Robin McAlpine: Our universities cannot be run like banks

There are a lot of ways to describe the messes we’re in: credit crunch, liquidity crisis, bonus scandal, endemic corruption of public life, feral media – the list is extensive. But in fact there is a strong case to be made that this is all just one giant governance scandal. Governance is simply the process of running organisations. It is about making decisions, allocating power, assessing performance and setting expectations. There are many forms of governance, each based on the structure and ownership of the organisations in question. Governments are “owned” by the public, which allocates power and provides a mandate: a democratic model. Businesses are owned by the shareholders, who select the board of directors to mind their interests: a corporate model. Big charities work for interests which are represented on boards of governors: a stakeholder model. And big, important public institutions are “owned” by the nation, with people appointed to look after them for the sake of us all: a stewardship model. So who owns a university? This question matters. Contrary to their own propaganda, banks aren’t the most important institutions in society by a long way. If they had been allowed to collapse we’d have quickly found an alternative means of providing credit to the economy. But if we burnt our libraries, knocked down our schools, razed our art galleries and demolished our parliaments, the impact would still be felt a hundred years from now. The human mind is infinitely more important to our society than the human wallet. This is why our universities matter so much, the places to which the mind goes when it seeks to grow. While bankers were selling duff mortgages, in universities people were discovering the building blocks of matter, finding new ways to heal people, uncovering the pasts which created us, and bringing to life the ideas which will recreate us for the future. Universities are generational institutions; what they do now is not just for us but for the next generation. They are our legacy, a small recompense for the wreckage we are otherwise leaving behind. So why do we run them like banks? Over the last decade there has been a very noticeable shift in the way Scottish universities are governed. A stewardship model has become a corporate model. Chairs of university courts talk about hard choices, rapid decision-making and restructuring, not custodianship. It is unsurprising that they talk like bankers; financial services are heavily represented on university courts. Finance directors and other senior managers are recruited from the private sector. The tools of corporate governance are imposed on institutions of learning. Meanwhile, public intervention is fought back with ferocity. Academic freedom – protecting academics from interference by managers – has become managerial autonomy. Now, apparently, managers must never face interference from government, even as they intervene in the work of their own academics. So long as minimal financial accountability and a handful of performance indicators are met, only a university court can prevent management doing as it pleases. In a corporate model the court would have a vested financial interest and so would have an incentive to do just that; without that dynamic, corporate governance is just a kind of monarchy. But senior managers generally recommend the members of a court, so a majority of “lay members” is not so much a check on management power as a built-in majority. Where academic members of a court used to be independent, now they often owe their appointment to senior managers. Student and trade union voices are seldom influential. Anyway, since management controls the agenda and analysis available to the court, and since there are no easy measures such as share price or operating surplus, the court relies heavily on that analysis. All the indicators of a problem are there. Senior salaries soar – a sure sign that governance isn’t working. Academics report ever-greater interference with their work as financial and performance criteria are imposed. As one university principal put it to me, if universities of the recent past had been subject to the performance management frameworks endemic today, there is absolutely no chance that DNA would have been discovered. True genius does not dovetail with accounting practices. Scottish universities are well administered in that they are run efficiently and with little corruption. But administering something well and running it well are not the same thing. It’s the decisions that count, not the implementation. Universities would point to a plethora of impressive-looking indicators; exactly like the banks did in 2007. What’s the alternative? Returning to a stewardship model of governance is attractive but there is precious little evidence that Britain can do this successfully anymore. Much greater state control works well for many universities, but not many great ones. But then, as another university principal pointed out to me, two of the world’s most successful universities are run almost entirely by their academic staff. “Who needs governing bodies if the academic community runs the uni?” he asks. This is the way forward for Scottish higher education. The best way to protect Scottish universities for the future is to put their running in the hands of the community that properly understands its purpose in society: staff, students, local communities and key stakeholders. It is not the university principal that should be elected but the entire court. People should stand for election on the basis of their vision for the future of the university. “Vision” is not something students and academics should hear first in an e-mail weeks after decisions are made. In the past, democratic universities might have been risky, as financial controls were weaker so hard decisions might have been avoided. Now the greater risk is that too many hard decisions are being made by a tiny group of people who expect us to take them on faith. Only when it is too late will the next generation discover their mistakes. We have suffered enough from crises of governance, and our children will continue to suffer for our errors. If universities are to offer some small recompense to our children’s society it is imperative we don’t repeat those errors. Universities matter in a way that banks never will. Anyone can lend money. The intellect and the soul of a nation require much, much more care. • Robin McAlpine is the director of the Jimmy Reid Foundation