A Governance Guide for
Industry Training
Organisations (ITOs)
Updated March 2012
Contents
1.
Introduction
1
2.
Background Information
3
2.1.
Structure of Post School (Tertiary) Education and Training
3
2.2.
Legal Framework for ITOs
4
2.3.
Public Accountability Expectations
8
2.4.
Tertiary Education Strategy (TES) and Funding Tertiary Education
9
2.5.
Central Education Agencies
12
2.6.
Legal Structures for ITOs
13
3.
Framework for
for Good Governance
17
3.1.
Adding Value Through Good Governance
17
3.2.
Building Blocks and Enablers of Good Governance
17
4.
Building Blocks of Good Governance
19
4.1.
Overview of Governance Roles and Responsibilities
19
4.2.
Robust ITO Systems and Processes
21
4.3.
Board Structure
21
4.4.
Understanding the Key Governance Roles and Responsibilities
23
5.
Enablers of Good Governance
31
5.1.
Mutual Trust, Respect and Collegiality
31
5.2.
Board Integrity and Impartiality
31
5.3.
Positive Board – CE Relationships
34
5.4.
Relevant Board Information
34
5.5.
Effective and Efficient Board Operation
36
5.6.
Strong and Positive Chair Leadership
38
Appendix 1: Tertiary Education Commission - Proposed Code of Practice
39
Appendix 2: Governance Effectiveness – A Quick Checklist
Checklist
40
Appendix 3: Glossary of Terms
42
1. Introduction
Industry training organisations (ITOs) are a category of organisation in the tertiary education sector in
New Zealand. ITOs are formally recognised under the Industry Training Act 1992, and the Education
Act 1989 which provides for them to be partially funded by the Crown through the Tertiary Education
Commission (TEC).
ITOs are not owned or governed by the Crown. Unlike universities, polytechnics and wānanga, the
Crown does not appoint the Board or board members of ITOs. They are essentially private industrybased organisations, with no legal structure prescribed in legislation except that they are required to
be a “body corporate”. Incorporated societies, registered charitable trusts and companies are all
“bodies corporate”. The majority of ITOs are incorporated societies, but there are also a small
number of ITOs which are either charitable trusts or companies.
The legal context and governance arrangements for ITOs have some features in common with other
tertiary education organisations because they also have a funding relationship, through their
Investment Plans, with the TEC. The critical distinction between ITOs and other tertiary education
organisations is that ITOs do not themselves deliver industry training. Their functions under Section 6
of the ITO Act are to:
• Set skill standards for their particular industry or industries that are able to be registered by the
New Zealand Qualifications Authority (NZQA)
• Develop arrangements for the industry training to be delivered and for the skill standards to be
met, including arrangements for monitoring and assessing trainees
• Providing leadership within the particular industry or industries on matters relating to skill and
training needs.
ITOs, like other tertiary education organisations have a funding agreement with TEC and although
ITOs are in part, funded by the TEC to carry out their functions, they are not funded by TEC to deliver
the training themselves (Section 10(2)(d)). Most of the legal requirements and rules that flow from the
Education Act and which apply to other tertiary education organisations do not apply to ITOs.
ITOs play an important role in supporting the Tertiary Education Strategy, and the Crown has an
interest in supporting trainees in their industries. This interest is managed through the relevant
Minister’s recognition of organisations as ITOs for their specified industry or industries.
The effective performance of the functions of ITOs means that high quality governance is important.
This ITO governance guide has been prepared to provide useful reference information about the
tertiary education sector for the people responsible for governance of ITOs, together with high-level
guidelines on the scope, nature and operation of ITOs’ governance activities.
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This guide is not intended to replace any formal training that Board members, particularly those who
are new to a governance role, may wish to undertake. Organisations such as the Institute of Directors
provide training courses targeted for various levels of governance experience, which can support
Board members in learning more about what makes effective governance.
Interested readers are referred to the Industry Training Federation reports “High Performance in ITOs”
which provide the results of surveys of ITOs to identify practices and models associated with high
performance in ITOs. These reports include information on governance practices such as; board
membership, board appointments, board processes, board concerns, challenges and issues.
The TEC is committed to working with ITOs and the Industry Training Federation to assist ITO Boards
to improve their governance processes for the benefit of their ITO, its trainees and its industry(ies).
It is important to note that this guide provides a set of guidelines and makes suggestions on good
practice. It is not a “manual” in a prescriptive sense; rather it provides a framework which is intended
to be helpful for ITOs when they determine or review their mode of governance. It is similar to the
TEC’s guide aimed at tertiary education institutions, such as polytechnics, universities and wānanga.
While each tertiary education organisation has a different focus and provides different outcomes for
learners, these guidelines provide a consistent approach to good governance across the wider tertiary
education sector.
This guide will continue to be updated to reflect revisions in policy settings or to provide new
information which would be of use to the ITO sector. As the policy settings for industry training are
currently being reviewed by the Ministry of Education, the TEC will revise this guide to reflect any
changes that occur in the sector over the coming months.
(NOTE: A Glossary of Terms is included as Appendix 3.)
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2. Background Information
2.1.
Structure of Post School (Tertiary) Education and Training
This term usually refers to the education and training available to students who are 16 years of age
and older (16 being the school leaving age). It describes education and training for students who
have left school or who are undertaking tertiary courses as part of senior secondary school. It can
take place in schools and tertiary education organisations.
The diagram below summarises the overall structure of tertiary education and training organisations in
New Zealand:
Tertiary Education Organisations – Organisations that offer, provide or arrange tertiary education and
training.
Industry Training Organisations – ITOs are a distinct category of tertiary education organisation as
they do not deliver or provide education or training but are responsible for purchasing (often from
TEOs) and coordinating industry specific training for employees in training arrangements. ITOs:
• Work with industries to set skill standards for qualifications in the sectors they cover
• Encourage and promote workplace learning and arrange formal training programmes
• Exercise a skills leadership role.
ITOs are not permitted to deliver training themselves, but they are required to arrange delivery by
third parties of training that meets the industry training standards that the ITOs set. The training is
partially (approximately 70 percent) funded through the TEC. Industry is also expected to make a
contribution (approximately 30 percent) to the industry training of their employees.
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Tertiary Education Providers
The distinguishing characteristics of the different groups of tertiary education providers is important to
ITOs because the capacity of tertiary education providers to contract with ITOs for the delivery of
industry training is affected by their status and scope of activities under the Education Act and other
relevant legislation.
There are two major groups of tertiary education providers:
Tertiary Education Institutions (TEIs)
These are the most significant group of 29 TEIs that are public institutions and comprise:
• 18 polytechnics - which may be named institutes of technology or polytechnics (ITPs)
• eight universities
• three wānanga.
Private Training Establishments
There are more than 700 registered private training establishments (PTEs), about 40 percent – 50
percent of which receive funding of various types from TEC.
In addition to the above two major groups, there are also a small number of other providers i.e.
Government Training Establishments (GTEs) and Other Tertiary Education Providers (OTEPs).
2.2.
Legal Framework for ITOs
ITOs operate within a legal framework that includes legislation that is specific to them (i.e. Industry
Training Act 1992), as well as some aspects of the legislation which applies generally across the
education sector (i.e. Education Act 1989).
The legal structure (i.e. company, charitable trust, or incorporated society) of each ITO dictates other
legislation that is relevant to all or some ITOs (e.g. Incorporated Societies Act 1908, Charitable Trusts
Act 1957, Companies Act 1993 and the Charities Act 2005).
2.2.1. Industry Training Act 1992
Industry training is training provided for people employed in an industry.
The Industry Training Act provides for the recognition and funding for ITOs which are tasked with:
• Setting skill standards for industry training qualifications whether delivered on or off the job
• Making arrangements for the delivery of the training
• Providing leadership within industry on matters relating to skill and training needs.
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ITOs are also required to develop arrangements for the collective representation of employees in the
governance of the ITO.
Requirements for Recognition as an ITO
Any body corporate (i.e. incorporated society, company, charitable trust) may apply to the Minister of
Education for recognition as an ITO for a particular industry. The Minister must be satisfied, having
consulted the NZQA, that the organisation can effectively and efficiently fulfil the functions of an ITO
before it is recognised. The features the Minister must have regard to before recognising an
organisation as an ITO are set out in the Industry Training Act (Section 7) and include:
• The extent to which the organisation represents and is funded by employers engaged in the
relevant industry
• The organisation's knowledge of the skills, and likely responsiveness to the demand for the skills
the industry needs
• The organisation's resources, skill and knowledge
• The organisation's intentions in relation to the involvement of people employed in the industry in
performing its functions
• The desirability of avoiding unnecessary duplication
• The range of levels of qualifications to be delivered
• The track-record of the organisation
• The steps taken to avoid fragmentation, and to provide a clear and representative industry focus.
ITOs can be granted full recognition for a five-year term, or provisionally recognised for up to three
years pending it meeting all the recognition requirements under the Act. They must maintain the
capability on which they were initially recognised, and perform to an appropriate standard to retain
their recognition.
TEC Funding of ITOs
The TEC funding is provided through the Investment Plan mechanism that also applies for funding
tertiary education providers i.e. TEIs and PTEs under the Education Act. ITOs are required to
prepare and submit proposed Investment Plans for funding approval by the TEC. Funding may be
sought from the TEC under the Investment Plan for:
• Setting skill standards
• Making arrangements for the delivery of the training
• Providing leadership within the industry on matters related to skill and training needs.
Developing arrangements for the collective representation of employees in the governance of the ITO
may also be included in the Investment Plan.
The TEC must have regard to the matters referred to in Section 11 of the Industry Training Act when it
decides whether to approve the funding under a proposed investment plan.
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In summary, Section 11 requires the TEC to consider the volume of training to be provided, the
desirability of the training in the particular industry, including any extensions into new areas, or to
people identified in the TEC’s statement of intent as not traditionally having access to industry
training.
