The Hallmarks of Good Governance in Academy Trusts – Part 4

A series of posts examining what good governance in an academy trust looks like and how boards can create a framework to deliver their core purpose and properly discharge their duties. In part 3 we looked at Stewardship of Finance and Resources. In this final part 4 we examine..

How to get governance right from the outset

The Department of Education’s view is that effective governance requires the following key ingredients:

  • The right people with the necessary skills, time and commitment, and sufficient diversity of perspectives to ensure internal challenge, all actively contributing in line with clearly defined roles and responsibilities under an effective chair and an explicit code of conduct, and with active succession planning
  • Clear governance structures and documentation with tightly defined remits, particularly in relation to functions delegated to committees or other bodies
  • Clear separation between the strategic and operational in terms of the role of the board and the school management
  • A positive relationship between the board and its school management enabling robust constructive challenge on the basis of a good understanding of objective data, particularly on pupil progress, staff performance and finances
  • The support and advice of an independent and professional company secretary
  • Robust processes for financial and business planning and oversight and effective controls for compliance, propriety and value for money
  • Processes for regular self-evaluation, review and improvement including; skills audits, training and development plans, and independent external reviews as necessary.

“Governors and trustees are engaged and energetic non-executive leaders who are driven by their core strategic functions of setting the vision, holding the Headteacher to account or results and making sure money is well spent; they sit on boards no bigger than they have to be; are curious about what’s going on in the classroom and aren’t afraid to innovate; they focus ruthlessly on what really matters: raising standards”  – Schools Minister, Lord Nash, 2013

Ensuring continuous improvement

Achieving high standards of governance and accountability requires sustained effort and resources – it isn’t easy. With all aspects of good governance, the effectiveness ultimately depends on the skills, knowledge and behaviour of those responsible for operating the system. The board must set the desired values, ensure they are communicated, incentivise the desired behaviours, and sanction inappropriate behaviour. Academy Trust boards can benefit greatly from an external review of their governance structures and/or an independent review of their board’s effectiveness. In response to the growing need for improvements, Elderflower Legal has developed fixed price review packages which can be delivered quickly, confidentially and with the minimum of fuss to help trustees and school leaders get a picture of how they are performing and what areas of practice need to improve. You can find out more about our review packages here.

Final thoughts

One of the difficulties in embedding sound practice is a current lack of clarity about who is responsible in academy trusts for setting up the framework for sound governance and embedding good practice.  CEOs and Executive Principals may not be the best people to lead on this – they are tasked with driving the organisation forward and taking measured risks. Similarly Finance Directors and School Business Managers may be too immersed in the day to day operations and short of time to take an overview of governance. The best person to implement your system is trained governance professional, such as an ICSA-qualified chartered secretary. They have the necessary experience and rigorous qualifications beyond financial and legal aspects to make things happen and help you succeed. Chartered secretaries can work for your trust on an outsourced or employed basis, depending on your budget.

A sound system of governance isn’t a ‘nice to have’, an exercise in box-ticking compliance or even a brake on progress: it is an essential foundation stone on which the whole institution is built. Get it right and it can be enabling and empowering: get it wrong and the academy trust’s whole purpose and even its survival may be compromised.

If you have enjoyed these posts, we have compiled the series “The Hallmarks of Good Governance in Academy Trusts” into a FREE downloadable Special Report.  The report can be downloaded here.

Mark Johnson is a highly experienced independent solicitor & chartered secretary supporting academy trusts, free schools & other education providers with their governance arrangements, legal and compliance matters. He is an independent member of a MAT audit committee. He offers a cost-effective governance review GovernanceCHECK360™ for academy trusts

If you enjoyed reading this series of posts on Good Governance in Academy Trusts and would like to be kept up to date on similar topics like this, then why not sign up to receive our regular newsletter.

The Hallmarks of Good Governance in Academy Trusts

This series of posts examines what effective governance in academy trusts looks like and how boards can create a framework to deliver their core purpose and properly discharge their duties.

With the demise in the role and capacity of local education authorities, England’s state education system is moving inexorably moves towards a school-led system with a diverse landscape of structures, partnerships and institutions entrusted with delivering statutory education with public funds. The need for robust governance and accountability has never been greater. At the same time, schools are subject to so many regulations and reporting requirements, it can be difficult to see the wood for the trees. The spotlight from Government and regulators on sound governance in the education sector has never been stronger. However, trustees face a daunting task in assembling a picture of all the requirements: so in this series of posts we aim to provide a route map, explain and demystify.

What is governance and why is it important?

