Boards that Make a Difference

Boards of IIMs: Roles and responsibilities

T. V. Rao

(Chairman TVRLS, Former Professor at IIMA, Founder President National HRD Network. Dr. Rao was associated with the Ministry of HRD in mid eighties when the new education policy was formulated. He was on the Sub-committee on Management of Education Headed by the HRD Minister at that time. Subsequently he was on the Committee to Review NIEPA. Recent years he served as a consultant to the Administrative Reforms Commission on Civil service Reforms, and on the Ministry of Finance Committee on HR in Banks (Khandelwal Committee). Dr. Rao also worked as HRD Advisor to Reserve Bank of India earlier. T. V. Rao can be contacted at: tvrao@tvrao.com)

The Boards of IIMs are the Chief custodians of the Management of these Institutions. The vision, mission, goals and objectives of IIMs are well set for these institution.  It is the Faculty and staff that make sure that the Institution strives to achieve its vision, mission and goals under the leadership of its Director. The Boards should remember that there is a substantial difference in academic institutions and corporate sector Boards. The Faculty of Institutions like IIMS, IITs, Universities and even schools and colleges are intellectual capital builders. In good Institutions like the IITs and IIMs and other Higher education & research centres the faculty set their own targets, programs and develop new research areas. The Board's job is to understand them, respect them, guide and support them with funding and other ways. For this purpose the Board should interact periodically with the faculty appropriately and get to know their work. At IIMA periodic Society conferences are organised to show case the work of faculty. The Board members should spend adequate time to attend such events and if they can't at least devote a meeting or two to discuss the lessons from the same and evolve support policies. 

The Chairman and Board are non-executive Governors of the Board. They don’t execute though they are termed as having the role of executive body. They enable the Director and his/her team to execute and carry out various activities.  They meet once a quarter and at best for a day each time. With four days on inputs in a year we don’t expect the Board to make the institute achieve its goals. They are not comparable to the Boards of Directors of companies. There is a lot of difference between the way corporate Boards function and the Boards of Educational Institutes function.  The Board provides  linkages between the Institute and the environment or the society at large, interprets the environmental needs and opportunities and provide direction for the Institute and its faculty to review, launch and re-launch their programs including teaching, research, dissemination or change management  activities. They also review the performance of the Institute and its Director from time to time and approve the budgets and balance sheets. They also help raising funds for where required.

The Boards are normally thought fully constituted to represent the outside society or environment so that the IIM can have maximum impact and achieve the purposes for which they are set up.  The members of the Board normally include representatives of the Government, Industry, other stakeholders and the Society at large. For example there are normally one representative of the MHRD and one of the State Government and in addition one each nominated by the Centre and the State. In addition two eminent people to be nominated by the Board from Alumni and three to nominated by the Government to represent different sections of society (education, industry, government and or special groups that need attention). Two represent the faculty, and four members representing the Registered Society if the Institute is a registered Society under the Societies Registration Act like the one at IIMA.

The Board members have both an individual and collective role. Individually each member has a role to play to represent the interests of the group for which he/she has been nominated/appointed.

Individual Responsibility:  

Faculty members on the Board are the active voice of the Institute and ensure that the other members are informed about various activities and concerns of the Institute, its needs, accomplishments, challenges etc. and seek solutions or give policy inputs. 

The members representing the Registered Society (under 1860 Societies Registration act)  has the responsibility to represent the society’ views to faculty, build bridges between the Institute and Society members, expand membership, collect views and inputs from the Society and present the same to the Board to be translated into policies and practises. For this they should be constantly in touch with the other members of the Society.

The MHRD or Central Government and State Government representatives have the role to play of informing the National and local priorities and guide the Institute to serve the National and local (State) level needs and interests.

The Alumni have the responsibility to represent the alumni interests and ensure that feedback is available to the Institute from alumni so that changes that help the institute move towards better curricula and better programs can be made available and also ensure that the alumni contribute to the financial health of the Institution.

The other members representing special interest groups like Industry including women, SC/ ST, or sectoral groups like Banking, petroleum, education etc. depending on the reasons for their appointment) should draw attention of the Board and Institute to National concerns of the groups as and when an opportunity arises.

Collective responsibility:

The Board should normally transcend their individual points of view and collectively work for the good of the Institution all the time. Sometimes there could be conflict and in resolving the conflicts they should be able to rise above the specific individual interests and work for the good of the Institution. Team work is the most essential part of the Board. If the Board’s divided view gets communicated to faculty, it affects the excellence and does not give right direction to faculty. It may leads to politicisation of the issues. The Board is there to support faculty, lay down broad policies and guide the faculty to govern themselves well. The Board is not an Executive Board. It is also not an Advisory Board. It is a mixture of both and in Academic Institutions the Board should remember that they are helping a group of highly knowledgeable scholars who get disturbed and de-motivated if they are not given proper support for their teaching, research and other academic work. The Board therefore does not get into individual cases and does not also get into decision making as far as possible. The only time they get to play active role in decision making is when they appoint the Director to lead the Institute or establishment of new centres which require big funding and their interventions. Other times include some exceptional cases of termination of faculty services or some financial norms, incentives have to be fixed, or big funds are to be accepted   etc. They could direct the faculty to start certain type programs or step up certain types of activities or scale down others etc. so as to serve the purpose for which the Institute is set up.

