Forum for the Future of Higher Education
2008 Aspen Symposium
William G. Bowen
President Emeritus, The Andrew W. Mellon Foundation and Princeton University
Trustees and Directors Matter
Podcast Transcript
In this podcast of the Forum’s 2008 Aspen Symposium series, Bill Bowen, President
Emeritus of The Andrew W. Mellon Foundation and Princeton University, draws
on his broad experience serving on boards in both the nonprofit and for-profit
sectors—as well as on extensive discussions with others who have served in similar
capacities—to shed light on how boards actually work. Even to many of those
elected to serve on boards, the basics—such as where power resides, how it is
exercised, and how it is limited—remain obscure. Bowen emphasizes the
importance of boards and notes that they can have far more impact on the success
or failure of organizations than most people realize. He is the author or co-author
of more than 20 books, including The Board Book: An Insider’s Guide for
Directors and Trustees, published in 2008.
And now, Bill Bowen on Trustees and Directors:
Thank you very much. I have a longstanding interest in governance by trustees and
directors and I’ve been especially interested in comparing experiences in the for
profit and nonprofit sectors. Through the accidents of life, I have served on a large
number of both nonprofit and for profit boards and the discussion in this new book
draws heavily on those experiences.
My wife, who is, as we are here today, on a boat going from St. Petersburg to
Moscow, believes that I am a virus and that wherever I go there is trouble. And this
is true, I’m afraid, to a considerable extent. And it was through gripping
experiences associated with the demise of Jimmy Robinson as CEO of American
Express, struggles with Chief Justice Burger at the Smithsonian, complicated
efforts at Merck to address both succession planning and litigation associated with
Vioxx, and so many intriguing experiences at Princeton, Dennison, where I served
on the board for a long time, and then at Mellon and elsewhere that have really
informed this book. I’m a bean counting economist as many of you know. This
book is not about bean counting, it’s actually about life as I have lived it in these
various settings.
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Importance of Boards
Perhaps the most important single point to make is that boards of trustees in the
nonprofit sector matter enormously. Nonprofit boards have more opportunity to
make strong contributions and more opportunity to really, really foul things up than
do most for profit boards. And the reason is simple. Market constraints limit
severely what can and cannot be done in the for profit sector. Stock prices go up
and down, markets take their revenge, takeovers occur and all the rest. There’s a
whole set of disciplines and constraints that do not operate to the same degree in the
nonprofit sector. The nonprofit sector has counterpart pressures, but they’re a little
different.
Now, this observation does not mean that markets always get it right. They plainly
do not. One of my early and very informative experiences was as a director, in fact,
chairman of the finance committee of NCR, a computer company in its glory days
before it was destroyed by AT&T, in without a doubt one of the stupidest takeovers
ever engineered by anybody. It cost I don’t know how many billions of dollars to
AT&T. I have the honor of having been voted out of office by the financial muscle
of AT&T at the time. Chuck Exley was the extraordinarily effective CEO and
chairman of NCR. And he said after this disaster, he said do you know what this
demonstrates is that a sick horse can kill a healthy dog just by falling on it. And
that is sadly what happened.
Now, in the nonprofit world, boards can sometimes overlook problems longer than
they should and can allow organizations for which they’re responsible to survive
even if they lead somewhat unexamined lives. And I’ve become convinced over
the years that there is much to be said in the nonprofit world for death with dignity.
When an organization has done pretty much what it can do and when it’s future
isn’t bright and there are no clear fixes, better to decide how to exit the world
gracefully, handing on whatever assets one can to responsible organizations than
just struggle to survive. The survival rate in the nonprofit world is I think far, far
too high, as any perusal of IRS lists of organizations will convince you.
In any case, my message to members of nonprofit boards is very simple. You really,
really matter and serving on a nonprofit board is a responsibility to be taken very
seriously.
Board Functions
Let me turn now to the basic functions of boards which are common to the for profit
and nonprofit world, say a bit about them and how they differ in these two sectors.
