Should the external, lay members of English university governing bodies be paid?
Historically, the sector has relied on a volunteer model of lay governance. Universities are charities. Most members consider it an honour to act as a university lay governor. It provides a chance to “give something back”.
England’s 120 university governing bodies have on average just under 20 members each, with about 60% external to the university serving as “lay” members. As such, over 1,400 volunteers share with the internal members the responsibilities of overseeing all university matters. Currently, only six universities pay the lay chair of the governing body (in a range of £15-25k per year) and two also pay committee chairs (a maximum of £7.5k each). The first university to do so started over ten years ago, with a gradual increase over time.
Given universities are autonomous, the payment of external governing body members is firmly a institution-level decision – and one that requires Charity Commission approval.
A recent discussion paper published by the Higher Education Policy Institute, suggests the topic deserves consideration which should be supported at sector level. It is time to revisit the volunteer model of university governance. There are three key reasons why…
- Other comparable sectors are increasingly paying their external governing body members
16 of the UK’s largest 100 charities, including Nuffield Health, the Wellcome Trust, the Girls’ Day School Trust, the Salvation Army, RNIB and the General Medical Council all paid one or more of their non-executives according to research conducted in 2017.
NHS Trusts and Foundation Trusts all pay their external, independent non-executive directors. Pay at Trusts is set centrally by NHS Improvement – chairs earn between £18.6k and £23.6k per year and other members earn £6.2k. Pay at the more autonomous Foundation Trusts is set locally. Foundation Trust Chairs earn around £40k a year for 11 days per month. Foundation Trust members earn £13k a year for c. 11 days per month.
Whilst housing associations also rely on volunteer committee members, in 2015, 82% of the top 60 housing associations by size paid their board members. Chairs earned on average £18k per year, though the range is significant. Even Peabody, which shouldn’t have trouble recruiting members given its long history and reputation – announced in 2018 it will pay members at rates to be disclosed in the 2018-19 accounts.
In Australian universities, practices vary by state. Where governing body members are paid, the chairs earn between £25k and £76k a year while members receive between £10k and £35k. In Scotland, universities must pay incoming chairs at their request. The likely range will be £16k to £27k.
- Pay appears to accompany improvements in governing body engagement – and potentially diversity
Across all of the aforementioned sectors, pay seems to accompany (and possibly facilitate?) different approaches to member accountability and skills and diversity. Enhanced accountability measures include reporting of meeting attendance, greater visibility on recruitment and selection practices, and annual performance reviews.
On the skills front, some sectors have specific skills requirements linked to payment whilst others have adopted broad skills matrices for member recruitment. Some Australian universities even require external accreditation of governing body members.
With regard to diversity, only 55% of English university board are “gender balanced” at 40-60% women and only 27% of chairs are female. Fourteen universities have less than 30% women. Yet, the English university sector is the only one of those included in the research without either legislated (Scotland) or sector-led self-imposed institutional targets relating to gender diversity. UK-listed companies also have targets for ethnic diversity.
If attempting to increase diversity, time is another important consideration. The time required ranges from 8 to 20 days per year. The primary pool of governing body member candidates is mainly those retired from their full-time roles, possibly juggling a portfolio of non-executive roles, with the financial means to offer this much time for free. Lower-paid working and self-employed candidates might be more able to take on the roles if some contribution were made to compensate their employers and/or offset personal costs, such as childcare.
- The new regulatory regime simultaneously ramped up the roles and responsibilities of governing bodies and raised the stakes
The regulatory framework which resulted from the Higher Education and Research Act (2017) introduces new mandatory public interest governance principles. In addition to the usual business and legal matters, governing bodies are required to take a deeper interest in academic issues as well as other contested areas such as free speech, senior staff pay, and value for money.
A number of sector-level organisations support governance development. However, most are membership organisations. It is up to the individual institutions to ask their sector-level organisations to provide greater support to inform their decision-making in this most important area.
Ultimately, the university leaders need to decide what kind of governance is required to support the viability of their individual institutions and the sustainability of the sector as a whole. Paying governors is one of the many available tools which should be considered to improve the skills, diversity and engagement of the governing bodies.
Alison Wheaton’s report Payment for University Governors, is available on the Higher Education Policy Institute’s website.