2.2.2. Modern Apprenticeship Act 2000
The objective of apprenticeship training is for trainees to achieve a national qualification in the skills of
the industry in which they are working. The national qualification is required to be part of the NZQA
National Qualifications Framework, which is also consistent with the industry training requirement for
qualifications under the Industry Training Act.
From a governance and statutory compliance point of view, it is important for ITOs to clearly
distinguish between their parallel roles as recognised ITOs under the Industry Training Act and
apprenticeship coordinators under the Modern Apprenticeship Act.
At an overarching level, these roles are “distinguished” in the legislation, but at a more operational
level, it will include separate revenue / expense and cost centre budgeting and reporting for the two
roles, separate KPIs for the two roles, separation of the roles in terms of the content of the Investment
Plan, and ensuring that the ITO is legally compliant with the two separate roles.
Relevance of this Act to ITOs
The Modern Apprenticeship Act is relevant to many ITOs because they are also apprenticeship
coordinators under the Act and there is clear overlap between the functions of ITOs under the
Industry Training Act and apprenticeship coordinators under the Modern Apprenticeship Act.
One key point is that apprenticeship training under the Modern Apprenticeship Act is akin to industry
training under the Industry Training Act. Both types of training are intended for trainees who are
working in the relevant industry. The apprenticeship coordinators are funded by the TEC, and their
functions include arranging apprenticeship training in respect of an industry or industries.
Apprenticeship coordinators may be the employers of apprentices, and they may deliver the training
as well as arrange the training, but that is not a requirement. The function of arranging apprenticeship
training without being the employer or training provider, is parallel with ITOs’ function of arranging
training, without being the training provider, under the Industry Training Act. The Modern
Apprenticeships Act (Section 11) reinforces that parallel by providing that ITOs may be apprenticeship
coordinators.
Functions of Apprenticeship Coordinators
There are differences between the role of apprenticeship coordinators under the Modern
Apprenticeship Act and ITOs under the Industry Training Act. Apprenticeship coordinators are more
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individually hands-on in their involvement with trainees than ITOs in their Industry Training Act
capacity. For example, the apprenticeship coordinators are:
• Required to produce and facilitate the implementation of individual training plans
• Monitor the implementation of those plans for trainees on an individual basis
• Expected to screen and place apprentices with employers and training providers.
Funding Arrangements for Apprenticeship Coordinators
The funding arrangements for apprenticeship coordinators under the Modern Apprenticeship Act are
less prescriptive than the arrangements that apply to ITOs under the Education Act. The Modern
Apprenticeship Act provides for funding agreements, and for the TEC to require information from the
apprenticeship coordinators (Section 13), but apprenticeship coordinators are not required to prepare
or report against Investment Plans.
2.2.3. Education Act 1989
The Education Act provides for the establishment of the TEC tertiary education institutions
(universities, polytechnics and wananga) and private training enterprises. The Education Act (in
conjunction with the Crown Entities Act 2005) also provides the legal framework for the governance of
these organisations, including the appointment of Council or Council members, and rules pertaining to
their operations.
None of the governance provisions in the Education Act are directly relevant to ITOs. The
governance provisions relating to the TEC and tertiary education providers are indirectly relevant to
ITOs as it enables them to understand the governance requirements placed on the TEC and in turn
TEC expectations of the governance and operating arrangements in ITOs and training providers
(including ITPs and PTEs) with whom ITOs may contract.
The Education Act is also important in setting the legal context for the tertiary education system, and it
is directly relevant for ITOs because it establishes the investment plan funding system for tertiary
education organisations, which include ITOs.
The high-level objects of the tertiary education parts of the Education Act are set out in section
159AAA. The object is to foster and develop a tertiary education system that,
a)
Fosters, in ways that are consistent with the efficient use of national resources, high quality
learning and research outcomes, equity of access, and innovation
b)
Contributes to the development of cultural and intellectual life in New Zealand; and
c)
Responds to the needs of learners, stakeholders, and the nation, in order to foster a skilled and
knowledgeable population over time
d)
Contributes to the sustainable economic and social development of the nation
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e)
Strengthens New Zealand’s knowledge base and enhances the contribution of New Zealand’s
research capabilities to national economic development, innovation, international
competitiveness, and the attainment of social and environmental goals
f)
Provides for a diversity of teaching and research that fosters, throughout the system, the
achievement of international standards of learning and, as relevant, scholarship.
Several of these objects (e.g. (a) and (c)) are relevant to ITOs and how the Minister, TEC and NZQA
will make decisions regarding ITOs.
The link between the high-level objects of the tertiary education system and the funding system for
tertiary education, which the TEC is required to operate, is the Tertiary Education Strategy (TES).
(TES)
The TES is the Minister's document, setting out the Government's long-term strategic direction for
tertiary education, and its current and medium-term priorities (section 159AA(1)).
The TES informs the investment plans prepared by tertiary education organisations (including ITOs),
and the funding decisions by the TEC. Proposed investment plans must describe how they will give
effect to the Government's current and medium-term priorities described in the TES as well as
meeting the needs of students and other stakeholders, and the organisation's mission and role for the
term of the plan (section 159P).
2.3.
Public Accountability Expectations
The discussion above clarifies that ITOs are independent industry based organisations which are
subject to the legislation that relates directly to them as well as the requirements that flow from being
partly funded by the Crown through TEC.
TEC is a Crown organisation, bound by public sector accountability requirements. Its accountability
for the funding it provides to ITOs and in turn how the ITOs use that funding means that it has an
interest in the governance arrangements and operations of ITOs. There are both Auditor General and
Treasury guidelines that TEC must apply when it funds organisations such as ITOs. In summary, the
guidelines include:
• Lawfulness – TEC must act within the law when they fund ITOs
• Accountability – TEC is accountable for its performance and a full account of its activities. This
accountability includes knowing how the funds it provides ITOs have been expended and the
outcomes achieved
• Openness – TEC is expected to be open with ITOs and in turn ITOs are expected to have high
standards of reporting and disclosure within TEC.
• Value for money – TEC is expected to use its funds effectively and economically and the same
standards are expected of ITOs (and their training providers) which are funded by TEC
• Integrity – TEC and the ITOs receiving funding from the TEC are expected to meet and manage
public funds with integrity, honesty and without personal gain.
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The guidelines also expect the TEC, when “contracting” with an ITO to be confident that the ITO is
capable of doing what it undertakes to do and that it has appropriate governance and management
systems, processes and controls. In turn, ITOs should have similar expectations of the entities with
whom they contract.
Attached as Appendix 1, is a copy of the Code of Practice developed by TEC in conjunction with the
ITO sector to promote the effective use of public funding.
2.4.
Tertiary Education Strategy (TES) and Funding Tertiary Education
2.4.1. Context
The Government makes an investment in tertiary education because it recognises that tertiary
education is a key stimulus to personal achievement, gives students a greater chance of employment,
increases their earnings, and equips them to master new technologies and challenges. The
Government also considers that tertiary education is a key stimulus to the New Zealand economy as
a whole. Increasing the supply of qualified and skilled labour will allow the economy to move towards
a more productive footing, promoting innovation and economic growth, raising gross domestic
product, and improving New Zealand’s ability to compete internationally.
The New Zealand tertiary education system is substantially funded by the Government through direct
Student Achievement Component (SAC) funding, research funding, student allowances and student
loans. In the 2010/11 financial year, the Government is spent $4 billion on tertiary education,
including $2.8 billion direct funding to TEOs and $1.1 billion on student allowances and loans.
2.4.2. Tertiary Education Strategy (TES)
The benefits of the tertiary education system are not delivered automatically, and the Government
requires the system to be responsive to Government policy, to provide value for money, and to be
accountable for the funding it receives from the Crown. The Tertiary Education Strategy is a key
component for ensuring that the Governments investment generates the outcomes being sought.
The TES, issued by the Minister for Tertiary Education following consultation with the Ministry of
Education, TEC and the tertiary sector, is the highest level policy document issued under the
Education Act. It primarily informs the TEC of the Government’s long-term strategic direction and
current and medium-term priorities for tertiary education [s159AA].
The TES is informed by the current Government’s broad policy objectives and programmes, as well
as its more specific policies for the tertiary education sector.
The TES is a guide to the TEC and the tertiary sector on the Government’s current and medium-term
priorities (three to five year horizon); and long-term strategic policy direction (five to 10 year horizon),
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including economic, social and environmental goals, as well as the development aspirations of Maori
and other population groups.
The TES provides clarity about the policy context for the funding provided by the Government through
the TEC, and each tertiary education organisations (TEOs) is expected to organise itself to perform its
responsibilities in accordance with the TES. The 2011-2015 TES is published on the TEC website.
2.4.3. Investment Plans
The Education Act provides that the Crown’s direct funding for TEOs (including funding for ITOs from
the Industry Training Fund) is conditional on their submitting Investment Plans for approval by the
TEC [s.159YA]. Direct Crown funding to the tertiary sector generally is characterised as an
“investment”, and TEOs are required to specify what they will do with the investment, and how they
will align themselves to the Government’s current and medium-term priorities, as specified in the TES.
The Education Act provides for requirements TEOs need to take into account when preparing their
Investment Plans [s.159P], and sets out the assessment criteria the TEC is required to apply when
considering proposed plans [s.159Y]. The Act also states that the TEC is required to issue guidelines
to the TEOs, prescribing the content of the proposed plans and the information to be included
[s.159R].
The current content of Investment Plans for all TEOs is structured around four sections:
• The planning context
• Key areas for focus
• Summary of activities
• Performance commitments.
All sections are important and provide the framework for the TEC and an ITO to negotiate the funding
to be provided by the TEC.