The first function is to select, encourage, advise, evaluate, compensate, and if need
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be, replace the CEO. This is by far the most important responsibility of any board,
and boards in general, let me say, do not understand how hard it is to find a new
leader of competence. I am, like many of you, consulted all the time in search
processes and inevitably, inevitably boards will think they’re going to have zillions
of terrific candidates and they can choose among – well, baloney. If a board ends
up with two or three good candidates the board is very, very lucky. Look at the
recent experience of Harvard if you want a case in point.
Second function is to discuss, review, approve strategic directions—a function often
harder to discharge in the nonprofit world than in the for profit world because
there’s so many choices, so many options.
Back in the ‘60s, when there was a boom in higher education, many liberal arts
colleges, they were doing OK but not great, chose to spend, as it were, the excess
demand that now came their way by changing fundamentally their programs. By
doing more in the arts and sciences – that was their strategic decision, not a
decision for profit organizations likely would’ve made. Decisions today being
made by wealthy universities about financial aid, what to do with the resources that
they have acquired through markets…big example of strategic decisions that need
to be made very thoughtfully.
Three – function three is to monitor performance. Regular, reasonably formal
reviews of the performance of the CEO in the nonprofit sector are now, thank
heavens, much more common than they used to be. There was for too long a
tendency to say oh, well, we all know how Sally or Dick or whoever it is is doing
and we don’t want to embarrass them or be awkward by saying we really ought to
review your performance. Well that is fortunately changing, and one of the
advantages of the change is that presidents learn – if they have a brain or any
capacity to look at themselves they can learn a lot from these reviews. Now, of
course in the for profit sector, performance review is a more established process.
A big challenge for boards in both sectors is to evaluate themselves. Not easily
done.
Function four – ensure that the organization operates responsibly as well as
effectively. We should note, the serious oversight lapses at the Smithsonian,
terrible, terrible. At the Getty, as well as at the University of California, all in the
nonprofit sector. Never mind Enron. One lesson of these dreadful lapses and just
meeting standards of integrity is that boards have to really be sure that the
gatekeepers, the providers of information, whether they be general counsels or
finance officers or whoever they may be, the main gatekeepers have got to be
people of real integrity.
I grilled a member of the Enron board who is a good friend of mine, mercilessly as
to what went on there and how he could possibly – he’s a smart person – have
allowed what happened to happen for as long as it did. And he said well, I just
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acted on the basis of the information I had and I looked at him and I said but didn’t
you ever realize that you had a responsibility to really be sure that the Fastows of
this world, providing the information, were who they ought to be. And he said oh, I
never really thought about that. And I said well, big, big lesson. Check out the
gatekeepers relentlessly and carefully to be sure that you’ve got people of real
integrity providing the basic information on which you have to act.
Function five. Act on specific policy recommendations and mobilize support for
decisions taken. This is a more important function that is sometimes understood to
be. In the university world, issues have a tendency to hang on, hang on, hang on.
How you achieve closure is very, very tricky question. Let me give you a specific
example. When I was in the president’s office at Princeton, we confronted the at
that time – hard to believe it now – contentious issue of coeducation, in which there
were people who felt strongly on all sides of the issue. The board did a very, very
careful study of the question, really brilliantly led by a trustee named Harold Helm,
came to a decision by a 22 to eight vote. Major decision was made—let’s not try to
force unanimity. We want each person to vote the way each person thinks he/she
should vote. And then we’ll come together after that, but not until that has
happened.
So 22 to eight and of course there were people we called, I called, the furry tigers
who were very upset by all this and thought oh, we’ll never raise another dime.
Totally crazy, but that’s what they thought. And so the trustees dispatched a
wonderful man named Ricardo Mestres great, great man, to meet with the staff the
day of the board decision. And so all the furry tigers were assembled to hear from
brother Mestres who said to them, I hope you all understand that the trustees have
today made a decision. This was a Friday afternoon. And he looked out at them
and he said those of you who can support this decision and work for it
enthusiastically should come back to work on Monday. And that was the end of the
meeting. And boy, was that message delivered, and was closure achieved,
absolutely.