A system of governance is all about the way organisations are directed, controlled and held accountable to deliver their core purpose over the long-term. The organisation’s structure, practices and procedures should all be organised so that the organisation achieves its core purpose, mission and goals, whilst complying with the law and sound ethical practice.

A sound governance framework will:

  • Set out the shared purpose, vision and values of the trust
  • Enable the trust to develop an agreed strategy to implement the purpose
  • Ensure oversight and monitoring of the organisation’s performance along the way
  • Ensure the organisation remains accountable for delivering its mission.

Positive benefits of good governance in academy trusts include:

  • People will trust and respect the organisation (including pupils, parents, funders, regulators, suppliers and the wider community)
  • The organisation will know where it is going
  • The board will be fully connected with management, the academy’s operations and wider stakeholders
  • Good and timely decisions will be made
  • The board will be better able to identify and manage risks
  • The organisation will avoid mistakes and have greater resilience to cope with problems
  • The organisation should enjoy improved financial stability

Where governance is strong, standards of attainment are likely to be higher because pupils are known and supported to be their best, the quality of teaching is a constant focus of attention, and the leadership of the academy is held to account for the performance and wellbeing of the children.” – Collaborative Academies Trust, 2014.

The pivotal role of the Board

The academy trust’s board is at the epicentre of the system of governance. They must set out the academy’s vision (what the school will look like in 3-5 years time) its values, the shared moral purpose that should run through all the academy’s actions. In most cases, this will be about improving children’s lives through excellent teaching and learning and preparing young people for the challenges of later life.

The model Articles for an academy trust (the main governing document) usually contain an anodyne statement that its object is “to advance for the public benefit education in the United Kingdom…by establishing, maintaining, carrying on, managing and developing a school offering a broad and balanced curriculum.” It therefore falls to the Board to put the flesh on the bones of this and stamp their particular vision and ethos on the trust.

The Department of Education’s view (Governance Handbook, 2015) is that the Board has three core functions:

  1. To ensure clarity of vision, ethos, strategic direction and structure
  2. Hold the Headteacher to account for the educational performance of the school and its pupils and the performance management of its staff;
  3. Oversee the financial performance of the school(s) and make sure money is well spent.

Those are certainly three key strands to the Board’s work, but there is a lot more besides! One of the key challenges for members of an academy trust board is to think and act strategically. The Board should continually review and evaluate the strengths, weaknesses, opportunities and threats and consider how best to play to the organisation’s strengths, or bolster the required competencies. Board members are not there to provide operational oversight or ‘second guess’ the executive managers. Nor are they there to represent or advocate for a particular constituency or interest group. The primary consideration must always be what is best for the pupils. The changing landscape and increasing levels of accountability and responsibility will require high calibre trustees with specific skills and attributes, who are able to step out of their comfort zone to lead school improvement, provide a high level of professional challenge and work as team players on dynamic boards. Running an Academy trust is like running a business, albeit one with a social purpose. Board members must understand that they have corporate collective responsibility and can be personally liable in some circumstances in the event of regulatory action or a legal claim (e.g. breach of trust, accounting irregularities, or negligence leading to personal injury).

The trend now is towards smaller, more strategic and skills-focused board, with less prescriptive structures and a definition of purpose more aligned to the new educational landscape. The National College of Teaching and Learning (Governance of MATs, 2015) has set out the skills and attributes required of trustees. Trustees should:

  • constantly focus on what’s best for the school and pupils by challenging in a constructive manner, asking probing questions, and visualising the strategic picture, in terms of both the trust and the schools within it. See more on developing strategy.
  • understand and effectively carry out their roles, responsibilities and accountabilities, with the ability to take risks and consider dynamic and innovative options
  • be able to analyse data, measure and lead school improvement and drive the necessary changes – useful starting points for monitoring data include the OFSTED data dashboard, Fischer Family Trust Governor dashboard (which measures ‘value added’ by the school based on socioeconomic factors) and the Wellcome Trust Questions for Governors.
  • understand the financial and the business aspects of leading a trust, as well as the legal implications and how the trust and the business work
  • work as part of a team and accept shared responsibility and accountability, as well as undertaking frequent self-evaluation in order to remain effective
  • act with a strong moral purpose, integrity and honesty, and as an advocate for the trust’s values, ethos and philosophy
  • express disagreement in a rational and professional manner
  • adopt an entrepreneurial mind-set in order to see and make the most of opportunities that are outside the day-to-day practices of the trust or schools
  • be innovative, creative and open-minded by engaging in futures thinking and ‘horizon scanning’
  • ensure that they have the commitment and stamina to drive forward the trust, as well as the will to abandon the ‘good’ in order to find the ‘outstanding’.