The preparation of the Investment Plans is typically an iterative process between the TEOs and the
TEC. The TEC has Investment Managers assisting TEOs with their Investment Plans. The objective
of the Investment Plan engagement process between the TEC and each TEO is to ensure that TEOs
are quite specific about what they are providing for the funding they are receiving. Investment Plans
are intended to cover a period of up to three years, which provides a greater degree of certainty to
TEOs than an annual funding system.
TEOs must however report annually against their Investment Plans, and continued funding is
contingent on the TEOs complying with their Investment Plans.
The TEC is required to provide a notice that prescribes the content of proposed investment plans
(Section 159R), and tertiary education organisations must comply with the requirements of section
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159R and consult with their stakeholders in preparing their proposed investment plans (Section 159X
- referred to in Section 10 of the Industry Training Act).
The TEC is also required to provide a notice prescribing the criteria for use to assess proposed
investment plans to determine if they will receive funding approval. These include criteria for
assessing how the organisation will contribute to the Government's current and medium-term
priorities and the TES (Section 159Y).
TEOs reporting against Investment Plans, and the TEC monitoring TEO compliance with their
Investment Plans, are critical to the accountability of TEOs, and their performance and quality
assurance.
2.4.4. Industry Cash Contributions to ITOs
Industries are expected to contribute to the costs of industry training, in addition to the funding
provided by the Crown. The Industry Training Act includes provisions for industry training levies to be
recoverable from employers within particular industries. The industry training levy provisions have
never been implemented because Industry Cash Contributions have been voluntarily made by
employers which have participated in industry training programmes without formal levies being set.
Industry Cash Contributions are payments made by employers and trainees to the ITOs, training
providers or other third parties directly related to achievement of credits towards qualifications funded
by the Industry Training Fund. They do not include “in kind” contributions towards training.
As industry training to national qualifications is not mandatory, industry will participate only if they see
value in the activity, relative to, for example:
• Investing in other activities such as marketing or capital improvements; and
• Other forms of training e.g. ITP programmes, private trainers, in house training.
The willingness of industries to provide Industry Cash Contributions is therefore an important test of
the relevance and value of the services offered by ITOs. It is important that industries contribute to
the costs of industry training to demonstrate their commitment to the training and assessment of
employees, and in order to ensure businesses drive good customer service from ITOs including
relevant training standards.
The Government has a long standing general expectation that industry contributes 30 percent of the
total industry training cash costs. The 30 percent expectation was derived from the original 70/30
(public / private) split in the wider tertiary education sector. Government’s expectation that industry
contribute 30 percent is therefore consistent with the approach in the wider tertiary sector.
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2.5.
Central Education Agencies and Peak Bodies
The roles of the three major central education agencies are described below:
The Ministry of Education
Education (MoE)
The Ministry of Education is responsible for developing the broad policy framework for tertiary
education and for advising Ministers on the development of the TES including the tertiary education
priorities. It is also responsible for monitoring the success of the strategy, collecting and managing
data on tertiary education, and monitoring the performance of the overall system.
Tertiary Education Commission (TEC)
The TEC is responsible for funding all post-compulsory education and training offered by universities,
institutes of technology and polytechnics, wānanga, private training establishments, foundation
education agencies, industry training organisations and adult and community education providers.
The functions of the TEC are described in the Education Act and include:
a)
To give effect to the tertiary education strategy by:
i)
Prescribing and publishing guidance on the content of, and processes associated with
seeking funding approval for, proposed plans
ii)
Prescribing and publishing guidance on the criteria the TEC will use to assess proposed
plans
iii)
Assessing proposed plans and deciding whether they will receive funding approval by
applying the relevant assessment criteria
iv)
Determining the amount of funding payable to organisations by applying the appropriate
funding mechanisms
v)
Allocating funding to organisations that have plans
vi)
Allocating funding to organisations that are not required to have plans in order to receive
funding
b)
vii)
Prescribing what plan summaries must contain for the purposes of public inspection
viii)
Building the capability of organisations.
To provide advice to the Minister on:
i)
The tertiary education strategy
ii)
The activities and performance of the tertiary education sector generally
iii)
Any policy implications arising from any research, monitoring, or evaluation conducted
under paragraph (e).
c)
To develop details of how to implement funding mechanisms
d)
To implement funding mechanisms
e)
To conduct applied policy and programme research, monitoring, and evaluation
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f)
To monitor the performance of organisations that receive funding from the TEC by measuring
performance against specified outcomes
g)
To undertake any functions directed by the Minister for Tertiary Education or delegated to the
TEC.
The New Zealand Qualifications Authority (NZQA)
The NZQA is responsible for:
• Managing the New Zealand Qualifications Framework (NZQF)
• Administering the secondary school assessment system
• Independent quality assurance of non university education providers
• Qualifications recognition and standard setting for some unit standards.
The quality assurance takes the form of processes at “commencement” i.e. at the time of
establishment or introduction for organisations and qualifications and the ongoing maintenance of
quality through EER (external evaluation and review).
Industry Training Federation
The Industry Training Federation is an incorporated society which recognised ITOs are eligible to join.
It is the peak body for ITOs, and 32 ITOs are listed as members on the Industry Training Federation
website (www.itf.org.nz).
The objects of the Industry Training Federation include providing a forum for dialogue and information
sharing among ITOs, interacting with government and policy development, and promoting ITOs and
industry training generally. The Industry Training Federation also provides information on industry
training for employers and prospective trainees, as well as publishing research on industry training
and governance and performance advice for ITOs.
2.6.
Legal Structures
Structures for ITOs
As outlined in the Introduction, ITOs are required by legislation to adopt a “body corporate” legal
structure. Incorporated societies, companies and charitable trusts are all “body corporates” and the
majority of ITOs have been established as incorporated societies, with a smaller number being
companies or charitable trusts.
It is important that all ITOs should consider the characteristics of each form of “body corporate” and
determine whether their existing legal structure provides the best platform for effective governance,
management and operation of the ITO. The remainder of this section describes the major
characteristics of incorporated societies, companies and charitable trusts.
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2.6.1. Incorporated Societies Act 1908
Most ITOs are incorporated societies, registered under the Incorporated Societies Act with the
Registrar of Incorporated Societies. Incorporated societies are separate legal entities like companies,
but they are not established for the purpose of making profits or pecuniary gains (long-title and
section 20). They do not have shares or shareholders.
Incorporated societies vary widely in their complexity and governance usually depending on the size
and scope of their activities. The legislation relating to incorporated societies, their governance and
operation is less prescriptive and less complex than applies to companies, their shareholders and
directors. An incorporated society is registered with an agreed set of rules and objects that provide
for basic features such as the name and objects of the society, arrangements for people to become
members, appointment of officers, control of the seal, investment and borrowing powers and
processes for disposal of property on the society being wound-up.
Key aspects of the legislation include:
• Members have no liability for any debts or obligations of the society, and they have no claim on the
assets of the society
• Limited formal compliance requirements to keeping a register of members, and to file a certified
annual return with basic financial information
• No references to the appointment and responsibilities of the “officers’ and no specific references to
a “board” or governance issues.
However, the principles of good governance whilst not in the Act are important to incorporated
societies, especially when they receive government funding or undertake significant commercial or
quasi-commercial activities. Because the Incorporated Societies Act has less prescription and
complexity, it is important that ITOs that are incorporated societies have robust and well developed
constitutions that describe the “rules” by which they will be structured, governed and operated.
2.6.2. Charitable Trusts Act 1957
Some ITOs are charitable trusts, registered under the Charitable Trusts Act. A registered charitable
trust is a separate legal entity with its own corporate existence.
The trustees are declared to be a “board” of a charitable trust that is registered under the Charitable
Trusts Act and their separate legal existence enables them to contract in their own right, and to
separate the charitable trusts’ legal obligations from the trustees’ personal obligations.
The trustees have a range of fiduciary duties which reflect the ‘trust’ basis of their role. For example,
they are not allowed to profit personally from their role, and they are required to put their duties to the
trust ahead of their own personal interests when there might be a conflict of interest.
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To qualify as a charitable trust, the Registrar must be satisfied that the purposes of the trust are
exclusively or principally charitable i.e. the purpose must benefit the community generally, rather than
specific individuals, and Section 38 of the Act includes education and the encouragement of skills
within the scope of “charitable” .
2.6.3. Companies Act 1993
1993
The company is the most common form of corporate body, although its use by ITOs is reasonably
uncommon.
Companies are required to have shares, which are owned by the owner or owners of the company.
The shareholders appoint one or more directors, and the directors are responsible for the governance
of the company. A key feature of companies is that they are usually incorporated with limited liability,
which means the liability of the shareholders for the obligations of the company is limited to the value
of their shares.
The Companies Act provides a detailed legal framework for companies, and the duties and
obligations for company directors are more detailed than the compliance obligations in relation to
incorporated societies and charitable trusts.
2.6.4. Charities Act 2005
The Charities Act complements the other legislation under which ITOs are established. Organisations
which claim to have charitable purposes may apply for registration under the Charities Act. They
obtain various tax exemptions if they are accepted as having charitable purposes and registered by
the Charities Commission.
Tests for charitable purposes include the advancement of education, as well as a general public
benefit test. The fact that ITOs involved in the provision of education indicates that they are likely to
have charitable purposes, and many ITOs are registered charities.
It is not necessarily a foregone conclusion that ITOs will automatically be recognised as charities,
because their capacity as funding conduits from the TEC means ITOs do not necessarily provide any
education services themselves. Their status as industry–representative bodies also tends towards
their providing commercially oriented industry benefits rather than charitable community benefits.
Applying for registration as a charity is voluntary. The trade-off for the tax exemptions for registered
charities under the Charities Act is that registered charities are required to file annual returns and
financial accounts which are publicly available to donors, members or anyone else who is interested.
