2005 ACCT Presentation - Building Better Boards

The following slides will be presented at the Association of Community College Trustees' Conference in Seatlle, Washington on Thursday, September 8, 2005 by WIlliam McGinnis, Trustee, Butte-Glenn Community College District. The slide titles are in bold letters.

Building a Better Board
Lessons from Outstanding Corporate Boards

WHY?
What makes this so important?

"The World is Flat"
The U.S. is in an economic competition with countries from all over the world that is getting more and more difficult to win. Our competitive advantage to date has been supported and fueled by our higher education system that both developed our young as well as imported educated and attracted international citizens.

But the edge is near!
The U.S. no longer attracts and retains as many international students as in the past.
The U.S. no longer leads the world in the percentage of college going students.
The drop out rate for high school students now exceeds the rate of college going students in many parts of the U.S.
The U.S. no longer leads the world in the number of College going students

How to Turn it Around
Our country’s Higher Education system needs to respond quickly by improving the quality and quantity of graduating students.
The U.S. government in cooperation with higher educations needs to improve the flow of international students into our country, as well as to foster the international education of our students.

Quality Improvement
The Quality Improvement of Higher Education begins at our local colleges.
The "champions" for the quality efforts at our community colleges must be our Boards of Trustees.
Boards of Trustees can best champion such quality improvement by becoming and modeling a high performing Board.

What Makes a High Performing Board?
The real challenge for Trustees isn’t regulatory compliance—it’s high performance. Setting standards of excellence for the College and themselves.
To achieve high performance, Trustees need to systematically examine their purpose, tasks, talents, information, and agenda.

Better Governance
The keys to better governance:
By having a strong working relationship between the Board and the President,
By having healthy social dynamics of Board interaction, and
By having the competence, integrity, and constructive involvement of all the individual Trustees.

Teamwork
A high-performing Trustee Board, like a high-performing corporate team:
is competent, coordinated, collegial, and focused on unambiguous goals.

One Key to Board Success
Regular self-assessment is a critical key to success in building a high performing Board of Trustees.

7 Areas of Success
The Right Mind Set
The Right Role
The Right Work
The Right People
The Right Agenda
The Right Information
The Right Culture

1. The Right Mind-Set
Board building is an on-going activity, a process of continuous improvement, which means Boards must keep coming back to the same questions about purpose, resources, and effectiveness.
Retain your focus in spite of all the noise from other college issues.

Self-Assessment Process
Self-assessment should not be a cursory glance in the mirror or performed in a vacuum.
Rather it needs to be a periodic & exhaustive culling of quantitative and qualitative data through: Surveys, confidential interviews, and facilitated group discussions.
(Community based, stakeholders, employers, universities, etc.)

2. The Right Role
Like most quests for change, board building begins with a vision.
Specifically, boards must engage in discussions and decide upon the College’s direction for the future, specifically the vision and strategic plan.

3. The Right Work
Establishing and sticking to an overarching level of engagement helps Trustees set expectations and ground rules for their roles relative to the President’s role.
(Again, focus on "what" not the "how", and don’t allow your focus to be diverted.)

4. The Right People
A team is only as good as its members, and high-quality Trustees are sometimes scarce.
While we cannot always choose Trustees, we can build their resources.
Trustees must select and develop key college leaders and establish a climate for higher performance.

Board Self-Help
Boards must recognize which Trustees need help, and then provide the help thru mentoring, education, establishing ground rules, and enforcing state and local laws, policies, regulations and ground rules.

Great People or Great Board?
"The most effective way to forge a winning team is to call on the player’s needs to connect with something larger than themselves."
Phil Jackson, Former Coach of the Chicago Bulls.

The War for Talented Key Staff
"In the new economy, competition is global, capital is abundant, ideas are developed quickly and cheaply, and people are willing to change jobs often. In that kind of an economy…. All that matters is talent….superior talent will be tomorrow’s prime source of competitive advantage."
The same is true for institutions of higher education.

Competitive Advantage
A competitive advantage comes not from strategy but from execution….and execution depends on people!
A competitive advantage does come from properly executing the strategy and executing it quickly.