By virtue of its constitution the Board members may have different points of view. It is the role of the Director to present the Institute views and interest and take the help of the Board. The Chairperson has a very significant role to play in harnessing the different points of view and driving the Board to consensus make intelligent decisions or formulate policies. He should ensure that no vested interests develop nor any one section by virtue of its roots or origins dominate and twist the discussions.

Chairman, Board and the Director:

These three play a keep role and their chemistry decides a lot of how the Institute develops. Their interrelationship should be one of trust and mutual respect. Trust can be built through continuous communication. Such communications from the Chair should not be seen as interference on the part of the Director and the Chairman could set a positive and non-threatening agenda for such communications.

A very significant role gets played by the Board at the time of selecting the Director. Normally it is good for the Chairman to keep himself out of Search Committee as he always had a lot of say at any point. When the Search Committee is constituted consisting of eminent people, they are likely to be respected for their suggestions and also they do consult the Chairman.  

Chairman taking over-active role in the Search creates some times gives wrong perceptions that he may be favouring some one or the other and leads to politicisation. Even if he/she is a part of the Search, if the Search Committee is constituted with people of stature, is above Board and does not have any interests or preferences for particular candidate, it creates a healthy atmosphere. They should have the single most important objective of finding a good leader of excellence who can help achieve the Objectives of the Institution and take it to newer heights.

Some times when the Chairman or a few members play an active role in the selection of the Director, the Directors subsequently tend to be more communicative with them selectively. Such Chaimran and Board members create new power centres and  may run the risk of turning a blind eye to the styles and impact of the Director. 

Director’s job is a bed of thorns. How so ever excellent he or she may be some negativism does get generated and academics are very expressive of their unhappiness. The Search Committee or the Board should be able to listen, decipher the reasons and guide the Director where necessary and provide healing touch where possible. I have recommended an annual 360 Degree feedback for IIM Directors initiated by themselves. 

 A 360 feedback annually or at least once a while helps the Director to be sensitive to the impact he/she is making. A 360 taken in early years of tenure can save a lot of negative energies that get developed.

If the Board get into delays in decision making (in laying policies or resolving conflicts etc.) it leaves the faculty guessing and runs the risk of starting new politics of alignment and realignment. It disturbs the academic culture and diverts the attention to other issues. It happened almost two decades ago at IIMA, when one of the Director’s appointments was delayed. There were letters to MHRD and the Faculty got divided and ended up wasting their time. It also made the life of the Current as well as the newly appointed Director difficult. In my view it took a long time to heal the wounds generated by the delay. It made an excellent Director less effective as he had to spend his time undoing what has been done and in the process he ended up hurting many more people.

Need for Performance Review of Boards

As per the new company law, the boards would have to lay down the procedures and methods for annual formal evaluation of performance of the board, its committees and individual directors, Chairman and of the Independent Directors.             The Schedule IV of the New Act specifies additional responsibilities for the Independent Directors and their duties and functions for the first time

•          The companies would need to have systems which would help familiarise the Independent Directors with these responsibilities

•          The Independent Directors will have to meet exclusively at least once annually in which they will have to review the performance of the non-Independent Directors, the Chairperson, and assess the time lines of the information flow between the management and the board

•          To do this the Independent Directors would have to have proper procedures in place which would enable them to conduct such meetings and carry out the reviews.

IIMs and IITs are public Institutions. They are financed by public money and therefore their Boards have a larger responsibility to ensure that the institutions are governed well and achieve the purpose for which they have been formed.

A large number of Board members including the Chairman are non-executive members of the Board and therefore have a larger responsibility to ensure smooth functioning of the Institution.

In an academic institution where there are no tangible measures to measure the achievement of goals in short term apart from placement data, revenues and expenditure, business rankings the real functioning of the Institution, its contribution to intellectual capital generation in short term becomes an essential ingredient.

IIM Boards should consider as a good governance practise to evaluate its functioning and also lay down clearly the roles and responsibilities of all its members. Special attention needs to be paid to the performance evaluation of the Chairman various committees, Director and other members of the Board. Without the Board’s involvement in all these the institutions run the risk of  going  in their own direction.  

(The thoughts here are personal and based my own experiences and narrations by those like Ravi Matthai, Udai Pareek and others from whom I learnt)