Greg Kochanski

Many objections to governance change arise from doubts about the necessity and wisdom of one of the "best practices": a centralised decision-making body with a majority of external members. Oxford can clearly and honestly make the argument that - because of our unusual social and governance structure - the need for external control is much weaker than in a "normal", strongly hierarchical organisation.

If so, we can take a modest step in HEFCE's direction, and create a Council with some of external directors. This will be more politically palatable, and may have the advantages of externals, without so much risk of damaging Oxford by unknown side-effects of over-enthusiastic changes.

So, why do most organisations need a majority of external directors? There has been much talk that externals bring in expertise, and it indeed is a good reason for having some externals, but it does not explain the need for a majority. After all, the expertise brought by seven externals is only 17% more than the expertise brought by six. So, yes, we want people who have personal experience with financing large projects, with management, with running large organisations, with the law. But, the needed expertise can be gained from a minority on Council, or perhaps even in other ways.

In most organisations, a majority of externals is needed, first and foremost as a check on a strong executive. Imagine a corporation where the Board of Directors was appointed and paid by the CEO. The CEO could set the Director's fees, and the Directors could set the CEO's salary, and everyone would scratch the back of their neighbour. Anyone who objected to the CEO's inflated salary could be replaced. Everyone would do well, except the stockholders, employees, and customers. To avoid a situation like that, one needs directors who do not owe much to the CEO so they have little to lose by disagreement. Thus, they cannot be employees of the corporation, thus the board must be controlled by externals.

However, at Oxford, power is (and should be) diffused widely. Given Congregation's current powers, a CEO who attempted to feather his own nest and corrupt senior management to any great extent could find him/her self replaced by Congregation. So, Congregation holds the CEO in check, much like external directors do in a normal, hierarchical corporation.

But, perhaps Congregation can feather its own nest? Potentially, but only to a very limited extent because of the financial arithmetic. Whereas we could double or triple the CEO's salary and have only a small effect to Oxford's budget, the money simply does not exist for Congregation to double its own salary. About the only way to give ourselves an unfair advantage would be to allow each other to be lazy. Fortunately, we collectively have much to lose of Oxford's reputation falters.

So, as long as Congregation has enough real power to oversee the central management team, no one has the power to set their own salary, and people will be paid (roughly speaking) a fair and reasonable salary. Other issues of oversight follow much the same logic as salaries. The essential feature is that there must always be a watcher who cannot be controlled by the decision-maker. Thus, there is no real need for a majority of externals at Oxford.

Issues of corruption aside, external control always is less desirable and efficient than internal control. Who, for instance, would think it sensible for Italian voters to control the UK, while British voters control Italy? Who would think it sensible to give control of your personal financial affairs to your neighbour? No one. Even if trust weren't an issue, there would be little motive and incentive for hard work and careful thought. Worse, they can't know what is going on nearly as well as the people who are actually here. For efficiency and maximum performance, the people who have the most knowledge and who are most affected should make the decisions. It is only in a hierarchical command structure where the opportunities for self-enrichment are blatant that giving control to externals makes sense. And even then, it is a conscious balancing of outcomes: accepting the inefficiencies and absurdities of external control to avert the greater disaster of an executive that works for personal gain rather than for the organisation.

So, let us welcome lay members into Council, for their knowledge, their connections, and their disinterested perspective. Make it a substantial minority, and let us make (continually if necessary) the argument that we do not need a majority of externals because we already have a body that oversees the executive.

And then, of course, we need make sure that Congregation has both the power and knowledge to do so. Congregation needs to retain its current powers to act on the basis of a petition, so that it can step in as necessary. History shows that Congregation does not over-use its powers, and it is highly advantageous that Congregation have gentler options available than wholesale removal of Council. Smaller corrections are always better than waiting until problems and dissatisfactions build up to the point where a vote of no-confidence would be considered.

Further, Congregation needs better and more timely information. I applaud the Vice-Chancellor for taking the initiative of sending out e-mail summaries of Council meetings, but we should go further. We need, first of all, agendas and minutes. Council should be open and transparent by default, with the option to close its meetings only when necessary.

Best practice is perhaps embodied in US "sunshine laws" that require public bodies to publish an agenda in advance of each meeting and publish minutes. Certain types of agenda items may be closed by motion, and closed items have a date after which they will be opened to the public. These laws have been in place for 20 years or more and are well tested and understood. Something similar should be a part of any real governance reform.

We can fulfil HEFCE's underlying demand that there be effective oversight of the executive without an majority of lay members in Council. Interpreting that part of "best practice" literally is a mistake, because it is designed for a hierarchical organisation with a powerful executive, not Oxford. Many routes to good governance are possible; the rest is just a question of educating HEFCE.