Ten Minute MBA Program
Why do people leave jobs?
The evidence is remarkably clear. People typically leave their job because of dissatisfaction with their boss, the lack of challenge, or the lack of opportunity for advancement……not simply for the money.
"It is almost impossible to recruit people away from their current job if they are happy." (Bill Unger)

Management Hot Air ?
"All organizations now routinely say, ‘People are our greatest asset.’ Yet few practice what they preach, let alone truly believe it….organizations have to market membership as much as they market products and services – and perhaps more."
Peter Drucker (1992)

Employee Centered Results
A study of 105,000 employees across 2,500 business units by the Gallup Poll found that happier employees were associated with higher levels of profit, productivity, retention, and customer satisfaction.

A Bain study showed that brokerage firms that increased broker retention by 10% increased broker value by 155%. Studies in trucking, retail, and hospitality have shown similar results.

An Alternative Perspective
Only 10% of the people are in the top 10%.

Great companies not only find and hire talent, they build it, and most importantly, they unleash the energy and the talent of all their people.

SAS Institute
Uses no stock options, phantom stock, or other incentives other than a small 10% annual bonus
Does not pay its account executives on commission and doesn’t share sales numbers within the sales force
Does not use any performance appraisals
Does have subsidized on-site day care and free health care, subsidized meals, free massages, and private offices for all staff
Uses no outside contractors, including workers in the gym
People are expected to have four careers during their work lives
Managers are evaluated principally on their ability to attract and retain talent
Has 3% turnover and requires fewer "checkers" and produces software with fewer "bugs"
Has no product development strategy

SAS Values
The desire to create a corporation where it is was as much fun for the workers as for top management.
All people at SAS are treated fairly and equally.
All people at SAS should be treated with dignity and respect.
The workplace should be fun..
A belief in and reliance on intrinsic, internal motivation of people.
A belief in creating a work environment in which both the physical aspects and services offered to employees relieve the stress of their day to day concerns.

Value-Based Practices
Values and Culture come first
Hire for fit
Investment and opportunities for all people in the company
Widespread information sharing of operational and financial data
Reliance on teams and involvement
Emphasis on equity and non-monetary rewards
Leaders, not managers

Psychological Ownership
Originates from:
Being Involved
Being Listened to
Having an opportunity to participate
The advantages of psychological ownership
outweigh
the advantages of monetary ownership.

Conclusion #1
SUSTAINABLE COMPETITIVE ADVANTAGE results from an organization’s ability to do something that adds value from the customer’s perspective and that is difficult for competitors to imitate.
Culture is about execution - - building those capabilities that provide this advantage and ensuring that there is organizational alignment for these.
The good news is that there is sustainable advantage from people; the bad news is that it is hard to do.

Conclusion #2
You can probably not earn above normal economic returns by doing what everybody else does. Earning exceptional returns requires being willing and able to do things differently, to develop a different business model, and not get caught up in following conventional wisdom.

A Final Question
Imagine doing the following experiment. Ask a sample of your employees and/or administrators the following questions:
Why do you work here? What gets you out of bed in the morning?
Tabulate these results. Then consider whether you are tapping the full potential of all your employees. Are you winning the "War for talent? "

Lessons for Trustees
Do we have a clear, well-articulated set of values that serve as the foundation for our management practices?
Do our management practices support and enhance our values?
Do we have alignment and consistency between our people-centered practices and our core values?
Do our senior administrators ensure that our values are maintained and constantly made real to everyone in the organization?

What steps should we take?
Create the VALUES & CULTURE first.
The value is the belief about what is worthwhile or really important. (i.e. Student Success is a student achieving their educational goal in the time desired by the student).
The culture is the organization’s day to day social control system in which shared expectations guide people’s behavior.

Making the Values Real
Senior administration must believe in the Board’s values statement and act consistently.
There must be absolute consistency between the organization’s values and practices that express these values.

Some Additional Steps
Hire for Fit – not only job skills but for shared values and culture of the organization.
Invest in People – Train, train, train. Spend time once hired to describe values and culture. Board fund such programs.
Widespread Information Sharing – all college data available to all Board members and college employees - 24/7
Team-Based Systems – College wide – not just in specific areas.
Rewards & recognition – support accomplishments by teams through on-going recognition by senior management.
Lead – don’t manage – focus on the what and not the how.