There are also compliance costs in notifying changes to officers, registered names and the rules of
registered charities. The principle is that registered charities are expected to be transparent.
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There is some flexibility in the Charities Act allowing charities to have ancillary purposes which are not
necessarily charitable, but there is risk that ITOs will not qualify as charities if they do not actually
provide educational services, and if they are primarily seen as benefiting and being representative of
industry.
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3. Framework for Good Governance
3.1.
Adding Value Through Good Governance
Boards of ITOs are responsible as “governors” for adding value to their ITO in ways that are very
similar to how Boards add value to a wide range of private and public sector organisations.
Value is added as a result of the Board understanding the principles of good practice governance and
putting into place the building blocks and enablers required implement those principles. The Board
should be committed to continuous improvement in everything they do collectively and individually in
their governance roles so that progressively the Board implements extensive best practice
governance and added maximum value to their ITO.
The diagram below shows that there is a journey for an ITO Board from a situation in which it may
initially only have “limited” good governance practices to being one that has “extensive” best practices
and which maximises the value it adds, and contribution it makes, to the ITO.
High
Extensive
Best Practice
The Excellence
Quadrant
Majority
Good Practices
Value of
Governance
to ITO
Limited
Good Practice
Low
Low
3.2.
Quality of Governance
Activities / Function
High
Building Blocks and Enablers of Good Governance
To enhance the value added by an ITO Board it should consider the foundation building blocks and
the enablers of good practice governance, as shown in the diagram below, and compare their existing
Board practices against a benchmark of good practice.
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The three foundation building blocks for good practice governance are considered to be:
• The Board understands the scope of its governance roles and responsibilities and focuses its
activities, meetings and information on undertaking those roles and responsibilities
• The Board is supported in carrying out its roles and responsibilities by robust ITO
ITO systems and
processes that provide the information and analysis for the Board to carry out its roles and
responsibilities
• The Board structure
structure enables it to carry out its roles and responsibilities in an efficient and effective
manner.
These three building blocks provide a very important foundation for the Board’s operation and
performance, however, even with the use of best practices for these three building blocks they do not
enable a Board to maximise the value that it adds to its ITO.
The ITO Board will only maximise the value it adds if the Board also adopts best practices for each of
the enablers in the above diagram. These enablers include:
• Conduct within the Board is characterised by there being an environment of trust, respect and
collegiality so that candour, positive challenge and robust debate are accepted as an integral part
of good quality debate, discussion and decision making
• Achieving integrity and impartiality in the Boards operation as a result of Board members
accepting that their primary responsibility is to always act in the best interests of the ITO
• Strong positive Board and CE relationships
relationships as a result of mutual respect and confidence and
clarity in the respective roles of the CE (and management) and the Board
• Effective Board Chair as a result of the Chair providing leadership and ensuring the efficient and
effective operation of the Board
• The Board operating in an efficient and effective manner to carry out its roles and responsibilities
• Clarity in the information the Board requires to perform its governance roles and responsibilities
and the content, frequency and format of that information.
Adopting good practices for both the foundation building blocks and the enablers should ensure that a
Board maximises the value that it adds to its ITO.
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4. Building Blocks of Good Governance
As identified in the previous section of this guide, the three foundation building blocks for good
practice governance are considered to be:
• The scope of governance roles and responsibilities
• The ITO systems and processes that facilitate the Boards activities
• The structure of the Board to enable it to operate efficiently and effectively.
Each of these building blocks is discussed below.
4.1.
Overview of Governance Roles and Responsibilities
Governance roles and responsibilities that are expected apply to you as a member of an ITO Board
are summarised in the table below:
Governance Responsibilities
•
Influencing and approving the ITO’s strategic plan, business plans,
plans, Investment Plan and budgets
•
Monitoring the implementation of the organisation’s strategic and business plans, Investment Plan and
budgets
•
Appointing the Chief Executive (CE)and
evaluating his / her performance
(CE)
•
Approving significant new business initiatives and capital expenditure
•
Ensuring that major business risks are identified and managed
•
Ensuring effective performance of the governing Board
•
Ensuring compliance
compliance with legislation and external reporting requirements
•
Operating audit and control systems to safeguard assets and to ensure accuracy and transparency of
information
•
Safeguarding the culture and values of the organisation.
A key issue when considering the governance roles and responsibilities is to understand the
distinction between the Board and the management contributions to each of the roles and
responsibilities identified above as almost all of them require both governance and management
input. That is, what is the governance-management interface?
The diagram below illustrates that there is a cluster of activities that are generally agreed to be
governance and another cluster that are generally agreed to be management. However, the ? area is
where opinions and practices differ about whether an activity should be considered “governance” or
“management”.
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Governance
?
Management
Many organisations successfully operate with different interpretations of the contributions that the
Board and management should make to the list of roles and responsibilities.
It is important that the Board and CE have agreed on their respective governance and management
contributions or responsibilities. It may be useful for the Board to use one or more of the following
techniques to assist with defining the scope of governance and management:
• A delegation of defined authorities to the CE that clarifies the respective roles
• An agreed understanding of the respective roles and responsibilities of the Board and the CE.
The words influence,
influence, review, agree, monitor and discuss are often associated with governance whilst
the words develop, implement, prepare and achieve are often associated with management. The
table below may assist ITO Boards in clarifying the governance and management contributions to the
list of governance roles and responsibilities.
Governance
Management
•
Influence and sign off strategy and direction
•
Develop and implement agreed strategy and plans
•
Influence and sign off macro level
•
Disaggregate performance measures and
performance targets
•
Sign off major strategies (and business
operationalise throughout ITO
•
cases) to implement overall strategy
Develop business case analysis of proposed
strategies and implement agreed strategies /
projects
•
Review and sign off budgets
•
Prepare and sign off “budget centre” and ITO
budgets
•
Agree and monitor implementation of
•
Board policies
•
Determine and monitor CE performance
Develop, update and monitor compliance with
major policies
•
Achieve CE and management performance targets
and operate the performance agreements
•
Monitor overall ITO performance against
•
strategies and key performance indicators
Establish and monitor disaggregated ITO
performance targets and provide reports on
progress
•
Sign off internal audit / control
programmes to protect ITO assets and resources
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•
Operate internal audit / control systems and
undertake legislative compliance reviews
20
Governance
•
Understand key business risks, adopt
Management
•
and monitor risk mitigation strategies
•
Establish and review the operating
Undertake business risk reviews and develop
plans to manage key risks
•
Implement requirements for Board operation
mode for the Board
In addition to the Board ensuring that it has established its key roles and responsibilities and how both
itself and management will contribute to each role and responsibility, ITO Boards should give attention
to ensuring that it participates in and receives information about how the ITO is meeting its three key
functions. These functions are set out in the Industry Training Act:
• Set skill standards for industry training
• Make arrangements for the delivery of the training
• Provide leadership within the industry relating to skill and training needs.
4.2.
Robust ITO Systems and Processes
The second building block is ensuring that the ITO operates robust systems and processes which
enable the provision of quality, relevant information to the Board. Without this, the Board will be
unable to ensure that its discussions and decisions have a robust foundation.
ITOs will operate numerous systems and processes that facilitate governance and examples include:
risk management, internal audit, CE review, budget preparation, key performance reporting, Board
review etc.
If these systems and processes are weak and do not incorporate best practice, then Board members
will be unable to robustly debate and discuss issues as part of their role in planning and monitoring
performance and in making governance decisions.
4.3.
Board Structure
The ITO Board will be best placed to carry out its roles and responsibilities if it has adopted good
practices in terms of the Board structure. The key element of Board structure is its committees – their
terms of reference, membership, and reporting to the Board.
Board Committees
Each Board needs to consider the benefits and risks associated with its overall use of Committees, as
well as each specific committee it establishes.
The table below summarises the benefits and risks of committees:
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Benefits
Risks
•
Enable in depth analysis of selected and specialised roles of the Board
•
Improve the efficiency and effectiveness of Board meetings
•
Create “A” and “B” teams amongst Board members
•
Key Board roles become the “responsibility” of a committee
•
Reduced Board scrutiny of key issues
It is important that when a Board has decided on the need for a committee that it has:
• A membership that ensures that the committee adds value to the Board
• Terms of reference that clarify the committee’s roles and also clarifies whether the committee has
the responsibility to recommend to the Board, to make decisions on behalf of the Board or to
implement a Board decision
• Determined the reporting to the Board from the committee
• Established how it will periodically review the need for and performance of each committee.
The most common committees are:
• Audit (audit and risk) committee
• CE performance review (and remuneration) committee.
Although a number of other committees such as finance, strategy, capital development and executive
have been frequently established, each Board needs to decide whether their “risks” out way their
benefits as the increased efficiency of having more committees may be outweighed by the Board
being insufficiently involved in key governance roles.
Education and Training Oversight
The three key functions of ITOs, require them to perform a number of education and training activities
such as setting skill standards and arranging for the delivery of training in relation to those skill
standards.
A key question, both for the structure and activities of the Board is how to provide appropriate
governance oversight of these activities. Answering this question will require the Board to consider:
• How does the ITO get appropriate industry advice? Should the structure and process for getting
that advice involve accountability and reporting to the Board?
• Does the ITO have an internal structure for setting skill standards and for determining and
monitoring training delivery that includes accountability or reporting to the Board?
An appropriate structure and / or process for the Board to provide oversight of ITO activities that
relate to its education and training roles is an important component of the Boards overall structure.
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4.4.
Understanding the Key Governance Roles and Responsibilities
4.4.1. Influencing and Approving the ITO Plans and Directions
It is important for the ITO to establish and use an integrated planning framework that ensures
consistency between their medium term strategic planning and direction and their annual plans and
budgets. These internal plans will need to be consistent with the commitments in their Investment
Plan. This framework is likely to comprise:
• A strategic direction / plan
• Operational business plans
Strategic business plan
• An investment plan
• Annual budgets.