Six. Boards need to provide a buffer for the president or CEO—in the vernacular,
to take some of the heat. In my experience, this is especially true when there are
free speech issues, issues of that kind, that the broad population often just doesn’t
understand. Why would you ever let that nitwit speak? Well, there are good
reasons for letting that nitwit speak and how you handle the speech is very, very
important. And often a key trustee who is not himself /herself a member of the
academy can make the basic point about the nature of a university more effectively
than can someone who is seen to be “one of them.” Now also, about faculty and
faculty role in governance. Here is another area where trustees can and should take
some of the heat. If a faculty has fallen into bad habits for whatever reason, it’s
really up to the board to say to the president, this process is not right, can’t operate
like this, fix the process. And the president then has authority, more authority, to
go back and work on the problem than if left to her or his own devices.
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Function seven. Ensure that the necessary resources are available to pursue the
organization’s mission in the nonprofit sector. That of course means raise money.
And I think one other aspect of governance in the nonprofit sector that has
improved is that boards now are less timid again about making clear to board
members that they’re expected to do what they can financially themselves in
support of the mission of the organization. It doesn’t mean that somebody with
little money can do what someone with a lot of money – of course not. But each
should do what each can do, and people who are not willing to do that have no
place on a nonprofit board and they should just be told that in no uncertain terms.
Function eight, the last on my list. Nominate suitable candidates for election to the
board and establish and carry out an effective system of governance at the board
level. This is a board responsibility. Not the responsibility of the CEO, though
obviously the CEO has to help, and the president should certainly participate in this
process.
One function of this selecting of board members is of course getting rid of board
members. A real failure of many nonprofit boards is a reluctance to confront the
sprawl and not getting rid of people who should retire and should’ve retired
probably a few years ago to make room for others. Now, people are afraid to do
this because they think it’s going to hurt friendships, it’s going to blah, blah, blah,
blah well again, for my many sins in both the for profit and nonprofit worlds, this is
a function I generally performed on the boards on which I served. Because
somebody had to do it. And this is not a job, not a job the president should ever do.
The president works for the board, the board does not work for the president. And
all I can tell you from my own experience is that confronting the need to replace Joe
or Jane is not as bad as you think it’s going to be. In what, four out of five
situations, the person to be replaced knows, knows that it’s time or that this is the
right thing to do and often will welcome a graceful way out if you simply work to
that end. And so I would say boards should be less timid in pruning the tree, much
less timid in pruning the tree than they sometimes are.
Building Boards and Board Dynamics
Now let me say a word about building boards and about board dynamics. Building
boards is an exceedingly important task and it’s only rather recently that boards
have understood that they need to be as systematic in recruiting new board
members as in searching for presidents. They need to find just the right mix of
talents, they need to have a matrix in front of them that shows age distribution, it’s
a systematic process that is required—it’s not a matter of sitting and saying oh yeah,
John would be great. Well, that’s not the way to do it. In finding the right mix of
talents for a board, one conclusion I have come to more and more firmly over the
years is that every board needs at least one, preferably two good curmudgeons. You
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really need on any board a good or preferably two good curmudgeons who will ask
all the tough questions that the people trying to be nice to the president won’t ask
but that need to be asked, need to be talked through.
Well, I was blessed at Princeton by having two superb curmudgeons. One was
named Paul Volcker and the other was named Mike Blumenthal. Mere timid souls.
And we could’ve sold tickets to the debates we had at the board over tuition, cost
containment, whatever. They were worth paying to participate in. But why were
these two people such good curmudgeons? Because they don’t only raise all the
right questions in a provocative way, but at the end of the day I knew very well they
were solidly in my corner and all they wanted was the best result that they could get
and they were not about to do anything that was going to interfere at the end of the
day with my ability to lead the university. And so that’s the kind of curmudgeon
you want.
You also need on every board to have at least a couple of people who know
something about what the enterprise, whether it’s a company or a university,
actually does, because that person can make sure that really important questions are
not overlooked. So you need to have a couple of people who know something
about the field.
CEO compensation, hot button topic. We all know that in the for profit world,
we’re still struggling, though we’re making progress, actually, more than is often
recognized, with getting rid of some of the real excesses, paid for failure,
inexcusable. And negotiating better deals upfront is of course the key to not paying
for failure.
