Issue 8
Your Guide to Good Governance
March 2022
The role of boards in principal retention
The beginning of this school year saw 48 independent schools in Queensland welcome new principals. Reasons for principal movements vary, but the context of a growing independent schooling sector, an increasing number of planned retirements and significant disruptions of the COVID-19 pandemic provided the backdrop of this year's appointments.
While departures for reasons of retirement, preferred location, increased compensation, or enhanced reputation are common reasons for heads not to sign subsequent contracts offered to them, boards may want to consider how to create an environment in which effective principals are motivated to remain in their role.
The 2021 dissertation by Kevin Yaley titled "Head of School Retention in Independent Schools", in the context of the United States independent schooling system, provides thought-provoking considerations about the role of boards in retaining their most significant employee.
Research indicates that sudden principal departures disrupt school progress, raise teacher turnover and lower student achievement. On the other hand, a correlation exists between healthily growing, thoughtfully developing schools and well-supported long-term heads (Quimby 2015; Adams 2002).
Reasons for unplanned transitions frequently include breakdowns in the relationship or ongoing patterns of conflict between the board, chair and principal based on a misreading of the school's culture or an inadequate understanding of best practices, and misalignments in expectations around purpose, vision, and decision-making.
The study provides several insights that may help increase principal retention and minimise preventable departures.
Unsurprisingly, most principals see a healthy and productive relationship with the board chair as crucial for their longevity at a school. Mutual trust is built through the principal's ability to work in partnership with the chair effectively, a clear delineation of governance and leadership roles, a commitment to open, honest, and regular communication, and reciprocated moral support.
According to the research, chairs who understand that their relationship with the principal must include serving as their "chief listener, confidant, public advocate, and critic when necessary" are more effective in building a fruitful partnership.
A positive head/chair relationship is built on a shared understanding of the strategic position of the school. Yaley quotes a long-serving principal as follows:
"I think a key to my longevity is the excellent relationship that has been cultivated with each chair at [my school]. We enter into a place of mutual respect, build an understanding of what we both lose sleep over and understand how we show up when under stress. We share our commitment to the institution and work hard to build and maintain alignment in support of the mission."
Further, principals experience greater professional satisfaction when annual evaluations are presented as an opportunity for growth and professional development and not as an instrument of accountability to decide pay increases or future employment. When these processes are comprehensive, transparent, and effective and seen as part of a significant investment into the professional development of the head, they lead to increased principal motivation.
Out of all tested intrinsic motivators, principals ranked maintaining a healthy work/life balance significantly lower than any others. Surprising at first, this is not to be understood as a lack of longing for work-life balance. Rather, it is an expression of the impossibility of achieving this balance when faced with the unremitting pressures and mounting stresses of being the principal of an independent school.
In return for the unrelenting lifestyle, the research shows that compensation does matter significantly in a principal's decision to remain at a school. However, Yaley clarifies that "while money matters, the sense of purpose and autonomy are priceless". Purpose and autonomy are the two major intrinsic motivators identified in the study leading to the increased likelihood of retaining an effective principal for longer.
Boards that acknowledge and champion the link between their governance performance and a motivated and professionally satisfied principal who provides effective leadership for an extended time are likely to add significant value to the wellbeing and effectiveness of their schools.
Further reading:
Adams, A. (2002). How to keep your head: Great schools and long-term headship. Independent School Magazine, Fall 2002.
Quimby, L. (2015). Changing horses midstream. NAIS. https://www.nais.org/magazine/independent-school/spring-2015/changing-horses-in-midstream-(1)/
Yaley, K. (2021). Head of School Retention in Independent Schools. Dissertations. 192. https://digital.sandiego.edu/dissertations/192
Since the COVID-19 pandemic, many organisations have moved their board meetings and processes online. For companies limited by guarantee, temporary amendments to the Corporations Act 2001, most recently through the Treasury Laws Amendment (2021 Measures No. 1) Act 2021, provided many organisations with the legal basis for this, allowing meetings to proceed virtually and enabling the use of electronic communications to execute documents even where the company's constitution did not allow for it. The temporary amendments will come to an end on 31 March 2022.