These plans are linked through agreed and shared ITO objectives and outcomes.
The strategic direction / strategic plan is the core component of the ITO planning framework and all
other ITO plans should flow from and be integrated with the strategic plan. The strategic plan should
answer four questions:
• Where are we now?
• Where do we want to be?
• How do we intend to get there?
• How will we know we are getting there?
The ITO Board is responsible for setting the direction for the ITO, together with guiding, influencing
and approving the four key components of the ITO planning framework. The table below outlines the
relative contributions of the Board and management to ITO planning:
Governance Planning Role
•
Set the overall direction and influence and sign off
Management Planning Role
•
Develop and implement agreed strategy and plans
•
Disaggregate performance measures and
the strategy
•
Influence and sign off macro level performance
targets
•
Sign off major strategies (and business cases) to
operationalise throughout the ITO
•
implement overall strategy
Develop business case analysis of proposed
strategies and implement agreed strategies and
projects
•
Influence the Investment Plan and ensure it is
•
consistent with ITO strategy
•
Establish budget targets and review / sign off
budgets
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Prepare the Investment Plan and lead negotiations
with TEC
•
Prepare and sign of “budget centre” and ITO
budgets
23
In carrying out its role in relation to ITO planning, the Board needs to give particular consideration to
its involvement in the development of its Investment Plan. The Board needs to sign off that Plan, and
recognise that it is also accepting the key performance measures and targets included in the
“Performance Commitments” section of the Plan. Therefore the Board should be assured that the
Plan and its commitments are achievable and that they are incorporated into their internal plans and
budgets.
4.4.2. Monitor the Implementation of ITO Plans and Budgets
Participation of the ITO Board in ITO planning provides the basis for it to participate in monitoring the
implementation of those plans and budgets.
The ITO Board needs to ensure that it receives the information it requires to:
• Monitor the progressive implementation of its strategic direction and plan. As this is usually the
medium / long term term plan of the ITO, it is likely that monitoring will occur on a six monthly cycle
• Ensure that the operational business plans are being implemented by the CE and ITO managers,
together with actions to rectify any major “gaps” in implementation
• Monitor the implementation of the Investment Plan and in particular:
−
ensure that performance commitments in the Plan are robust
− provide the basis to evaluate progress towards achieving the agreed performance indicators
and targets in the commitments section of the Investment Plan
• Ensure that the actual financial performance and cash flows are consistent with the year to date
budget and that major variances are identified together with action to rectify those variances.
The monitoring role of the Board will only be effective if it focuses on the “corrective” actions proposed
by management and their implementation. All Boards have a responsibility to keep asking questions
until they can understand and evaluate the answers they receive from management. By asking the
“hard” questions and sometimes the “dumb” questions they are ensuring that a robust and
independent view is taken.
4.4.3. Approving Significant New Business Initiatives and Projects
All Boards should have an active involvement in the identification, evaluation and approval of
significant new business initiatives and projects to ensure that they understand implications for the
ITO, such as:
• Being inconsistent with the ITO directions
• Creating new business risks for the ITO
• Absorbing available financial capital
• Placing pressure on management resources.
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To facilitate the Board evaluation and approval of such new initiatives and projects, the Board should
consider the structure and content of business cases and information provided to them about such
initiatives. Good practice suggests that the business case should include:
• Executive summary and recommendations
• Description for the initiative or project
• Evaluation of the initiative or project:
− Implications for ITO strategy and direction
− Evaluation in relation to agreed criteria
− Financial costs of the initiative
− Benefits (financial and non financial) of the initiative
− Risks associated with the initiative.
• Other information:
− Responsibility and timeline for implementation
− Linkage to other ITO activities and initiatives.
4.4.4. Plan and Review CE Performance
CE Performance planning and review should focus on supporting the CE to be more successful in
enabling the ITO to achieve its strategic goals and objectives. A robust CE planning and review
process will include:
• A performance agreement that clearly sets out both the expected performance and how those
expectations will be monitored and evaluated.
• Agreed, timely, transparent and balanced performance expectations
• Accurate and relevant information
• A professional approach.
There are two key ingredients to planning and reviewing the CE performance i.e. the process and
timeline; and the structure and content of the performance agreement.
CE performance agreements should include:
• Strategic positioning and key performance targets of the ITO. This would contain the strategic
environment of the ITO, critical issues being faced, and strategic goals and objectives. In addition,
there would be CE performance targets that:
− Align the CE’s performance with the ITO’s strategy / plans and KPIs including those in the
Investment Plan
− Provide a balanced set of measures covering the dimensions of performance and which are
manageable, measurable and achievable.
• Personal performance areas. In addition to achieving ITO performance targets it is important to
include specific personal performance requirements for the CE in areas such as leadership;
management efficiency; relationship with Board and stakeholders.
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• Monitoring and reporting of CE performance includes:
− The performance agreement, identifying the timeline and key phases in the CE’s review cycle
and clarifying the requirements and expectations of both parties
− The timing of structured review meetings (probably six monthly) to discuss overall progress and
to agree expectations
− Ensuring that the performance process, is consistent with the employment agreement and any
clauses in that agreement that link remuneration to performance.
4.4.5. Effective Performance of the Board
There are two related drivers of effective Board performance:
• The selection, induction and development of Board members
• The evaluation of how well the Board, its members and Chair are contributing to achieving good
governance.
Selecting, Inducting and Developing Board Members
Selection of Board members is assisted by firstly establishing a matrix of the skills and experience
that the Board requires. When a vacancy arises, the Board would use this skills and experience
matrix to:
• Establish the “priority gaps”
• Identify potential candidates
• Evaluate each candidate firstly in terms of filling the “priority gaps” and then in terms of their other
attributes.
For ITO Boards there is a need to balance the selection of members on a “skills and experience”
basis with the need for the ITO to be representative of their industry. One effective contribution to this
requirement is to have the industry and sub sectors represented on the ITO Board.
ITO Boards that are expected to have at least a partial representation structure for their Board,
including appointees from industry associations should ensure that the principle outlined above is
recognised by ensuring that those associations:
• Are fully briefed on the Board’s requirements in terms of skill and credibility
• Nominate individuals who are committed to their role on the Board
• Recognise the importance of the nominees being able to mutually communicate key issues.
The ITO Board should encourage nominating organisations to provide two or three nominees so that
the Board can choose the best person in terms of the governance priorities at that time.
When preferred candidates have been identified the Board needs to ensure that prospective Board
members make informed decisions about joining the Board.
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Induction of new Board members is essential and should occur soon after joining the Board. Good
practice induction should include:
•
Meeting with the Chair to clarify expectations and discuss key issues facing the ITO
•
Provision of an induction pack about the operating environment and the ITO
•
Meeting with the CE to understand the organisation structure, scope of activities, key personnel and
significant issues
•
Tour of the ITO facilities (where appropriate)
•
Follow up meeting with the Chair and CE
To enhance the induction of new Board members, consideration should be given to a “buddy system”,
whereby for a period of 12 months each new Board member is assigned a Board “buddy”.
In addition, biographies of all Board members should be prepared and available to all members.
Developing and upskilling of the Board and individual Board members is an attribute of many highly
regarded Boards. The specific objectives of this continuous improvement include:
• Enhancing understanding of the external environment in which the ITO operates,
• Increasing knowledge and understanding of the ITO and its operation
• Understanding trends in “good practice” governance.
Is the Board Performing Effectively?
Effectively?
A Board evaluation and review process should involve three components:
Review of the Board
Review of the Chair
Review of Board members
1. Review of the Board
The review of the ITO Board may include:
• A generic review of the Board every two or three years
• A focused review of specific aspects on the Boards activities every year or two years
• A comprehensive indepth and independent governance audit every four or five years.
The TEC has an ITO Governance Self-Assessment tool which will be made available to all ITOs. The
Tool aims to assist Boards in identifying key areas to focus on to improve the Board’s performance.
The TEC will work with ITOs and the Industry Training Federation to ensure that the tools the TEC
provides to assist ITO Boards are fit-for-purpose and relevant to the sector’s needs.
Board reviews need to:
• Be objective, both in their conduct and the interpretation of the findings
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• Benchmark Board Performance with other Boards to reduce an “inward looking” focus
• Be viewed as a major contributor to improved Board performance and not a bureaucratic process
• Sensitively undertaken to ensure a commitment to both the review and its findings.
2. Review of Board Members
All Boards need to be committed to the changes identified by the review and to have an
implementation plan for the agreed changes.
A review of each Board member is increasingly used as a component of Board review and evaluation.
Whilst sometimes considered as intrusive, many Boards undertake reviews of their Board members
to:
• Improve the overall performance of the Board by improving the performance of Board members
• Identify opportunities to enhance the contribution of individual Board members.
3. Review of the Board Chair
The Board Chair has a pivotal role in ensuring the success of the ITO Board including the operation of
the Board, relationship between the Board and the CE and relationships with key external
stakeholders and agencies. These reviews are likely to be undertaken by the Deputy Chair or an
external consultant and focus on themes of a “good practice” Chair such as:
• Ensuring the Board provides leadership and vision
• Facilitating Board discussions and meetings – to make good use of available time, to focus on key
issues and promote debate
• Encouraging participation in Board meetings and activities
• Developing CE relationships – based on mutual respect and trust
• Ensuring the Board is well informed.
Note: Governance Effectiveness – A Quick Checklist is included as Appendix 2.
4.4.6. Risk Identification
Identification and Management
ITOs operate in a changing and challenging environment which generates risks and uncertainty. As
“risk” is the chance of something happening that will have an impact on its objectives, it is important
that ITOs adopt a systematic approach to identifying and managing their risks.