And in the nonprofit sector, the problem is exactly the opposite. The problem is too
often we don’t pay good people enough and when we don’t pay them enough, as the
University of California sad tale reveals, we are tempted to find under the counter
ways, behind the door ways, of getting the mix right. And so we provide perks we
shouldn’t provide. We don’t tell everybody what we pay. Very, very bad. Pay
what you have to pay, put it on the table and be prepared to argue for it.
Board dynamics. How well a board functions in either sector depends in large
measure on how well it’s led, the quality of the chairman. Chairing meetings is a
gift. It’s a skill and a gift and it’s so important. Prevent filibustering, make sure the
right people speak in the right order, and on and on and on. Providing for regular
executive sessions is I think critically important. And nonprofit boards are only
now learning that this is just something they should do routinely, routinely. And if
there’s nothing to talk about you don’t have to meet for very long. But there should
always be an opportunity for the trustees to say or to ask whatever is on their minds
in an executive session.
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So often people have nightmares. Nightmares are worse always than what you learn
in the day. And so to get the question off the chest, out on the table, have it
discussed, puts so many things to rest that need to be put to rest. But then of course
the critical thing is to debrief the CEO after the executive session. And at Merck
where we were relentless and effective in our use of executive sessions, two of us,
Larry Bossidy and I, were the two who debriefed the CEO. We did it together just
to minimize any risk of misunderstanding, wrong message getting communicated,
and it worked, it worked very, very well.
One of course big challenge in board dynamics is to get the right questions asked
without undermining the CEO. Here is what a very wise friend of mine said about
this:
“There’s no problem as long as the organization is on a roll. But then
along comes the day when the CEO, barely disguising his adrenaline,
proposes a big, bold move. He has done his best to keep his board
informed. He has made it abundantly clear to the other party and to his
staff that matters subject to board approval blah, blah, blah – as a director,
you don’t like it. It doesn’t feel right. However, it is a fast moving world
and if I say no way, I am pulling the rug out from under the feet of the
person I’m trying to help do a job. Thus the director finds himself making
comments about the proposed deal knowing that it is too late to stop it
from happening, the other 80% of the board aren’t going to do anything
under any circumstances. And yet hoping to have an influence on the
CEO’s next idea, not knowing what the next idea could possibly be, it’s
the essence of indirect influence, not easy to do and not much fun.”
That’s the end of the quote and, I would add, absolutely essential.
CEO-Board Relationships
CEO-board relationships. I have become convinced that one person rule is basically
a bad idea. It’s just basically a bad idea, and that what you really need to have is a
separation of functions. The person overseeing the CEO should not be the CEO
and that is the fundamental argument for having a separate chairman.
Now, it needs to be done with great skill, there are substitute models, I discuss the
lead director model at some length as an alternative where a lot of – almost all big
companies now have gone, but I think that’s a transitional model. And if you keep
track and count the changes that are occurring you will see steady movement in the
direction of a separate CEO. Now, of course here’s where the nonprofit world has
so much to teach the for profit world. Because the nonprofits have understood
basically forever that you need to separate these roles, that there’s a job for both a
chairman and for the present CEO to do. They need to work together and I am
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absolutely convinced that the healthy partnership between these two folks, the chair
and the CEO, is more important than anything else in determining how well a board
and an organization functions. You’ve got to have the right chemistry. The people
have got to get along, they’ve got to respect each other, they’ve got to work
together to make sure that the organization succeeds.
Now it is of course so difficult to change from one model to another. And so what
tends to happen is that these changes occur in a transition or when there’s a crisis.
And maybe that’s just the way it has to be. There are situations in which you don’t
want to make this change or certainly don’t want to make it now.
