says Peter McGrath MAICD, executive director of Griffin Legal, chairman of the Australian Rugby Union and a director of Daramalan College in Canberra. “For example, directors make decisions based on a value set that is, in my view, consistent across every business and every board.”

As the governing body of the school, the board establishes the strategic direction and appoints the principal. The board must also ensure compliance with legal obligations, adhere to systems of risk management and undertake periodic performance reviews.

“Overall, the directors’ role is to formulate and articulate the mission of the school and facilitate the delivery of education to its students,” says Elizabeth Jedynak, chairman of Independent Schools Victoria.

Like many not-for-profit (NFP) organisations, independent schools are legal entities managed by either a board or a council as a company limited by guarantee.

“This ensures limited liability, perpetual succession, ownership of property, the ability of schools to contract in their own right and to adhere to established commercial procedures,” continues Jedynak. “This is important because, even though schools operate on an NFP basis and do not undertake commercial activities, they are often sizeable businesses.

“Good governance minimises problems and optimises performance and accountability. An effective board establishes a culture that values accountability, transparency and trust.”

One of the most important duties of a commercial board is to appoint the CEO. For a school board, it is appointing the principal.

“The principal is the CEO, educational leader and the public face of the school,” observes Jedynak. “As the conduit between the board and the school community, he or she is central to the philosophy and personality of the school. It is vital that the board and principal have confidence in one another, and a positive and professional relationship between the principal and chairman is pivotal to the success of the school.”

The balance of the board also carries equal weight in the NFP and for-profit sectors.

“Generally, what works and doesn’t work is the same as in companies listed on the stock exchange,” says Mark Puzey GAICD, a partner at KPMG who has sat on the board of St Hilda’s Anglican School for Girls in Perth for the past four years. “Then, along with skills in areas such as accounting or corporate finance and risk management, you will probably want someone with marketing experience to help with fundraising and someone with a background in education.

“You also need to be looking at what the next chapter is and how you can achieve the right mix for that. For instance, when we commissioned and built a new primary school we clearly needed to have people in place who had project-management and building skills. Schools, like companies, go through cycles of maturity; you need different things at different times.”

A volunteer role

As with most NFP organisations, school board members donate their services.

“Any director worth his or her salt would say this makes no difference to their commitment, loyalty or work,” says Gary Vick GAICD, who sits on a number of private enterprise boards and has been a director of Yarra Valley Grammar School for 15 years. “However, I think it’s bound to have some influence, both positive and negative.

“For instance, in my experience, volunteers don’t sacrifice their paid time as much as their free time. As part of our push to professionalise the board, we have tried to encourage our directors to fit board meetings into their working day. This is because there’s inevitably a different atmosphere in an after-hours meeting and also because we’d rather directors didn’t sacrifice their family time. Another possible down side is that some people who, for very good and altruistic reasons, push hard to sit on a board may not have the skills set needed to run an organisation of that size.”

Members of school boards can have the same legal duties as directors of for-profit companies and can expect similar demands on their time. Monthly board meetings and meetings of subcommittees all require a comparable degree of preparation and in some cases, the pressures may be even greater.

“The business of a school is a balance between academic and financial outcomes,” says McGrath. “Principals are required to meet the board’s budgetary expectations while, at the same time, satisfy the demands of a broad range of stakeholders including parents, children, staff, ex-students, the owners of the school and the board itself. There will always be tension around quality outcomes and the constraints placed on schools to operate within budgetary limits.”

The school’s history can also have an effect on the way the board operates.

“Many of the great schools in Australia and overseas have long histories and dominant cultures and, in my view, there is no need to apologise for this,” notes McGrath. “However, where traditions and cultures get in the way of progress and good outcomes, a board should question their relevance. I suppose the question directors should be asking is whether the culture and history is encapsulated by the values of the organisation.”