Many risk management systems have five key stages:
1. Assess the context or
•
Understand the operating environment of the ITO
environment
•
Decide on the “appetite” for accepting risk
2. Identify risks
•
What are the key risks faced by the ITO?
•
Risks may be grouped into categories such as strategic, operational,
compliance, financial and reputational
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3. Analyse risks
•
Assess and rate each risk in terms of its likelihood of occurring and its
consequences for the ITO
4. Evaluate risks
•
Create a risk register
•
Rank risks by combining likelihood of occurring and consequences to
determine their relative importance / priority
5. Risk response
•
Determine the priorities for managing risks
•
Decide how each risk will be managed by the ITO
The role of the ITO Board is primarily to provide oversight to ensure that risks are continuously
identified and managed. The Board tasks include:
• Establishing the ITO appetite for accepting risk
• Contributing a Board perspective on the key risks facing the ITO and their priority for management
• Ensuring that management is operating an effective system for risk identification, assessment and
management
• Understanding and supporting the mitigation strategies for high priority risks.
A number of Boards may delegate the conduct of Board’s oversight of ITO risks to a risk committee.
However, the Board cannot delegate its responsibility for ensuring major risks are identified and
managed.
4.4.7. Ensuring Compliance with Legislation and Regulations
Each ITO Board need to be assured that its ITO is complying with three broad types of legislation and
regulation:
• The legislation that directly relates to ITOs (e.g. Industry Training Act, Education Act and Modern
Apprenticeship Act)
• The legislation that applies more generically to ITOs and other organisations (e.g. Incorporated
Societies Act, Charities Act, Health and Safety in Employment Act, Employment Relations Act,
Building Act etc)
• Internal ITO Board and management policies (e.g. financial, investments, trainee enrolment,
academic awards, media, disclosure of interests etc).
Compliance with legislation, regulations and policies maybe a daunting task for an ITO and
particularly the Board. However, non compliance can have significant financial and reputational
implications and an ITO Board needs to:
• Be assured that management is operating systems and processes that will ensure compliance
• Receive periodic reports that provide information on ITO compliance
• Be informed of any significant breaches of legislative, regulatory and policy compliance
• Adopt a process for the periodic review of its own Board policies.
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4.4.8. Operating Audit and Control Systems
All ITOs need to establish and operate robust systems that ensure the accuracy of information and
protect the assets of the ITO. Internal audit is one of the key tools that the Board should use to obtain
this assurance.
In summary, ITO Boards (and their Audit Committees) should ensure that:
• Their responsibilities for internal audits are recognised by identifying how they will carry out their
responsibilities and schedule the resulting activities into their work programmes
• Each Board agrees a programme of internal audit projects each year on a cyclical or priority basis
• Appropriate independence from management occurs in the identification, completing and reporting
of internal audit projects
• They monitor the implementation of recommendations arising from each internal audit project.
This governance role is closely linked to the need for the Board to ensure that it has addressed the
building block of ensuring that the ITO has “robust systems and processes”.
4.4.9. Accountability to Stakeholders
Successful ITOs are those that, amongst other requirements, accept their responsibility to be
accountable to stakeholders (including TEC, tertiary education providers, industry groups and
employers and trainees). There are at least two components to ensuring that accountability.
Ongoing Communications with Stakeholders
Although the majority of ITO communication with their stakeholders will occur by the ITO CE and
managers, the Board should develop and implement a governance level stakeholder plan that may
include:
• Meetings and communications at senior management and governance levels within key
stakeholders
• Obtaining information from ITO management on their major stakeholder engagements
• Periodic surveying of stakeholders regarding their issues and satisfaction with the ITO.
Annual Reports
Reports
Annual Reports are key accountability documents for stakeholders. It is important the ITO Boards
use their Annual Report as a rich source of information to review the performance of the previous 12
months. Each ITO Board should have an explicit discussion about the information the Annual Report
contains and its implications for its planning and direction.
It is increasingly good practice to include a section on governance in the annual report of an
organisation. This provides information to stakeholders on how governance is structured and
operated within the ITO. Although there is no standard format, it is important that the focus is on
giving confidence to stakeholders that the ITO operates robust governance practices.
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5. Enablers of Good Governance
An earlier section of this guide identified the importance of best practice performance relating to a
number of enablers of good governance. These include:
• Trust, respect and collegiality
• Board integrity and impartiality
• Positive Board – CE relationships
• Relevant Board information
• Efficient Board operation
• Effective Board Chair.
Each of these are discussed in the following section.
5.1.
Mutual Trust, Respect and Collegiality
Boards are increasingly accepting that their effectiveness requires:
• A positive Board environment of mutual trust and openness exists amongst Board members. In
such an environment Board members accept that constructive challenge amongst members,
openness of discussion and having confidence in each others’ capabilities are essential
ingredients to a high performing and excellent Board
• This view is supported by commentators who have observed that:
− “Hard” solutions (based on structure, composition etc) will not solve all the challenges of
achieving excellence in governance
− “It’s not the rules and regulations of governance that enables excellence in governance – it’s
the way Board members work together and with management”
− The real challenge for governance excellence isn’t ensuring regulatory compliance – it’s
achieving enhanced Board performance.
• Mutual trust and respect will be major contributors to “working together” and enhanced
performance.
5.2.
Board Integrity
Integrity and Impartiality
5.2.1. Avoiding Conflicts of Interest
Most ITO Board members have personal and professional interests and roles which from time to time,
may overlap with the interests of the ITO. Situations of overlapping interests or roles may create a
conflict of interest when:
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“…an individual’s duties or responsibilities to the ITO could be affected by some other interest or
duty – whether in a personal capacity or as a member of another organisation.”
ITO Board members should ask themselves:
“does my other interest create an incentive for me to act in a way which may not be in the best
interests of the ITO?”
If the answer is “yes”, a conflict of interest exists or may be perceived to exist – irrespective of
whether the member would actually act on that incentive.
A conflict may arise from: directorships or employment with another organisation; involvement in
another business; professional or legal obligations owed; holding another office; membership of
another organisation; investments and property ownership; beneficial interests in trusts; gifts and
hospitality; family or close personal relationships; strong political or personal beliefs.
A conflict of interest may be financial (pecuniary) or non-financial and it may be direct or indirect.
In general terms, a Board member may have a financial or pecuniary interest that creates a conflict:
• Directly,
irectly because they are a party to a contract with their ITO; or
• Indirectly,
ndirectly if the contract with the ITO is with a third party, but the Board member has a “personal
connection with that third party”, or “could benefit (financially) from the contract”.
A NonNon-financial interest can arise when a Board member:
• Has a close relationship with an individual or organisation “involved” with the matter under
consideration
• Acts in a way that indicates predetermination of a matter (before hearing all the relevant
information).
An ITO Board needs to have internal practices to ensure that conflicts of interest can be appropriately
managed. A summary of these practices is provided below.
Key Internal Mechanisms for Managing Conflicts of Interest
Discussion with Chair
Should a Board member be uncertain whether the potential for conflict of interest exists, he or she should
discuss it with the Board Chair.
Policy and procedures
A conflicts of interest policy including procedures to deal with conflict of interest matters (or potential conflicts)
should be developed and recorded and made available to all Board members
Register
Boards should establish and maintain a conflicts of interest Register that is updated regularly.
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Key Internal Mechanisms for Managing Conflicts of Interest
Meeting agenda item
Conflicts of Interest should be the subject of a regular agenda item at Board meetings to ascertain whether any
Board member has a potential conflict related to any other items on that meeting’s agenda.
Board minutes
minutes
Any potential conflict of interest should be clearly recorded in the Board minutes along with the process by which
it will be managed.
In addition to managing potential Board member conflicts, the Board needs to be assured that the ITO
is operating robust internal policies and practices to manage potential staff and management conflicts.
5.2.2. Code of Conduct
A Code of Conduct is a set of principles that should guide the behaviour of Board members in relation
to carrying out their “governance” roles and enable the Board to set a “tone from the top” for the ITO.
The table below summarises the key principles in a Code of Conduct.
a) Honesty, integrity and
transparency
•
Act with honesty and integrity in approaching to their roles and responsibilities
•
Undertake Board responsibilities in a manner that respects other Board
members and the employees of the ITO
•
Ensure that actions taken in the performance of Board duties do not discredit
yourself, any other Board member, or any employee of the ITO
b) Act in the best
best interests
of the ITO
•
Diligently prepare for and attend Board meetings
•
Maintain a good level of competence and knowledge including remaining
familiar with the ITO activities and its operating environment
•
Apply their knowledge, skill and experience with reasonable care and diligence
•
Not engage in activities which could affect their judgement or objectively as a
Board member nor engage in any activities that could damage the integrity and
reputation of the ITO
c) Act fairly
fairly and
•
impartially
Observe independence and objectively in carrying out responsibilities of the
Board
•
Avoid business connections, affiliations and personal connections that could
impact negatively on involvement in Board discussions and decisions
d) Use Board information
information
•
and Board
Board position
position
appropriately
ppropriately
Respect the confidentiality of information received as a Board member and use
it only for proper purposes
•
Decline gifts, benefits and positions that may compromise independence or
create perceived obligations
•
Accept responsibility for the decisions and actions of the Board even if they are
contrary to a personal view
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e) Exercise due
due care and
•
diligence
Work to improve the performance and efficiency of the ITO and use its
resources carefully and only for intended purposes
•
Exercise due care and diligence when considering issues and making
decisions by understanding the educational, financial and strategic implications
•
Understand and robustly enquire into the financial and other information
provided to the Board
5.3.
