Introit

Boards: When Best Practices Aren't Enough

A recent issue of McKinsey Quarterly (June 2011) features an article by Simon C.Y. Wong on boards of directors, in which Wong focuses on boards that work well already, but could benefit from growing to the next level.

Wong writes about governing boards in for-profit corporations, but much of what he says can be applied to the boards of independent schools. The point of reference (for research) for Wong was the financial crisis of 2008-09; he looked at board deficiencies, identified by external inquiries, that exacerbated the tumult. It wasn't that boards of financial companies weren't (supposedly) engaged in their normal work, but, according to the inquiries, the way in which they conducted their business was insufficient: guiding strategy, risk management, structuring executive pay, managing succession planning, and other essential tasks.

Yet, these boards would claim that they were employing best practices, Wong proffers. Their processes would underscore the application of best practices.

Wong submits that, in addition to employing best practices, what can set a great board apart--and help that board to be ready for the unforeseen--is attention to "human dynamics." From his perspective, it boils down to three things:

(1) directors who "think and act like owners". Wong argues that, to be effective stewards, directors need to think and act like owners of the institution. As one chairman of a large firm states, "Directors with an ownership mind-set [...] have passion for the [institution], look long term, and take personal (as distinguished from legal) responsibility for the [institution]." Wong suggests that those charged with identifying new directors should look for "energy, a 'can do' attitude, and an independent mind."

Wong offers a handful of questions to ask these potential recruits (I've adapted them, slightly):

• how should directors be involved in the development of strategy?
• what type of information would you need to discharge your responsibilities effectively and how would you obtain it?
• in your previous board roles, in which areas did you have the greatest impact?
• in a group setting, when have you taken a stance against the prevailing majority view and what was the outcome?

Wong opines that "it is a clear warning sign when a candidate cannot mention an occasion when she or he disagreed with management. [...] boards that operate to their potential are characterized by constant tensions, coupled with mutual esteem between management and [...] directors."

An owner's mindset "also requires," says Wong, "directors to possess a strong understanding of the industry [education, in our case], so that they can challenge management effectively. Often, they don't have that kind of knowledge."

(2) CEOs with a collaborative mind-set. In short, there needs to be appropriate sharing of information between a CEO and his/her board of directors. A board "should look for collaborative traits when selecting a new CEO," says Wong. He suggests that a board "should spend time understanding how a candidate who is a sitting CEO at another[]institution] interacts with its board. And a board should avoid, at all costs, candidates who give the impression that they see [the institution] as an entity to be 'managed' rather than a body to which they are accountable."

Wong proposes that collaboration should be built into the CEO's job description. He cites one example of a board that, in its annual review of the CEO's performance, includes "questions about the sufficiency of the information the CEO provided and how well the CEO got along with the other directors. The purpose is to signal to the chief executive that these issues are important to the board [...]."

As he points out, though, collaboration goes both ways, and it is based on trust, which is built "over time through repeated encounters." Boards' behavior is equally as important. They [board members] must demonstrate "an ability to add value and not to micromanage the executive team." This point is best illustrated by the CEO of a company in the UK who says that, "the test is whether executives [CEOs] consider board counsel on matters within management's areas of responsibility as advice which they can accept or ignore. If they feel that they must follow it, the line has been crossed."

(3) a board that guards its authority and independence. "Although few board directors like to say so, an increasingly successful CEO is one of the biggest threats to the board's authority [...]. Tell-tale signs include less robust questioning of management's proposals and a readiness by the board to agree to unreasonable demands [...]. Some boards realize the extent to which they have relinquished their authority only when the CEO changes or something goes wrong, such as a crisis or scandal."

Wong suggests that boards need to be on top of leadership development and succession planning, so that they're not 'held hostage' with unreasonable demands. Additionally, when recruiting new board members, all directors need to support the appointments, which shows that each director respects the other: a necessary balance. Term limits for directors also need to be in place, so as to ensure the inflow of new ideas and perspectives. Again, attention to this realm of board operations contributes to the constructive tension that characterizes truly successful boards, per Wong.

Observations from the Independent School World

What I, an independent school educator, find so interesting about Wong's article is that more attention is given to the board than to the CEO. In independent schools, we (faculty, staff, most administrators) tend to become quite uneasy when contemplating how much power a board should have. Yet, I think it's safe to say that most faculty and staff (and some administrators) do not truly understand the dynamics involved with headship and board membership. Plenty of folks think they do, but their understanding is superficial only; and that's OK.

