Current growth and forecasting demonstrates that industry of higher education would grow by $2 trillion by 2017 in all over the world. This rapid growth confronts the boards of trustees with a number of challenges to provide guidelines to universities and colleges with the consideration of a variety of stakeholders.
Similarly, Penn State University combating with a board of trustees who is ineffective as required by this rapid growth, and such governance would ultimately reduce the outcomes of an academic institution. The past performance of this board reflects the number of unwise and costly decisions that declined the productivity of the institute.
This case study demonstrates that how five design issues, including board size, board composition, fiduciary responsibility, term limits, and transparency help to create an environment which eliminate the threat of choosing the poor alternatives. Multiple alternatives are mentioned for Penn State board’s flaws and provide the reasons that why the board’s self-imposed reforms are inaccurate.
Recommendations presented in the article to enhance the board performance are that board should be, (1) small enough to allow full participation of all members (2) composed in a way that none of the stakeholder could dominate the decision making (3) form in such way that threat of conflict either perceived or actual could be reduced (4) guide according to term limits and (5) introduce transparency in each strategic decision making and communications.
These principles required a reduction in voting members of the Penn State board from 30 to 19. Furthermore, many other educational board could have a self-analysis from the Penn State case to tackle their existing problems and to find their ineffective areas.
Related Case Solutions & Analyses:
La Martina (B): Selling the Passion
Chad-Cameroon Petroleum Development and Pipeline Project (A)
Herman Miller (B): Creating Innovation Streams
Pilgrim Bank (A): Customer Profitability
Japan: The Miracle Years
Why Do Some Strategic Alliances Persist Beyond Their Useful Life
SCORE Educational Centers (A)
VINSUN Infra Engineering Pvt. Ltd
China Telecom (Hong Kong) IPO: Money for Nothing?
Aluminum Smelting in South Africa: Alusaf’s Hillside Project