In the longer term, the federal government has shown its intention to permanently modernise company meeting and document execution requirements by releasing an exposure draft of the Treasury Laws Amendment (Measures for Consultation) Bill 2021: Use of technology for meetings and related amendments (the Bill) in 2021.
The Bill proposes several changes, including incorporating virtual technology and electronic communication into meetings of company directors and members.
For schools that are charities registered with the Australian Charities and Non-for-profit Commission (ACNC), certain provisions of the Corporations Act 2001, and therefore the Bill, do not apply, including sections relating to Annual General Meetings (AGMs). However, charities must comply with the ACNC Governance Standard 2, which provides schools with a high level of flexibility in relation to AGMs. The standard requires charities to "take reasonable steps to be accountable to their members and allow their members adequate opportunities to raise concerns about how the charity is run."
Schools planning to use online meeting technology in this year's AGM season may find this guidance document useful in planning for a meaningful engagement with members. It contains helpful tips for holding AGMs in an online-only or hybrid format.
Other provisions in the Bill relate to directors' meetings and the signing of documents:
S248D Use of technology. A directors' meeting may be called or held using any technology consented to by all the directors.
S110A Technology neutral signing. A person may sign company deeds, documents relating to meetings of directors or members, or a resolution being considered by directors or members without a meeting, by signing a physical form of the document by hand or by signing an electronic form of the document using electronic means.
The section provides flexibility by stating that it is not necessary for a person to sign the same form of the document as another person; or a person to sign the same page of the document as another person; or a person to use the same method to sign the document as another person; or the document signed by a person to include all the information recorded in the document.
Despite consultation on the Bill closing in 2021, it has not yet been passed. Considering temporary legislation will end soon, schools operating as a company limited by guarantee should assess whether virtual directors' meetings, digital communication and digital execution of board documents are valid under their constitutions. If not, boards may consider if they should avoid these types of activities until the Bill is passed or investigate the process for adding the required provisions into the school's constitution.
Organisational culture remains on board agendas
In Rio Tinto's recently published "Report into Workplace Culture", organisational culture sets the context for everything an enterprise does. It asserts that "culture provides an informal control mechanism, a strong sense of identification with the organisation, and shared priorities among employees. Organisational culture transforms over time, shaped by the organisation's leadership and by actions and values perceived to have contributed to earlier successes."
As part of the investigation into workplace culture, some Rio Tinto employees expressed scepticism about the depth of commitment by organisational leaders to cultural change, despite a range of recent initiatives. They also noted that the culture of their workplace is dependent on the leader in charge at any one time.
Opportunities for reflection for schools
Boards walk a fine line to maintain an appropriate distance from operational aspects of the school. The challenge is not to become involved in the school's operation while at the same time monitoring if the expectations set at the board level are a reality for the school community.
Boards can take the following actions to assess whether the organisational culture envisaged is the lived experience of staff, students, and the school community.
- Opportunities exist at board meetings to hear not only from the school executive. For example, boards may invite a series of deep dives on different aspects of the school's operations to improve their understanding and demonstrate engagement.
- Consider the extent of exposure of board members to the school. For example, a series of informal visits or tours may allow board members to observe the school in operation and for staff and students to see board members as engaged and approachable.
Boards can keep a continuous assessment of school culture on the board agenda with the following suggested actions:
- Adding the expectation that cultural implications are assessed in board papers may assist in keeping the spotlight on the centrality of culture.
- When policies are reviewed or approved, ensure that the policy assessment process has a view beyond mere compliance to the implementation and lived experience of staff, students and families, policy effectiveness and consistency of application.