Positive Board – CE Relationships
Relationships
The performance of any ITO, together with the contribution by the Board and the CE is influenced by
the ongoing relationship between the Board and the CE. It is important that an open, positive
relationship exists, which is characterised by:
• Understand and agree each other’s roles, but accept that there is no “black and white” definition of
those roles
• Mutual confidence and trust in capability and expertise
• Mutual constructive questioning – critical inquiry and disagreement, but in a collegial environment
• Active debate and discussion – willingness and acceptance of the need to challenge each other
• Board behaves as the “critical friend” of the CE. Supports the CE to be successful
• CE trusts and values the Board – will share difficult information and new initiatives at a formative
stage. CE considers the Board as a valuable asset.
A number of Boards adopt an expectations statement that outlines the key expectations that the
Board has of the CE and the CE has of the Board.
5.4.
Relevant Board Information
Information
Introduction
As Board members are “isolated” from the ITO’s day-to-day activities, they rely on the information
provided to them to build their knowledge and understanding of the ITO, its issues and its
performance. Interpreting and monitoring that information is at the heart of good governance.
Good quality, well presented information also allows Board members to focus their energies on
constructive and substantive discussion. Poor quality information or sub-standard presentation can
divert attention from core governance responsibilities as members work to clarify content and the
meaning of the information they have been given.
Board members have a responsibility to ensure that the information they receive is clear and
complete, of sufficient quality and in the right format to meet their needs. They also have an
obligation to keep asking questions about that information until they can understand and evaluate the
answers they received from management.
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Establishing a Good Practice Information Package
Package
A good-practice information package presented for the Board will contain information that answers the
question: What information do we need at Board meetings to carry out each of our governance roles?
The content, format and timing of the information package must be customised for the ITO, but should
be agreed in a planning session involving the Board and management, followed by periodic structured
reviews of the information package.
In planning the information package, Board members and management need to agree on:
• The types of information the Board requires
• The specific content of that information and the format in which that information will be presented
by management
• The desired timing and frequency for receiving each item or type of information.
Reviewing the information the Board decides that it needs for carrying out its roles and
responsibilities, should result in:
• More efficient and effective Board meetings – as the Board gets to focus on the information it
needs, eliminating the need to carry issues over from one meeting to another because there are
gaps in the information required
• More efficient and effective use of management time – as staff focus on supplying the information
the Board needs, and do not spend time preparing information the Board does not value.
Components of the Information Package
A quality Board information package assists Board members to fulfil their governance role in three key
areas of performance:
1)
Decision making impacting on the future of the ITO
2)
Understanding the context in which the ITO operates
3)
Monitoring the ITO performance.
A good practice Board information package will contain a number of key components. Sometimes
they will comprise separate reports and on other occasions a key component may be spread across
two or more reports for the Board. The list below illustrates the typical key components of an
information package for Board meetings:
1)
Chair’s update
2)
Chief Executive report
3)
Performance reporting (i.e. against the strategic plan and investment plan, including key
performance indicators)
4)
Financial performance reporting – against budget
5)
Board committee reports
6)
Projects and initiatives
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7)
Context reports (information on the external environment)
Assessing the Information Package
Board members need to assess the robustness and appropriateness of information by asking:
• Does it incorporate the full range of information that the Board needs to carry out its roles?
• Is an appropriate balance of information provided across the all of the Board’s roles?
• Does it reflect the content and format agreed between the Board and management for the
Information Package?
• Does the content and format specifically match the Board’s information needs with regard to
monitoring progress on the contents of the ITO’s Strategic Plan, Investment Plan, Business Plans,
KPIs and budgets?
• Is the information pitched at an appropriate level to meet governance needs? (ie neither too
detailed nor too operationally-orientated; not so high level that there is insufficient information for
Board members to get to grips with the issues)
• Is the content, style and format in which information is presented helpful to enable robust Board
discussion and debate, or does the Board “waste” time seeking to understand the information
because of presentation weaknesses?
• Does the frequency and timing of the information provided in each area of reporting align with the
Board’s annual timeline and work programme?
5.5.
Effective and Efficient Board Operation
The efficient and effective operation of an ITO Board is likely to be the outcome of several “drivers”.
These include:
• Focus on core governance roles
• Involvement of all Board members
• Board workplan
• Board policies.
Each of these is discussed below.
5.5.1. Focus on Core Governance Roles
The effective (and efficient) Board is one that accepts that it is not the time the members put in, but
the focus of what the Board does in that time. That is, the Board needs to ensure that its time is
related to its core governance roles. It asks: What is the right balance? What should be discussed?
When should it be discussed? What deserves most time?
Ensuring that there is a focus on core governance roles will be assisted by:
• The allocation Board meeting time:
− 40 percent Big Picture – vision, strategy, direction
− 20 percent Conformance – compliance, risk management
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− 15 percent Dialogue and Issues Management – stakeholder dialogue, emerging issues
− 25 percent Monitoring – performance against strategy, business plan, investment plan, KPIs
and budget, Board and CE performance reviews.
• Arranging the agenda to schedule key topics early in the meeting.
5.5.2. Active Involvement of Board Members
The success of the Board is dependent on the approach, attitudes and contributions of its members.
To assess whether a Board member is making a positive contribution, a checklist of good practice
Board member involvement includes:
• Acts in the best interest of the ITO and does not demonstrate undue “bias” towards the interests of
any group
• Is prepared to allocate sufficient time to their Board role by regular attendance at meetings and
good preparation prior to meetings
• Acts as an ambassador for the ITO
• Actively and constructively participates in Board discussions and debates – not just a “nodder” or a
“yes person”;
• Is open to the views of other members (and of management), evaluates these views constructively
and objectively
• Trusts and respects other Board members, the CE and management.
5.5.3. Using a Board Workplan
Board operation can be enhanced by the Board developing its own annual workplan. This plan is
likely to comprise a month by month schedule of:
• The specific activities it needs to undertake in relation to each of its key governance roles
• The other one-off activities and tasks which it plans to undertake in addition to its key governance
roles as a Board.
Not only does such a workplan assist Board members understand their activities during the
forthcoming year, but it also assists the CE and management with planning their workload to meet the
Board workplan.
5.5.4. Board Policies
Establishing a set of Board policies to guide the Board behaviour or to set the “tone from the top” for
the ITO will make a positive contribution to the Boards operation. However, care is required to ensure
that the Board does not create “policy fatigue” by preparing policies, which may not always be used,
to direct all of its activities. It is expected that Board policies are likely to include:
• Roles and responsibilities of Board members
• Media and communications
• Conflicts of interest
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• Sensitive expenditure
• Financial and other delegations
• Banking and investments
• Business continuity and risk protocols.
For these policies to be effective, Board members (and the CE) must be aware of them, they must be
observed and significant non-compliance must be reported to the Board.
5.6.
Strong and Positive Chair Leadership
Leadership of the Board by the Chair is one of the most important drivers of an effective Board. In
summary, the Chair should:
• Ensure the Board provides leadership and vision
• Facilitate the Board business and meetings
• Achieve an appropriate Board membership
• Ensure efficient administration of Board activities / meetings, including oversight of agenda
development
• Direct Board discussions – to make good use of available time focus on key issues and promote
debate
• Develop CE relationships – based on mutual respect and trust
• Lead Board performance evaluation and development.
A strong Chair will also avoid:
• The Chair dominating the Board meetings
• Restricting Board access to information
• Long meetings that lack direction and focus
• Hijacking of meeting agendas
• CE domination of Board meetings.
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Appendix 1: Tertiary Education
Commission - Proposed Code of Practice
As part of our operational policy development for the ITO sector, the TEC is proposing a Code of
Practice, supporting the Office of the Auditor-General’s principle that funding agencies should ensure
the use of public funding is effective in achieving its aim.
The purpose of the proposed Code is to:
• Cover instances where funding rules and conditions do not exist
• Apply a principle-based approach, avoiding an overly rule-laden approach
• Provide a purposive basis for interpretation of rules and conditions of funding.
The proposed Code is based on the following documents, published by the Office of the Auditor
General and Treasury:
1)
Principles to underpin management by public entities of funding to non-government
organisations, Office of the Auditor General (OAG), June 2006;
2)
Guidelines for Contracting with Non-Government Organisations for Services Sought by the
Crown, New Zealand Treasury, April 2009.
The proposed Code comprises the following six principles:
3)
ITOs are recognised and funded by the Government. Therefore they have responsible to the
Government for expenditure of the funds that they receive from Government, and must take
reasonable care in overseeing the use of those funds.
4)
As well as meeting contractual obligations, ITOs must adhere to public service standards of
conduct and ethical behaviour when use of public resources is involved. Actions should be able
to bear the closest public scrutiny.
5)
ITOs must be able to demonstrate that funds provided were spent properly, and for the
purposes for which they were given.
6)
ITOs have an obligation to keep adequate accounting records, so that appropriate financial
information can be provided to the TEC in relation to the funding provided.
7)
Conflicts of interest must be identified and managed. In performing their duties as Board or staff
members of ITOs, those members must act impartially to ensure that public money is spent for
the purposes for which it was given. Members must put aside their interests as members of
other organisations (for example industry bodies), and the interests of those organisations.
8)
Funding must be used to promote the roles of ITOs as defined in the Industry Training Act as
well as current Government policy as expressed in the TES, regardless of the wishes of
individuals, or other organisations those individuals may represent in another context.
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Appendix 2: Governance Effectiveness –
A Quick Checklist
Defining Governance
Governance Roles
• Has your Board had a recent discussion on its role and the role of management?
• Has your Board reviewed its composition, skills requirements, and skill gaps in the past year?
• Are you and your fellow Board members thoroughly familiar with the legal requirements required?
• Do you have a code of conduct for Board members?
• Has the Board recently discussed the role and expectations for the chairperson?
• Have you recently reviewed the position description and delegated authorities of the CE?
• Does the CE understand his or her role and that of the Board?
Improving Board Processes
• Have you recently reviewed what you expect from Board meetings?
• Is your agenda under constant review?
• Is the number, level of detail, format, information, content and lead-time of Board papers
satisfactory?