In the end, we're looking at balance. It is a necessity. There are things the Head (CEO) needs to do, and there are things that board members need to do. It's a relationship, always with the best interests of the school in mind. Wong's advice listed above is equally as valid for boards of independent schools: trustees need to think as owners (meaning that they need to think about the long-term health and position of the school), promote collaboration between themselves and the Head, yet be sure that they retain their authority and independence (they hire and evaluate the Head, and not the other way around).

Entrepreneurship from Independent Schools - Eton

Luke Johnson, chairman of the RSA and head of Risk Capital Partners (a private equity firm) in the UK, as well as a writer for the Financial Times, published a fascinating piece in today's Financial Times (June 22, 2011): Enterprise is finally part of the Eton Mess.

Johnson claims that he was pleasantly surprised to learn that Eton, among other independent schools, was turning out students who eventually became entrepreneurs. The fact that graduates were not all going into "establishment careers in charge of grand institutions" astounded him, and made him question his long-held beliefs about independent school education in Britain.

What is more, Eton has a club devoted to entrepreneurship. I wonder how many independent schools here in the states have similar clubs? Some do, I'm sure.

In any case, the important thing here is that Johnson is helping to attack some of the stereotypes of independent schools, such as "everyone comes from old money," "mom and dad are their bank," and the like. I'm sure that many readers of the FT article, some of whom have commented (in the negative) below the article, would be surprised to learn the commitment to diversity that permeates our schools; in many cases, our diversity is stronger than those of the public schools in our own locations.

Extend the Value Chain

With today's competitive market for independent schools, one way that schools can focus on potential families is to "extend the value chain."

In other words, as a recent study put it, "enhance and expand influence throughout the value chain."

Question: what is your school's value chain?

If you can't answer that, you'll have a difficult time figuring out where to enhance and expand those links of influence.

Caught Off-Guard

Each year, I am surprised by how I feel as the school year winds down. After all these years, why do I continue to be caught off-guard by my own feelings?

After all, we know it's coming -- exams are before us, the end-of-year awards assemblies and graduation-related events are spelled out in advance, we have intense meetings regarding those students for whom we have some measure of concern, heading into final assessments and the like.

I found myself in a true "funk" on Friday, nonetheless. Suddenly, events were over. We had graduated our seniors. Our eighth graders had "moved up". The lower schoolers had finished with much joy. I walked down the hall, looking somewhat longingly at the open lockers, smelling of cleaning agents. Friendly faces from our cleaning services greeted me, as they were polishing banisters and shampooing carpets. The work of the summer had begun, with tremendous efficiency.

The feeling that surprises me most is how empty I feel. In a matter of mere minutes, the school building goes from teeming with students and brimming with activity and excitement to being an entirely different universe: a facility that is sparsely populated with adults, most of whom are tucked away in rooms, writing final reports and comments. There is a silence that is almost uncomfortable. I become aware of the cycle of the school year, once again. With no end, there is no beginning; that thought comforts me somewhat. In a word, it's spiritual.

I look forward to what I will be able to accomplish over the summer months: more time with my own children, rejuvenation of the mind, engaging in some professional development (whether formally programmed or of my own making), reflective writing, and thinking about the profession.

Yet, for all that, I know that I will retain a measure of sadness for a short while. Next, that sadness will morph into an early stage of anticipation, as I begin to revise curriculum and consider what new things I will do next school year. Shortly thereafter, around the beginning of August, the anticipation grows daily, buttressed by a growing degree of excitement. I will wonder how much the students grew over the summer, what they read, which places they visited, how their fall sports teams will shape up. I will be ready to engage for another school year, centering my mind on the work of education.

Trends in College Guidance: Part Two

The second installment on trends in college guidance. This post is from an anonymous college counselor.

I think what has changed from my end is that students/parents are still looking at college admissions as it was several years ago.

Selectivity has increased in the past five years, which has led to disappointment in terms of acceptance. I think that people are over concerned with “reputation” and not the best fit for their child. Sometimes there is an assumption that there is an “old boy” network where you can make a call and get a student into a school. People who pay high school tuition expect and assume that their child will get into the “best” schools. The advent of the electronic application and applying online has made it easier for counselors, but we do not see the finished product. Students tend to apply to more schools because it is easier and also because they have to consider more schools due to cost and selectivity. What once were safety schools are no longer a “sure thing”.