Composition of the Board

The model Articles state that the number of trustees shall be at least 3, but not subject to any maximum. The Chief Executive / Executive Principal may choose to act as a trustee, but is not obliged to. No more than one third of trustees can be paid employees of the trust. Normally, there must be at least 2 parent trustees (who are parents or carers of a registered pupil at the school) and who are properly elected by parents/ carers. However, (somewhat controversially) in the case of a multi-academy trust, this requirement can be dispensed with, if there is parent representation on local governing bodies. Care must be taken if appointing persons who are employees or councillors of a local authority – their involvement must be kept below 20% of the membership to avoid accounting difficulties.

Beyond that, there is some flexibility to decide the composition of the Board. There will usually be a specified number of trustees appointed by the members and by the external sponsor (if there is one). The Board can co-opt further trustees as it wishes. In practice, trusts have usually adopted one of three models – the traditional model where trustees are drawn from the stakeholder groups such as parents, staff and the community; representation model where there is a group of schools, the board is made up of representatives from each constituent school- the problem is that this can become unwieldy as the group grows and there is potential for inherent conflicts of interest; the third model, usual in sponsored academies, is for the sponsor to appoint the majority of trustees.

The default term of office for a trustee is 4 years, however, trusts may instead opt for retirement by rotation on an annual or bi-annual basis, in which case an annual general meeting of the members may need to be held to deal with appointments. The National Governors Association recommends that Chairs should serve no more than six years and no trustee should serve more than two terms.

The Financial Handbook requires that Board meetings take place at least three times a year (and business can conducted only when quorate), although trusts may consider it appropriate to meet more frequently, particularly in medium-sized and larger trusts with more complex structures, and any undergoing a period of change.

There is no perfect model for the Board, although the trend recently has been toward smaller boards, with an emphasis on getting the right skills mix. The starting point is to get the right people round the table.

Recruitment and succession planning

There should be a formal, rigorous and transparent procedure for the appointment of new directors to the board’ – UK Corporate Governance Code

There are various sources of potential new trustees, including the Chamber of Commerce, local charities or housing trusts, or through organisations such as Academy Ambassadors, SGOSS, Inspiring the Future. It is important to cast the net wide and consider what skills the candidate needs to bring.

Succession planning is a key factor which ensures expertise is shared across the system and prevent boards stagnating or individual trustees or governors gaining too much power and influence. Ideally there should be an annual re-election of Board and committee chairs.

The absence of a succession plan can undermine a company’s effectiveness and its sustainability. It can also be a sign that the trust is not sufficiently clear about its purpose, and the culture and behaviours it wishes to promote in order to deliver its strategy

The Chair’s role is pivotal

The Chair of the academy trust plays a key role in giving the board leadership and direction, ensuing that trustees work as a team and understand their accountability and role in the strategic leadership of the schools and in driving improvements.

The Chair must be able to:

  • Articulate the vision, shape the culture, build a team and attract trustees and local governors with the necessary skills, values and principles, ensuring that tasks are delegated, followed up and accomplished, and who can ensure board members feel that their skills, knowledge and experience are used
  • Develop a positive relationship with the CEO/ Executive Principal as a critical friend offering support, challenge, and encouragement, holding the CEO to account for outcomes across the trust and ensuring there is rigour in the management of their performance
  • Pursue a relentless focus on school improvement – this should be the focus of policy and strategy and scrutiny and challenge by the board and its committees should reflect this
  • Leadership – ensuring that systems are in place to meet statutory obligations, terms of Funding Agreement, value for money from resources that board business is conducted effectively, including effective minute-taking and agendas.

You can read more on the role of the Chair here.

Given the increasing demands on trustees and governors, it perhaps not surprising that HM Chief Inspector of Schools, Sir Michael Wilshaw last November called for Chairs and Vice Chairs to be paid for their work. “The role is so important that amateurish governance will no longer do. Goodwill and good intentions will only go so far,” Wilshaw said. He was also concerned about governors who “lack curiosity” and hold “an overly optimistic view” of how their school was performing.

In all their dealings Academy trustees local governors and the Accounting Officer are expected to adhere to the Nolan Principles of Public Life: selflessness, integrity, objectivity, accountability, openness, honesty, and leadership. See more.

Next time: we will examine the framework of governance in academy trusts.