• Do the minutes provide the right amount of detail?
• Does your Board have a calendar, which not only lists forthcoming Board and committee meetings
dates, but also the key events and specific tasks required of the Board?
• Do you have the right number and type of committees?
• Are there Terms of Reference for each committee setting out its roles, composition and any
decision-making powers?
Key Board Functions
• Is the Board’s involvement in strategy and investment plan appropriate?
• Do Board members provide appropriate advice and mentoring to management?
• Do Board members make appropriate use of their contacts and networks to further the goals of the
ITO?
• Are the financial and non-financial KPIs provided to the Board appropriate?
• Are the systems that provide the KPI data accurate and efficient?
• Is an appropriate compliance system in place?
• Is an appropriate risk management process in place?
• Is there a formal CE evaluation process in place, which at appropriate points involves the whole
Board?
• Are there formal delegations from the Board to management, and at the different levels of
management?
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Continuing Improvement
• Can Board members obtain the information required for effective monitoring and decision making?
• Is there a regular Board evaluation process in place?
• Are the remuneration guidelines appropriate?
• Is there a formal Board member development programme in place?
• Is there a sufficiently frequent rotation of Board members which ensures that new blood regularly
joins the Board, while ensuring that Board memory is retained?
• Do we appoint the best new Board members, given the skill gaps on the Board?
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Appendix 3: Glossary of Terms
This glossary of terms is substantially based on a glossary of terms included in the Ministry of
Education publication Profiles and Trends – New Zealand’s Tertiary Education Sector.
While not all terms will relate to ITOs, this glossary provides a useful reference for the commonly used
terms in the tertiary education sector.
Term
Description
Academic Year
The academic year is defined in the Education Act 1989 as a calendar year, 1 January to 31
December.
Course
A course is a component of a qualification and may be known as a paper, module or unit. A
course has aims and curriculum content and includes assessment that measures the extent to
which the learning outcomes have been met. A course or collection of courses forms a
programme of study which, if completed successfully, results in the award of a qualification.
Distance
Distance education occurs when students and the instructor are separated by geographic
Education
distance. The student’s learning is usually facilitated using correspondence study, audio
conferencing, video conferencing, email or the internet.
e-Learning
Learning
e-Learning is education, both formal and informal, which uses electronic delivery methods
such as internet-based learning delivery packages, CD-ROM, video conferencing, websites or
email to manage the relationship between teacher and learners.
Foundation
Foundation
The Training Opportunities programme is targeted towards job seekers, usually aged 18 years
Focussed
or more, long-term unemployed with low qualifications, people with disabilities, certain Work
Training
and Income benefit recipients, refugees, ex-prisoners, or Work and Income priority clients.
Opportunities
These programmes are targeted towards learners at the highest risk of long-term
unemployment with a more explicit focus on improving literacy and numeracy skills, with
sustainable employment the primary objective. The Ministry of Social Development also
allocates funding to providers, targeting programmes towards more work-ready learners.
Government
A government training establishment (GTE) is a government department or a Crown entity,
Training
other than a TEI, approved and registered as a tertiary education provider.
Establishment
(GTE)
Industry
Industry training organisations (ITOs) facilitate workplace learning for trainees in employment
Training
by setting national skill standards for their industry. In addition to providing leadership to
Organisation
industry on skill and training needs, ITOs develop appropriate training arrangements for their
(ITO)
industry, organise and contract for appropriate training, monitor training quality and arrange
for the assessment of trainees.
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Term
Description
Institute of
The term ‘institute of technology’ is a synonym for ‘polytechnic’
Technology
Integrated
The Integrated Funding Framework is a tertiary funding framework which will, over time,
Funding
support the alignment of the tertiary system with the Tertiary Education Strategy 2007 – 2012
Framework
(TES).
Industry
The purpose of the Industry Training Fund is to support ITOs to achieve outcomes in line with
Training Fund
the Tertiary Education Strategy, their distinctive contributions to the tertiary sector, and their
statutory functions under the Industry Training Act 1992. Industry training funding is intended
to meet a proportion of the costs incurred in the development of qualifications, arrangement of
training, and sector leadership role, with the balance being provided by contributions from
each ITO’s recognised industry(ies). The Industry Training Fund is targeted towards
employment-based training linked to national qualifications, predominately at Levels 1-4 on
the NZQF.
Industry
The Industry Training Register (ITR) is an online data collection service that captures
Training
information about activity in the industry training sector. It collects information about:
Register (ITR)
(ITR)
•individual trainees (name, date of birth, etc)
•their enrolments
•their completions
•their achievement of unit standards and qualifications
The ITR interfaces with the National Student Index (NSI), as all trainees must have a National
Student Number (NSN); and the New Zealand Qualifications Authority (NZQA), from which
ITR obtains completions data.
Modern
Apprenticeships
The Modern Apprenticeship programme aims to provide young people with high quality,
mentored, job-based training towards national qualifications. The Modern Apprenticeships
programme combines the strength of the apprenticeship tradition with the latest thinking in
workplace learning.
In the programme, Modern Apprenticeship Co-ordinators (MACs) help young people access
and complete Modern Apprenticeships. They also encourage employers to take on young
people as Modern Apprentices. While most MACs are ITOs, some ITPs[, PTEs, community
organisations and career-advising bodies also provide this service.
National
The New Zealand Qualifications Framework (NZQF) is a framework for registering the unit
Qualifications
standards-based system of national qualifications developed by the NZQA.
Framework
(NZ
(NZQF)
Network of
A comprehensive national system of tertiary education that is the outcome of tertiary
Provision
institutions focusing on their distinctive contributions in response to the needs of employers,
industry, communities and iwi.
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Term
Description
Other Tertiary
Other tertiary education providers (OTEPs) are organisations that deliver programmes of
Education
tertiary education or in support of tertiary education of some national significance, and that are
Provider
recognised by the Minister of Education. They are neither TEIs nor PTEs.
(OTEP)
PartPart-time
Part-time can apply to either the qualification or the student. A qualification offered part-time
has the same EFTS value, but is studied over a longer period of time than its full-time
equivalent. A student may elect to study a full-time qualification on a part-time basis, by
enrolling in fewer courses than the normal student full-time workload.
Investment Plan
The Plan is the key document or mechanism through which each TEO sets out its response to
government priorities and stakeholder needs and links these with strategic planned shifts,
provision, capability development, outcome commitments, funding and monitoring. Structural
engagement with the TEC during the plan’s development should ultimately lead to agreed
funding levels and provision with the TEC approving the Plan for up to three years.
Polytechnic
A polytechnic is a public tertiary institution that is characterised by a wide diversity of
vocational and professional programmes. Refer also to Institute of Technology above
Private Training
A private training establishment (PTE) is an establishment, other than (a public tertiary
Establishment
education) institution, that provides post-school education or vocational training.
(PTE)
Programme
A programme of study is a collection of courses, classes or work in which a student enrols
and which contributes to meeting the requirements for the award of one or more qualifications.
Qualification
A tertiary education qualification is a course or suite of courses that together, lead to the
award of a qualification. Tertiary education qualifications are quality assured and registered
on the New Zealand register of Quality Assured Qualifications.
Register of
The New Zealand Register of Quality Assured Qualifications is a comprehensive list of all
Quality Assured
quality assured qualifications in New Zealand. The development of the register has led to a
Qualifications
standardisation of qualifications and a common basis for comparison of qualification ‘size’.
The register will also enhance learners’ ability to transfer credit by the establishment of a
common system of credit.
Skill
Skill Enhancement is vocational training for young Māori and Pasifika peoples. It is designed
Enhancement
to meet the skills required for an identified industry, leading to qualifications recognised by the
industry and incorporating workplace learning in the industry.
Standard
The rate of funding from the Industry Training Fund. The number of Standard Training
Training
Measures funded per valid enrolment per year is the total number of credits in the programme
Measure (STM)
divided by the average number of years needed to complete the programme ("duration"),
divided by 120.
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Term
Description
Student
Student allowances are grants designed to provide financial assistance to those students who
Allowance
are unable to support themselves or do not have access to alternative sources of support
while undertaking full-time study.
Student
The SAC is the government funding contribution or subsidy to the costs of teaching and
Achievement
learning and other costs driven by student numbers. The total amount of SAC funding is
Component
calculated by multiplying the funding category rate by the number of domestic EFTS in the
(SAC)
plan. It constitutes approximately 70% of total government funding to TEIs through plans.
Tertiary
Tertiary education institutions (TEIs) are public providers of tertiary education. There are
Education
three kinds of institutions: universities, ITPs (Institutes of Technology and Polytechnics) and
Institutions
wānanga.
(TEI)
Tertiary
Tertiary education organisations (TEOs) are all the institutions and organisations that provide
Education
or facilitate tertiary education and training. These include public tertiary education institutions
Organisation
(TEIs), private training establishments (PTEs), other tertiary education providers (OTEPs),
(TEO)
government training establishments (GTEs) and industry training organisations (ITOs).
Tertiary
The TES sets out the Government’s strategies and objectives for tertiary education. The
Education
current strategy is for the period 2010 – 2015.
Strategy (TES)
Tuition Fees
Tuition Fees are the fees charged to students for tuition by tertiary education providers.
These fees differ across TEIs and within a TEI They also differ between domestic and
international students.
University
A university is a public tertiary education institution that is primarily concerned with advanced
learning and knowledge, research and teaching to a postgraduate level.
Wānanga
A wānanga is a public tertiary institution that provides programmes with an emphasis on the
application of knowledge regarding ahuatanga Maori (Maori traditions) according to tikanga
Maori (Maori custom).
Youth Training
Youth Training provides a bridge towards employment, further education or training for school
leavers with low or no qualifications. It is characterised by innovation and a diverse range of
learning opportunities. It develops young people as independent learners preparing for the
world of work.
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