One of the report's recommendations extends to the intersection of workplace culture and risk: "It is recommended that Rio Tinto's risk assessment, management and control processes be utilised to capture hazards and risks associated with harmful behaviour as safety risks, including risks to psychological safety."
School boards may consider whether their risk register contains risks associated with the failure of organisational culture to support the espoused reality of a school. In addition, risk reports providing relevant insights about wellbeing and culture may be part of regular board monitoring.
If, as the adage goes, culture does eat strategy for breakfast, boards should ensure they are well placed to monitor whether the strategy they approve sets the tone for and drives the experienced culture of their school.
"Key to success will be our people. We have learnt that focussing solely on top-down process and system solutions will not deliver the right sustainable outcome. We must lead in a different way that is more supportive, inclusive, and people-focused." Rio Tinto CEO Jakob Stausholm
Board Chair Interview
Stuart Durward AM QC GAICD
Chairman of the Board of Trustees of Townsville Grammar School
On the board since 1995 | Chair since 1997
Q: What excites you about your school?
Our students never cease to amaze me with their dedication to learning and their humility and mutual respect, and I enjoy observing the fulness of life and activity they demonstrate. Of all the voluntary work I've engaged in over a long time—including a hospital foundation, being chair of a number of hospital boards, and many other things in the community sphere—the governance of this school has given me the greatest personal satisfaction. I see our Queensland Grammar education as being something special. The issues we generally deal with, some not particularly unusual and others which are quite challenging, are things I find satisfaction in trying to deal with and resolve.
Q: What prompted you to become a board member?
I was asked to replace a retiring lawyer on the board. At the time, I had three children at the school, and it seemed to me to be a worthwhile contribution. The school was undergoing some significant change, and I wanted to be able to influence that development and change.
Q: Why is effective school governance important?
A board accepts its responsibility for governance oversight of a school's finances, particularly regarding financial viability and ongoing financial circumstances, risk management, strategic planning, and protecting and reinforcing reputation and values. I think a board is ideally placed to do that as it is separated from the operational aspects of the school. I am adamant that board members do not get into operational matters, as we pay someone well to deal with those. The way a board thinks about the school and its decisions influence in a significant way where the school goes and how well it conducts that journey. Of course, that's largely achieved through the direction we give to the principal as the CEO. Effective governance, therefore, is a critical element in the success of a school.
Q: What is your advice for new school board chairs?
It depends on the nature of the school, but there are some things which I think apply generally. Firstly, maintain a regular but professional relationship with the principal, recognising that there needs to be some distance. I remember giving that advice to another school board a while ago where I had the impression that the principal and chair were very close, personally. My point, without being critical, was that a chair should keep in mind that the principal is not his or her best friend because that sometimes can interfere with the relationship.
The next point is for the chair to remember to keep members engaged in a whole of school sense. That is, to avoid encouraging parochial contributions by board members or when they represent only a part of the school community - that can be dangerous.
Finally, delegation is important. To share the investigation of issues, the board must consider asking members with appropriate expertise to prepare materials for the board's consideration and delegate the leadership of committees to committee chairs. Delegation is healthy because it encourages innovative thinking and a non-reliance on the board chair to lead discussions.
Q: Which topics and issues should be on school board agendas in 2022?
Boards need to maintain a focused oversight of financial management, particularly considering a changing funding regime. If there is a change in federal politics, this could change again, making planning very difficult.
Talking of planning, boards need to give thought to where their school may be in two or three or more years. They need to plan for a future that is likely going to be markedly different from that which is the norm now, and may include how education is delivered, both structurally and regarding the use of classroom spaces. It includes the possibility of there being a hybrid system of school and home learning.
Further, boards need to ensure risk assessment and management are a regular topic for review by the board. Finally, keep in mind that thinking time for a CEO is vital. We certainly keep an eye on ensuring that delegations of day-to-day issues allow the CEO to sit back and think about strategic issues in the school and how to do things better.
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