The recent Exxon debate – very interesting on this subject. Some of you may have
seen. A group of people trying to separate these roles at Exxon lost. They got 40%
of the vote – not a small percentage to get, but 40 is not 50. They will get 50, it’s
just a matter of time. What happened in the Exxon case is that the argument over
the separation of roles got mixed up with debates over global warming and what
kind of policies Exxon should be following and it just became all muddled. Plus
the fact that of course Exxon as a company has done very well. Stock price has
done great and so a lot of pension funds, particularly union pension funds said
whoa, whoa wait a minute, I don’t want you to do anything that has any chance of
hurting my pension. So it will take different circumstances for that question to be
reopened there, but it will be reopened.
Now I want to end by saying a word about the CEO leadership role in the context of
this partnership I’ve been describing. I think if you read the financial press
carefully, you will see that there is a very important change that has been occurring
gradually, without a lot of notice, but steadily. It’s in the for profit world and it’s
called collegiality. The day of the overbearing, my way or the highway CEO is
leaving. Just talk to Nardelli about his experiences at Home Depot if you want to
understand what I’m saying there, where basically goons dressed in orange aprons
were used to escort people who asked awkward questions away from the
microphone. Well, not a good idea as he later agreed.
To my mind, the person who illustrates what I’m talking about best is sadly now
Dick Fisher, the chairman at Morgan Stanley who was, those of you who knew him
will be aware, a simply superb human being as well as a great leader. And Dick
walked the corridors at Morgan Stanley. Everybody knew that whatever their view
was, he wanted to hear it, he wanted to help them get better at what they did. He
was a great, great leader. And more and more you see people moving into what I
would call the Dick Fisher mold. Now of course, in universities we’ve understood
for a long time you can’t just order people around. You’ve got to build support,
you’ve got to build alliances, you’ve got to be careful in how you handle
relationships. But it is very important in both sectors. I think it’s happening more
and more.
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Now, finally why do people serve particularly on nonprofit boards generally
unpaid? And I think the answer is very simple. It is a privilege, it is. It’s a
privilege to be part of something bigger than you are and the feel that you can
actually have an impact on an organization that’s going to do some good in the
world, one hopes, and that will have perhaps a longer life than you will have. So
thank you.
Question and Answer Session
QUESTION: Could you please talk a little bit about CEO succession particularly when
there’s a highly effective CEO who is having a great time on the job but the board
hasn’t really thought through what’s going to happen after that person leaves?
BOWEN: Well, I went through exactly that question at Merck, where we had a very
good CEO – we had succession of very good CEOs, people of enormous integrity,
good people, Ray Gilmartin was the CEO there, and Ray was just right at the time
he took over from his predecessor, a great scientist and that was fine, but then the
whole industry began to change. As everybody knows, pharmaceutical industry’s a
different place. And a different kind of leadership was needed and Ray didn’t quite
understand that. He certainly didn’t like the idea. But he was a good person. Is a
good person. And so he understood that we needed to set a time, which we did, and
we needed to run a real search, a real search and he needed to help.
And it was accomplished. It wasn’t easy, it wasn’t always fun, and at the end of the
day Bossidy and I ran this search together as a team of two, and when we finally
ended up with Dick Clark – I think the record will show, absolutely brilliant
selection, if I may say so, patting myself on the back briefly. I looked at Larry and I
said Larry, my god, this is such an obvious choice. How could it conceivably have
taken us so long to come to such an obvious conclusion? And so we sort of mulled
that over in our minds for a while and said well, at least we had the advantage of
having looked everyplace so that Clark knew he wasn’t just a sidebar thought. It
was a considered judgment. And I think that’s very important. It was important to
him.
Now, in the nonprofit world, we of course often find the same thing and this is one
reason why annual reviews are so important, periodic reviews are so important.
Because if there is a problem, or a problem building, there can be a conversation
not only about whether the person should stay in office, but for how long, and what
should be done to prepare the way for another person, maybe with a different
leadership style. But I’m a strong believer in no surprises. Talking candidly,
another two years may seem about right, maybe it’s one more year, and let’s get on
with it, let’s get on with it. And let’s get on with it cheerfully. We don’t need the
field littered with bodies. That doesn’t really accomplish very much. I think again
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as in the case of getting rid of board members who’ve served too long, nonprofit
boards are often too timid in facing the need for change.
But there’s a reason, particularly in small, impecunious nonprofits why that’s true.