As parents/students become more aware of the admission process, it puts more stress on everyone to get into the " right school". Many of my discussions start with where a school is ranked, not how does the child fit in with the academics, social or spiritual aspect of the school in question. I have to talk numbers, not quality of education. Money is another big consideration when looking at schools: in this economy it is hard to separate what a school costs from what it has to offer.

To sum up, I think that students are applying to more schools; rankings and reputation play a big part in decisions; cost/scholarships are more important; admission standards are more demanding; and the timeline for applying has moved up.

Trends in College Guidance: Part One

Jill Lauck, Director of College Guidance at Tower Hill School, offers the following thoughts on recent trends she's seeing in application to college.

Having spent 12 years in highly selective college admission prior to this first year in college counseling, I still find myself adjusting my thinking – and, to some extent, my feelings. Things that once seemed quite rational to me as a college admission officer now feel much more personal to me since they directly affect ‘my kids’ – that is, the 55 seniors for whom I am responsible as a college counselor.

So many things have changed since I began working in admission in the fall of 1998.  For one, consumer confidence levels seem to correspond nearly perfectly with college admission application numbers: when things are good in the economy, application numbers grow. Given the more recent peak in numbers of students in the off-to-college-age demographic in recent years, it is not surprising that colleges experienced a huge surge in applications. From the less competitive to the most selective, admission officers found themselves hunkered down with more and more files in the past five or so years, everyone clamoring for the spots too few and too precious. What has changed is the number of colleges to which students – and parents – expect to make applications. Whereas it used to be quite standard in the early to mid 1990s to apply to five or six colleges, it is now not at all unusual for a student to apply to 12 or 13. What students – and parents – do not seem to realize is that they are competing directly with one another, and that these kind of numbers can be harmful in a student’s own shot at admission. When 10 students from Tower Hill School apply to one highly selective college, chances are good that no more than one or two of those students will be offered admission. In a good year, one or two more will be offered a place on the waiting list. When smart students from good schools apply in huge numbers, only the very, very best – or the very best connected – will be admitted, often leaving average or better than average students with a list that is not what they’d hoped. When I was in admission, I often joked that I wished college admission was like national Match Day for medical students: you submitted applications and a list of rank-ordered preferences in advance, and then everyone would come together on a given day to find out the single program to which they had been admitted. Not good for 17-year-olds who are prone to changing their minds, of course, but at least it might ensure that students were evened out a bit better in terms of hope and ability.

The other glaring change I’ve found in admission over the past several years is the preference given to students with ‘demonstrated interest’ toward a particular college. It used to be that only a handful of schools who needed to watch their dollars carefully employed this tactic, but in my first year as a college counselor this year I found that more and more colleges admit students based more on their likelihood to attend that college than more concrete factors like academic achievement and extracurriculars. It seems to mean more at a selective (but not super selective) college that a student logged on to an online chat in the fall and that that student sat for an interview with an admission officer, than, say, real demonstrated leadership in the school and community setting. I can’t tell you how upsetting I found this in the past few months, watching otherwise extraordinary kids get passed up in favor of the student who had played the game. It was often disheartening – both for the students and for this counselor.

Core Inflation and Tuition-Setting

Great article by Lorenzo Bini Smaghi (member of the executive board of the European Central Bank) in the June 2, 2011, edition of the Financial Times: "Ignoring the core can keep inflation at bay."

[N.b. My question to schools is at the very end of this post. However, please read through the next section, to see what I'm driving at, so that the question will have context.]

Smaghi makes a potent argument against the use of core inflation (what we in the US refer to as CPI) as an accurate measure for forecasting economic trends and making monetary policy. "For core inflation to be a good basis for forecasting headline inflation, the variations in the prices of agricultural and energy products have to be temporary, and should on average not differ from other prices. If that is not the case, core inflation is neither a good estimate of underlying inflation, nor a good forecast of future inflation."

He points out that a study of the data since 1999 shows that "the global index of energy and raw materials has more than doubled, as has that of food prices. These increases have not been short-lived at all, but have had a lasting effect."

His thesis, well-argued, is that the philosophy behind the measure of core inflation (the CPI) is predicated on short-term fluctuations in food and energy, but that these longer, secular movements to the upside render core inflation an impotent metric.

Looking ahead, he says, prices of food and energy commodities are expected to only increase, which will skew the measure of core inflation even further. "For central banks around the world, this means that core inflation is no longer a very useful indicator for monetary policy, and should probably be abandoned. It may have taken a while to realise this but, as the Romans used to say, errare humanum est, perservare diabolicum -- to err is human, to persist in erring is diabolical." (Ah, Latin!)

