The BOT’s Governance Consultant Speaks

January 17, 2014 at 9:44 am 2 comments

Holly Gregory wanted to clear up one thing right off the bat. The lawyer hired to facilitate the Board of Trustees’ discussion about the more difficult parts of governance reform—the size of the board, the constituencies represented on the board, the qualifications needed to serve on the board, etc.—opened the trustees’ retreat Thursday afternoon with, as she put it, a disclosure:

She’s not a Penn State graduate.

That was a soft opening, to be sure. But as Gregory continued, she laid out her philosophy of good governance and how she sees her consulting role. She explained the focus of her law practice—working with boards of directors and trustees, at both for-profit and nonprofit organizations, and said that includes other universities.

She acknowledged the progress Penn State has already made in governance reform, but she added, “There are a number of areas where observers have continued to call for change. We have to listen.”

When governance committee chair Keith Eckel announced the hiring of Gregory in November, he stressed that he was looking for not for an expert in the field, but a facilitator, someone who could guide the board—which is divided—in what he has called the ongoing and continuous work of determining how best to govern the university.

He reiterated that Thursday, when he introduced Gregory and opened the retreat:

“The right model for Penn State will be the Penn State model,” he said. “It is within every one of our hands, the ability to shape that. Holly is the expert, and I have great confidence in her ability. But perhaps her most important talent is one of facilitation.

“There may be differences among us, but I am convinced there is one thing that unites all of us, and that is that we want the best for Penn State. Our viewpoints may differ in what that definition is, but we want the best for Penn State. And this effort is to create and in many cases reaffirm processes we may already have as the best Penn State model.”

And Gregory immediately picked up one of Eckel’s main themes: “Governance is a work in progress,” she said. “It never really ends. You never really say you’re done. You continually need to think about how this board functions and operates and the rules it has in place to guide it.”

The first part of the retreat was open to the public; by my count, 12 people—including me, four other reporters, and two Penn State public information staffers—attended the session, which lasted for about 40 minutes. The trustees were in one room; we watched a video hookup from the room next door that showed whoever was addressing the trustees. The rest of the retreat took place in a closed executive session.

Among the points that Gregory made in the public portion of the retreat:

Fiduciary duty: As a lawyer, she sees fiduciary duty as the underpinning of everything a trustee does. “Not as an ending,” she said, “but as a starting point.”

Disagreements are OK: Tensions in “key relationships” at an institution that has undergone a crisis are not unusual. “In fact,” she said, “they are the norm.”  Gregory called herself “agnostic” on the Sandusky scandal and aftermath and stressed that “disagreement isn’t something to be afraid of. It’s something to be valued.”

Speaking with “one voice:” That said, she also stressed how important it is that the board speaks publicly with one voice. They key, she said, is to figure out a way to get the “benefits of vigorous debate”—meaning, in private—“without causing harm to the university.”

Three duties of trustees: She laid out three duties that should guide trustees: obedience, meaning that everything the trustees do should be tied directly to the university’s mission as described in the charter and bylaws; care, meaning to put in the time needed to fully understand issues and to do due diligence; and loyalty, meaning avoiding conflicts of interests—or identifying ones that can’t be avoided and protecting the university’s reputation. “After all,” Gregory said, “that’s one of a university’s primary assets.”

She continued: “The good news is that perfection is not required. These duties, they expect a very, very high standard from trustees. But the law recognizes that the board, acting in real time and in response to real emerging issues, will not always make the best decision. You’re going to get it wrong. You’re going to make mistakes sometimes. As long as you’re acting with reasonable and prudent care, you as trustees will not be held liable.”

A culture to strive for: Gregory characterized the culture the board should strive to meet with these phrases: Mindful of fiduciary duties. Future-focused: anticipatory, not reactive. Revitalizing, not entrenched. Diverse and inclusive.

She ended with this: “I can’t emphasize enough the value that comes from having the opportunity to debate a variety of viewpoints.”

Lori Shontz, senior editor

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Entry filed under: Board of Trustees. Tags: , .

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