This was pointed out to me with great clarity by Derek Bok who has served
faithfully as the head of many impecunious, small nonprofits. Derek said look,
yeah, he said I knew that Joe was not the right person for this organization, that was
pretty clear to me. But we’re living on this razor thin margin, and if I chuck Joe
and launch a new search process, by the time I get the search done, the organization
is going to be dead. And so the very fragility of the organization made it difficult to
achieve the change in leadership that was needed. I’m afraid that happens, that’s
the reality of life. But just praying that the sun will shine tomorrow morning when
it’s raining today – not a good idea. Not a good idea in either sector. Yes.
QUESTION: Could you talk a little bit about how board members at nonprofits,
particularly universities, can take the temperature of their institution? Should for
example board members be mingling with faculty and students independently of the
president?
BOWEN: There are different views, as you know, on that question. And a lot of it’s the
matter of the personality of whoever the president is. I was always a believer in
people talking. And so we organized dinners, even, in which faculty would
entertain trustees in their homes and things like – but there were ground rules. The
main ground rule was that when any member of the administration was talking to a
trustee and had an important conversation, that that got reported to the president
immediately. There were no conversations going on out there in the field, in the
jungle, without the president being apprised of what was going on.
I am not a believer in trying to cut off the board from the life blood of the
institution. First of all, it doesn’t work, you can’t do it. And it’s not a good idea,
it’s not necessary.
QUESTION: Could you talk a little bit more about this concept of shared governance?
When I talk to new board members coming into colleges and universities, they’re
just befuddled by this idea that the core, the heart, the soul of the college or
university—the academic program—is hands off and can’t be dealt with at the
board level and they’re coming from industry, they’re talking about products and
markets and all this. What can we do to help faculty understand that and boards
understand that?
BOWEN: Well, I think the emphasis on process is critical. Because as I was saying a
minute ago, I think the board does have a role, whether it’s promotion policies or
new appointments or opening up new fields – not in deciding whether Joe Dokes
should or should not be appointed, that’s not the job of the board. But it is a job of
the board to make sure that the process that led to the recommendation that Dokes
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be appointed is sound. That is the job of the board. And so I think the board can
play a useful role, even in these sensitive areas, without overstepping its bounds –
but the confusions are rampant.
QUESTION: Bill, you may not want to address the issue of the health of public
university board governance, but I think it is the case that fewer consider
appointment to the board as a privilege and, instead, more see it as an opportunity
to advance personal political agendas—either theirs or their sponsors. Even if the
process is well established it can change the composition of a board in very short
pause. Let me give you one example. Arizona. Bruce Babbitt was the governor,
he selected a board that had the president of a major hospital and medical system,
or president of a utility company, so on. And he would say to them I’m asking you
to serve because of the experience and the knowledge that you bring that I think
will help our university. Don’t try to second guess what I want you to do. If I want
you to do something, I’ll come to the board and ask for it, and then I want you to
exercise your best judgment. He was followed by a governor who was ultimately
impeached and placed in jail and in a very short period of time, the character of the
board was dramatically changed.
BOWEN: Absolutely. Well, let me say first that there’s a great book to be written on the
boards of leading public universities. How they have evolved, what works, what
doesn’t work, great, great book to be written. I think that the dysfunctional aspect
of so many of these boards is one of the reasons – not the only one, but one of the
reasons why there’s been such movement of presidents from the public sector to the
private sector, I think without any question.
If enough influential, sensible, thoughtful people in the state see that the governance
of the major public universities is dysfunctional, heading in the wrong direction,
serving personal agendas, they can put pressure on the governor, on whoever it is to
make things better. I was involved in various discussions about the California
Board of Regents. And how it should be led and all the rest. And it did help that
there were some prominent citizens who did understand the importance of the
issues we were discussing. Not perfectly, but they did understand it. So I think
there’s no substitute for making the case for the kind of board-president relationship
you want more broadly, and some of these trustees of public universities, as well as
privates, can learn. And if you explain with sufficient effect the stakes, I think you
can get sometimes better results.