To come to it, then, here is the question: if core inflation (CPI) no longer has the "accuracy" it once had, should we continue to use it as a guide to setting tuition in our schools?

Thoughts?

*I've been writing about core inflation as deletrious to endowments as well. Please check out the category "Endowment" here at Introit (categories are on the right vertical bar). If Smaghi's argument is valid, then my concern is even greater than before, in terms of maintaining intergenerational equity.

About to Take a Leap

I am about to take a leap into the unknown... one is a road travelled before by many (and many who read this blog) and another is one tread by few.

Most of my life, in one way or another, has been spent in independent schools.  I grew up going to a wonderful, small, community-based independent middle school; and then went off to boarding school for high school.  After college, graduate school, and some work at the university level, I came back to independent schools seven years ago to teach.  For the last seven years, I have tread on a path familiar to those who have worked in independent schools since the 1950s and before: teacher, coach, advisor, club advisor, and administrator.  So, after a series of progressive moves within the school, it is not an uncommon path (but still a personal leap) that I am taking to become the head of a school.

What is uncommon is that I am leaving to head an online school.

Most independent school educators have the notion that online education is a lesser brand of education that what we do in independent schools.  It is impersonal, cold, cheap, shallow, thoughtless, computer-based, and easy.  Whereas, they argue, what we do in independent schools is personal, warm, elite, deep, thoughtful, relationship-based, and challenging.  The words that those in the independent school community use about online education and independent school education are almost always the exact opposite of each other.

Independent school educators point to articles, like this one from the New York Times http://www.nytimes.com/2011/04/06/education/06online.html?_r=2&pagewanted=1&src=tptw to document how online education is at best "not what we do" and at worst "ruining education in America."

And yet, online education is exploding in popularity.  Estimates from iNACOL, the international association for K-12 online learning, put the number of students taking online courses at the K-12 level at 1.5 million (http://www.inacol.org/research/docs/iNCL_NationalPrimerv22010-web.pdf).  A 2010 survey by Sloan-C, the higher education consortium for online learning, found that 5.6 million college students were taking courses online (http://sloanconsortium.org/publications/survey/class_differences).

Two years ago, a few independent school educators got together to ask: "With that many students taking courses, is online education really as bad as we think that it is?"  The short answer: well, yes, a lot of what is out there is not that great, but it does not seem to have to be that way.

The group of educators built a theory that the construct "online education" did not have to be in opposition to the construct "independent school" education.  They focused on what they knew, girls schools, and began to build an organization that became the Online School for Girls.  In many senses, the path that they took was a well tread path for starting an independent school: decide on a mission and guiding philosophy, create a guiding pedagogical approach, register as a non-profit organization, hire teachers, and build a space for learning.  What was a little different was that they worked at hyper speed: ideas in February and March; bring together group of schools and individuals to work on the project in April and May; register as non-profit in June; and open doors in September.

In September of that year, the Online School for Girls opened its virtual doors for two semester-long courses, with the backing of four schools.  Two years later, the School will begin the 2011-2012 year with seven year-long courses, eight semester-long courses, five summer courses, and five professional development courses.  At some point this summer, the School will have educated more than 500 students and teachers; by later next year, that number will likely be doubled.  And, there are now forty-seven schools that are a part of the Online School for Girls: http://www.onlineschoolforgirls.org/community/our-schools

Why such growth and success?  The Online School for Girls thinks that is is because it has succeeded in bringing together the best of "online education" and "independent school education," in the process forging an independent school vision for online and blended learning.

From "independent school education," the School brought a mission-based approach to education, absolutely incredible teachers, an emphasis on personal and connected relationships, and small classes.

From "online education," the School brought a flexible learning approach of asynchronous courses, a greater emphasis on accountability and transparency, and the ability to meet students where they are in better ways.

What the Online School for Girls has shown is that "online education" and "independent school education" do not have to be in conflict with each other, even if they certainly can be.

That is why even though the path is not well tread from working in an independent school to heading an online school, I am proud to make that leap.

Brad Rathgeber is about to become the Director of the Online School for Girls in Bethesda, Maryand.  He can be reached at: brad.rathgeber@onlineschoolforgirls.org.  Follow him on Twitter at http://twitter.com/brad_rathgeber or follow the Online School for Girls at http://twitter.com/os4g