5. The Right Agenda
Agenda management is a mundane-sounding subject if ever there was one. Agendas, however, dictate what the board discusses and at what length. To control the agenda is to control the work of the board.

Impact of the Agenda
With the call to accountability and higher performance, Trustee Boards can no longer doze behind the wheel while management steers.
Alternatively, after each board meeting, the Board President and the College President can collectively set the agenda for the next meeting.

Corporate Example
The board at Target, has transformed agenda management into something of an art. At the start of each year, the board sets three top priorities—for example, strategic direction, capital allocation, and succession planning. It then places each topic at the top of the agenda for at least one upcoming meeting. Target’s board also devotes one meeting a year to setting the strategic direction for each major operating division, an acknowledgement of the company’s growing complexity.

College Example
Other Possible Major Board Discussion Topics:
College Budget and fees structure
Student success
Economic Development
Performance Measurement Reports:
Key Performance Indicators
Performance Goals

Beyond the meeting
Trustees should find ways to stay engaged with the College’s issues outside of regular meetings as well. This will facilitate setting the right agenda plus an understanding of the issues.

6. The Right Information
"There are two equally effective ways of keeping a board in the dark.
One is to provide them with too little information.
The other, ironically, is to provide too much."
The Board must communicate its information needs to the staff. And staff must adjust the information load by trustee.

How Information Reaches the Board
Boards often subsist on just two sources of information.
The first is retrospective data on the College’s performance and operations—in other words, trailing indicators.
The second is presentations by management—particularly by the President, whose articulation of the future and interpretation of financials significantly shape boards’ views.
President’s Responsibility
It is the President’s responsibility to ensure that the board receives the right information at the right time and in the right format to perform their duties. The best boards design processes to deliver formal information that combines both leading and lagging performance indicators associated with their goals.

7. The Right Culture
Against a backdrop of governance progress, many boards appear afraid to engage in open and contested discussions of issues.
No one argues passionately about anything.
Robert’s Rules of Order prevail as a requirement for lock step.

Open Discussions
Engaged cultures are characterized by candor and a willingness to challenge, and they reflect the social and work dynamics of a high-performance team.

Do You Have an Engaged Culture?
Culture, by contrast, develops over time and tends to reward those who perpetuate it, making it difficult to change.
Trust and respect between and among the Trustees is critical to the successful development of an engaged culture by the Board. Likewise the trust and respect between the Board and the CEO are also critical.

Create a climate of Trust & Candor
The CEO should provide the Board with the right information in the right amount in a timely manner. (in order to allow reading & digesting)
The Board should periodically Rotate Board members through various small groups & committees to broaden interaction.
The Board should work to prevent and/or eliminate polarizing factors

Approve Strategy Decisions
Annually review the College’s vision and long-term strategic plan.
Approve Major Capital Expenditures / Plans
Approve Acquisitions / Divestitures
Assure Short-term decisions comply with the College’s Approved Strategic Plan.

Trustees Role in Assessing Campus Performance
The new accountability makes the Trustees accountable for results (outcomes).
Trustees can best fulfill this responsibility for results; NOT by dictating the details of assessing performance. Rather, by questioning performance results, and especially their use.
Ask College Administrators Critical Questions and insist on Clear Answers.

Hidden Value Keys to Success
To the extent that any organization can truly unleash the hidden value in its people, it will increase its chance of success. This is particularly true in a world in which intellectual capital and knowledge are increasing such as in our Colleges.

Knowing is not doing.
Knowing what needs to be done is not sufficient.
Talking about what to do is not sufficient.
Only by doing what is needed - executing the strategy will move your organization ahead will result in high performance. Therefore, the Board of Trustees must arrive at a strategic plan for the college in a timely manner and must empower the staff to innovatively implement the strategy in a prompt, efficient and effective manner and then measure such performance!

Questions??
Presenter:
William McGinnis
Trustee – Butte-Glenn CCD
mcginnisbi@butte.edu
Copy of Slides:
http://cctrustees.blogspot.com/