Now, let’s quickly add, these are not problems only in the public sector, which is
not I think what you were saying. Some of you have followed the incredible saga at
Dartmouth where this battle over alumni elections and what kind of a board this is
supposed to be and – just incredible. So it’s not only a public sector problem, but it
is a more serious problem by far in the public sector. You’re absolutely right. Yes.
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QUESTION: Bill, you spoke earlier today and you speak fairly extensively in the book
about the important role of the board in assessing the CEO. And you also
mentioned in your book the difficulty of selecting the right metrics for a CEO and
how important it is not to use metrics over which the president may have no real
control, or perhaps wrong-headed metrics like U.S. News & World Report ranking.
How do you select good and somewhat quantifiable metrics?
BOWEN: Well, we can think of outcome measures, which I think are going to become
increasingly important in all of higher education, graduation rates for different
groups of people, success in achieving real diversity – those are just two examples.
Scholarship of course, the leadership that a faculty provides, not just within the
institution but nationally and internationally. Those are all things that in rough
order – we knew whether the math department was good or not, and we also knew
whether some other departments were good or not. So there are things that you can
focus on. And of course the president should have identified certain things to fix,
certain ways to make the place better.
And then if that’s been accomplished, setting of rough objectives, you could see
how the place is doing in moving towards them. Now, of course fiscal
responsibility is important, but I wouldn’t overdo that metric relative to other
metrics. At the end of the day, there’s no substitute for having intelligent,
thoughtful, sensible people talking together about what the right measures are, how
do we get information that’s reliable, and doing all this in a relatively transparent
way. I think the notion that this is going to be done in a secretive way is not
helpful. Yes, please.
QUESTION: Bill, could you make some comments about roles in a public system where
you have a chancellor and presidents or a president and chancellors and they all
want to be the CEO?
BOWEN: Well, back to this issue of effectiveness and how do we measure the
effectiveness of the whole beast. It isn’t just a matter of individual campuses, it’s a
matter of how well they fit together, how well they articulate together, and overall
meet the needs of various constituencies, various groups, and one of the jobs of the
system head is to make sure that this articulation occurs. I think myself, that we’re
going to see – I hope we’re going to see this new – I’m working on a huge new
study, an empirical study of all of this with Mike McPherson. And I think one of
the things we’re likely to end up recommending, because we have data, is that a
much more careful look at transfers be taken than has been taken.
One of the ways in which you can achieve real efficiencies and just get better results
is by allowing the right kind of flow-through to occur between students who may
have not known what they wanted to do, not as well prepared as they might have
been, and then thrived in a two-year college, to move up through the system. The
data that we have show that these folks do very well, do very well in the four-year
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institutions in which they head up, and it’s far from obvious to me that most
colleges and universities have thought as carefully as they should think about this
question.
And of course, that’s one of the roles of a system head is to encourage them to think
about those kinds of things and how the system as a whole can get better. But it’s
certainly not the job of the system to appoint a chairman of the statistics department
on campus A. No, not at all.
QUESTION: There are many advantages to having people rotate off the board in a
reasonable timeframe. But one of the disadvantages is that you have more new
people coming on to your board—at any given time and over a small number of
years. You talked about the importance of selection, but I wonder if you could talk
about how in your view you best bring people on to the board?
BOWEN: Absolutely. Socialization is a critically important task, and I am against
bringing too many new people on at once, because if you do that – and this holds in
the corporate sector as well as the nonprofit sector. You can’t socialize properly
when you’re got an army of people marching in the door, and so I think there’s a lot
to be said for structuring the flow through the system in such a way that you have a
relatively modest number of people coming aboard at any one point in time, so that
you could then spend time – serious time with them. The board – other board
members can, key administrators can, so they get some sense of what they’re all
about.
Let me just say one other thing on this business of rotation and flow through the
system. It’s easy to be too theological about this. The rule of the road that works in
one place may not work in another. And so there’s got to be some smell test –
some common sense applied in thinking about the rotation through the system. I’ll
give you examples from my experience. Princeton is blessed in many ways, and
certainly has an incredible pool of talent for board service. And so you could lose
people, very good people, and there was somebody else. Now at Denison, where I
was also on the board – wonderful place – did not have the same pool of talent.