Finding the right directors

“Finding potential board members with appropriate technical skills and philosophical qualities is a challenge, particularly for new and small schools and those in rural areas,” says Jedynak. “The lack of remuneration can further inhibit school boards’ ability to attract and retain suitable members.”

This is one reason why many schools look first to people with a close connection to the school.

“We always look first to alumni and parents to see whether we can find the skills we need within that pool,” says Puzey. “In our case, we usually can but, if we can’t, we’ll look elsewhere. The skills have to come first.”

McGrath also believes a real connection between stakeholders and the culture of the school is very important. However, he is concerned that directors with a very close connection to the school are more likely to see a particular issue in the same way.

“In my experience, ‘outsiders’ bring real value to decision-making as they can cast fresh eyes on the situation,” he says. “Again, it’s a question of balance.”

Parents of current students can make a valuable and committed contribution to a school, but they also have a very strong vested interest. Is it good governance to have them on the board?

“If you have children at the school, you meet the ‘shareholders’ on a daily basis,” says Dr Brian Holt MAICD, who is chairman of a private company and sits on the board of Redlands, Sydney Church of England Co-educational Grammar School. “That can make it more difficult to keep board solidarity and resist the temptation to push one’s own barrow at the expense of the good of the school.”

Parents who are appointed to the board need to have a clear understanding of their legal responsibilities and the differences between their roles as director and parent. Holt suggests AICD’s Company Directors Course (CDC) as an excellent way of broadening the skill sets of all board members, parents or otherwise.

“A number of directors on our board have done the course and it has been of great benefit,” he says.

Yarra Valley Grammar School has taken board education a step further. It is now policy that every director must attend the CDC when they have had time, to demonstrate their commitment to, and suitability for, the position.

Is a school a good place to start?

A seat on the board of an independent school is often cited as an ideal first position for a would-be company director.

“Schools are central to the positive development of our children and being a director of a school can be a very rewarding experience,” says McGrath. “But we do spend many hours as directors and I’m a great believer that the role is a far easier undertaking if there is real commitment to the organisation. The only recommendation I would make to anyone seeking to go on a board, especially in the NFP sector, is that they choose an organisation or sector in which they have an interest, if not a passion. That could be a school, a local sporting club or even a family company – it really makes no difference where the journey begins.”

Holt can see benefits and disadvantages for a first-time director.

“Schools can be incredibly complex and financials are always very tight,” he says. “If you start with a good board you will learn a great deal, but you may never find out how much of a problem a bad board can be and how to manage it.

“There are also the same risks that would apply to any potential director, such as an incompatible board, an inept executive or principal or poor financial control.”

Candidates considering a position on an independent school board are advised to pay as much attention to due diligence as they would if they were considering a commercial board.

“I would be very careful to check the board’s credentials,” adds Holt. “Who is chairman and how long he or she has been in that position? What is the make-up of the board? How long have the directors been serving? What range of skills is represented?”

The chemistry of the board could be particularly important.

“Chemistry is important on all boards, of course, but at a school you are more likely to have an out-of-the-boardroom relationship with your fellow directors,” says Puzey. “It can be more personal, so it makes sense to take up every opportunity you get to see how directors relate to each other before you join.”

Before appointing a new director, a sound board will undertake extensive due diligence of its own.

“School boards in the past may have included mums and dads in fairly voluntary and notional management roles but, for a while now, good schools have been moving rapidly towards a corporatisation and stewardship model,” says Vick. “As they start to mirror what’s happening in Collins Street, recruitment is no longer as simple as tapping someone you know on the shoulder.

“In my experience, the appointment of a new director is very rigorous. At Yarra Valley, by the time the successful candidate is offered the job, he or she will have had separate interviews with the board, the CEO or managing director and the chairman. In some cases, we use external recruiters to help us. In others, we still tap people on the shoulder – but only if we’ve identified that person as having a skills set or focus that suits our board.”

AICD’s In-Boardroom program is becoming increasingly popular with school boards because it can be customised to cover each board’s particular challenges and needs.