Mark Johnson is a highly experienced independent solicitor & chartered secretary supporting academy trusts, free schools & other education providers with their governance arrangements, legal and compliance matters. He is an independent member of a MAT audit committee. He offers a cost-effective governance review GovernanceCHECK360™ for academy trusts

If you would like to be kept up to date on more topics like this, then why not sign up to receive our regular newsletter.

Trustees’ Duties in Academies & Free Schools

Trustees’ Duties in Academies & Free Schools

The landscape of schooling in England has been transformed over the last five years. Academy sponsorship has encouraged and facilitated the contribution of individuals not previously involved in education provision and laid down a challenge to maintained schools to improve or face replacement by the insurgent academy model’– Education Select Committee Report, January 2015.

Academy schools are independent semi-autonomous schools funded by the Government. At the time of writing, out of 21,500 schools in England, there are over 4,464 academy schools, made up of 2,385 primary schools and 2,079 secondary schools. The first academies were born out of the City Technology Colleges: schools outside of local authority control, introduced by the Conservative Government in 1988. The policy was continued by New Labour from 2000 under the ‘City Academy’ label. The momentum really began with the passage of the Coalition Government’s Academies Act in 2010, which paved the way for any school to convert to academy status, including secondary schools, primaries and special schools. The momentum continues under the new Conservative administration. Today, many academy schools are part of multi-academy trusts (federations or clusters of schools supported by a common sponsor). This brings economies of scale, can attract more teaching resources and enhanced funding opportunities.

Free schools are usually new schools formed as academy trusts. Whenever a local authority plans to establish a new school to meet demand for more school places, they must now run a competition and promoters of free schools (often parent-led groups) can put in a bid to establish a free school. This will be a completely new school, often in new or converted premises. There are now more than 400 free schools either open or approved. The new Government has said they will approve 500 more by 2020. Some private fee-paying schools have chosen to become free schools to ensure their continuing viability.

Further types of academies have developed over time, such as studio schools, university technology colleges (UTCs), and cooperative schools. Essentially, these are all variations on the same academy trust model, but with different sizes and a specialist curriculum.

An academy trust is a company limited by guarantee with charitable status. As a company, it has an independent legal identity, can enter into contracts, employ staff and be sued in its own name. It enjoys a fair degree of autonomy (within the constraints set by the Department of Education’s Funding Agreement and Financial Handbook), but the trade-off for this is more responsibility on the managers and trustees to run the school’s affairs prudently and professionally. As a company with ‘exempt charity’ status, the trust and its managers must also comply with duties laid down by company law and charity law.

Converting a school to an academy, setting up a new free school and running the new organisation once it is set up, bring a series of opportunities and challenges. Operating under these new arrangements can be quite a daunting experience at first. Following several recent scandals and press coverage there is now an increased focus on good governance and propriety controls in academies, in particular the need to avoid conflicts of interest and to ensure the proper stewardship of public money. It is important that academy promoters, managers, trustee directors and governors understand their responsibilities and duties.

Our particular interest is on leadership in relation to financial management and governance...We must respond to increasing calls for greater transparency. This means we must all be open about who is involved in the governance of our public bodies, including academies and free schools, and how they are run‘ – Peter Lauener, CEO, Education Funding Agency, Sept 2015’

Academies often point to the increased freedoms and financial resources that independence from local authority control brings. With those freedoms comes additional responsibility and accountability. Despite the label of being independent state-funded schools, academy trusts are in fact quite heavily regulated by means of the Funding Agreement with the Secretary of State, OFSTED inspection regime, the extensive accounting and reporting requirements, as well as by general company and charity law. These issues are not insurmountable, but they do require a watchful eye on governance and compliance tasks. Elderflower Legal has produced a new concise guide intended to provide an overview of the key points to be aware of, based on our extensive experience of acting as trusted advisor to academies and free schools.

Academy trusts should be required to appoint a part-time Company Secretary to ensure probity in decisions around the constitution and powers of Boards and governing bodies.” – Education Select Committee Report, September 2014.

As a trusted advisor to academies and free schools, Elderflower Legal can help guide you through the maze of regulation and compliance and help you to put in place effective governance arrangements which ensure the organisation fulfils its mission effectively, as well as providing reassurance to Board members and wider stakeholders that the academy trust is well-managed. Find out more about services for Academy trusts..

Download your free copy of our Concise Guide to Academies & Free Schools. Please feel free to get in touch to discuss any of the issues raised.

 Mark Johnson is an experienced solicitor and company secretary helping academy trusts, charities and social enterprises to manage risk, ensure good governance and protect their legal position.