And so there were a couple of trustees at Denison that we just could not afford to
lose. It was as simple as that. We could not afford to lose them, whatever the
rotation policy in general said. So we engineered ingenious methods of keeping the
key people that we simply had to keep in the Denison context, as we did not have to
do in the Princeton context. So I’m a great believer in common sense, and
moderating whatever the general rule of the road is with a pretty good idea of what
will work in your setting and what won’t. Yes?
QUESTION: I wonder if you could reflect on practices in higher education in other parts
of the world that might bring benefit or insight to American higher education?
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BOWEN: Oh, I wish I could. This is an area in which the U.S. is really way ahead.
Much more thought has been given to governance, and to boards here than
anywhere else in the world. And if you talk to our friends, some of whom are here
in this room, about governance structures elsewhere, you find not a lot of lessons
that transpose themselves to us. Now that’s not to say that we shouldn’t be
watching closely what happens in the globalization area. We should, because the
days of a steady, one-way flow of super graduate students in science and technology
to the U.S. – particularly from Asia – those days are over, and there’re going to be
flows in both directions. There’s going to be competition for talent. So we’ve got
to look very, very closely at what's going on worldwide – no question. But I think –
different governments – in China, if they want something to happen at Beida
University, it’s going to happen. And it doesn’t much matter what the governance
system is. It’s – when I was in China for the – I’ve been in China many times.
First time was in 1974, right after the Cultural Revolution. I was part of a team of
university presidents that went there then, and the Chinese presidents that we met
with of universities – when you’d ask them, what is your biggest problem? They
would say, how to get the faculty to think right. How to get the faculty to think
right. Well no American president would ever… But it was just a reflection of
totally different cultures, assumptions. The leaders were forced always to speak in
Chinese, even if their English was perfect so that the party people around would
hear exactly what they said. I mean it was another world.
QUESTION: Can I ask you the flip of that? Do you see the trend of American
governance practices being exported?
BOWEN: I do. I do because I think one of the many great lessons of an American
experience is – sometimes it’s good, sometimes flawed – is that you develop a
diversity of institutions, and very important, a diversity of funding sources that are
themselves a function of governance in part. And that lesson really needs to be
understood, particularly in various parts of Europe where I think it is being
understood to a greater extent than in the past. You see fundraising machinery now
in the UK that you didn’t see 15 years ago, and many of the issues that the U.S. has
thought through – roles, relationships between industry and the academy and all of
that – are being worked out – it’s often very intelligently, in places like Cambridge
and Oxford now, as they were not some time ago. So yeah, I think there’s – one of
the sort of mild hopes I have for this little book of mine is that it will be useful
particularly in some of the developing countries –not so much in the nonprofit
sector, but in the for profit sector because you're going to get people invested in
these countries. They want to know how the organizations are going to be
governed.
BOWEN: Yes?
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QUESTION: What about the relationship between the board and major contributors?
One, should the board be going after those who are delinquent? Secondly, the board must
have a role when there’s some sort of interference.
BOWEN: Well, one of the functions of a nonprofit board is to work hard at garnering the
resources that the place has to have to succeed, and that does involve both –
including on the board – people who can be generous and can lead by example, and
also having the right set of relationships hither and yon with key donors. There
were certainly members of my board who relentlessly courted difficult people for
years, and finally, more often than not, paid off – sometimes not with the original
target, but with the target’s son or daughter in another generation. But that kind of
careful marshalling of support over time, taking the long view, is really, really
important. But of course, what you cannot allow to happen is donors dictating
substance. You just can’t have that. I had a conversation I remember vividly with
some people from the Middle East who wanted to make a big gift – big, big gift to
Princeton, but wanted to condition it on A, B, C, and D happening. And I just said,
no. I said, you have to understand. I said – as nicely as I could – the university is
not for sale, and I said, that’s one of the reasons why it’s a great university, and it’s
one of the reasons why it’s in your interest to have a relationship to it – but on the
right terms. That’s very important.
OK, I’ve kept you in prison too long.
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