An analysis of the stakeholder model of public boards and the case of school governing bodies in England and Wales

Introduction

The board model for the governing of public, private and third sector institutions is widely prevalent across the UK. This model separates the governing of institutions from those responsible for their day-to-day operation. The board, which typically comprises individuals from various backgrounds and with a range of different kinds of expertise, is primarily responsible for the overall conduct of the institution in the medium and long term. The person with responsibility for the proper function of the institution on a day-to-day basis, who is typically referred to as the chief executive officer (CEO), is normally a member of the board. Given the significance of the board’s responsibility, board functioning as a focus of research remains somewhat neglected and in particular, the functioning of boards of public sector institutions, the constitution of public sector boards and the expertise of board members have not received sufficient attention by researchers. This lack of attention in part underpins our interest and motivation to explore issues around the constitution of public sector boards. This article focuses on schools and many of the issues regarding the stakeholder versus skills model will be widely applicable in other public service contexts.

There are two contrasting perspectives on the constitution of the boards of public sector institutions: the stakeholder model and the skills-based model. The underpinning assumption of the stakeholder model is that public sector institutions should be governed by those who have an interest in them. In contrast, the skills-based model of board constitution is based on the notion that such institutions are best governed by those who have the requisite skills with an expectation that these will be a useful asset in the day-to-day management of the institution. Over 40 years ago, school governing bodies in England and Wales were re-constituted on the stakeholder model. Thus although Foo et al. (2011) argue that the notion of stakeholding was introduced to the UK public realm by the New Labour government in the late 1990s/mid-2000s, the constitution of school governing bodies demonstrates that the concept has a longer history.

The stakeholder model of school governing body constitution in England and Wales is currently being challenged especially so in England. In England, new regulations for the constitution of school governing bodies have recently been published (DfE, 2015). While giving governing bodies greater flexibility in relation their constitution, the new regulations emphasize the importance of the skills governors should have and also give a strong steer towards smaller governing bodies. In Wales, where academies have not been introduced, the stakeholder model of governance continues to operate. As education and school governance are both devolved to the National Assembly for Wales, there has not been the same attempt to force schools in Wales to adopt a skills based system.

Stakeholding and stakeholders as concepts have been the subject of theoretical and empirical analysis for some time. Gomes et al. (2010) argue that stakeholder theory can be described as descriptive/empirical, instrumental and also normative. In our analysis here, we are interested in utilizing empirical work to examine the instrumental and normative claims for the stakeholder model adopted for school governing in England and Wales. At the heart of our interest is a concern for securing the proper governance of schools as important public sector institutions.

Debates about governance reflect tensions around two dimensions of legitimacy and accountability. Haikio (2012: 417) argues:

In a governance context, all participants face novel issues of legitimacy. Common distinctions between input legitimacy … and output legitimacy … frame legitimacy as an issue for government. In a governance structure, legitimacy is required not only of the governing system but also of participants.

Haikio (2012) is drawing attention here to tensions around the rationale for determining the membership of governing bodies. In essence, in the context of schools as institutions, should a school governing body comprise solely those who have a stake in the school, or should individuals who have a set of the requisite skills? Which approach provides the most effective model of governance?

This article examines the interests and participation of stakeholders in the governing of schools and their role in ensuring appropriate levels of performance and accountability within schools. It seeks to reflect critically on the nature of the stakeholder model of public boards and particularly in relation to school governing bodies. By comparing policy and practice in England and Wales we attempt to deepen the analysis. We begin the article by setting out the key arguments underpinning the stakeholder model when it was originally advanced. In the subsequent part, we analyse the position of each of the stakeholder groups and review a range of evidence on the roles and participation of these stakeholders in governing. In the final part of the article, we draw conclusions on the appropriateness of the stakeholder model of governing for schools and, given the shift in England to the skills based approach, the alternatives.

Stakeholder Theory and the Notion of Stakeholders

The concept of stakeholder governance has its origins in the idea that there are ‘Groups of people without whose support the organization would cease to exist’ (Lozano, 2005: 60). Thus Freeman and Reed (1983: 30) refer to stakeholders as ‘those groups who are vital to the survival and success of the corporation’ and Freeman (1984: 46) defines a stakeholder is ‘any individual or group who can affect or is affected by the achievement of the organization’s objectives’. Bryson’s (2004: 22) conceptualizes stakeholder broadly similarly: ‘the term refers to persons, groups or organizations that must somehow be taken into account by leaders, managers and front-line staff’. These definitions and conceptualizations are compatible with approaches to democracy and social justice, in which the interests of those who experience services and/or who are the recipients of goods and services must be acknowledged, given weight and allowed to influence. Hence as Freeman (1984: 39) argues:

stakeholder groups have a right not to be treated as a means to some end, and that therefore must participate in determining the future direction of the firm in which they have a stake.

School Governing and the Stakeholder Model

The stakeholder approach to school governing in England and Wales originated with the Taylor Report (1977) and the subsequent Education Act 1980 and Education No. 2 Act 1986. The genesis of the report was rooted in both the diversity of school governing arrangements in England and Wales and concerns about the performance of certain school governing bodies.

The legislation under which school governing operated at the time of the Taylor Report (1977), the Education Act 1944, had been was relatively loosely framed to enable and allow for variety. Indeed ‘the Act did not stipulate what interests should be represented on managing and governing bodies’ (Taylor Report, 1977: 21). Local education authorities (LEAs) had considerable power to determine the membership of governing bodies of schools within their remit and governing bodies had the some lesser appointing powers (Taylor Report, 1977). As a consequence, the size and constitution of governing bodies varied widely. In some local authority areas, headteachers chose to be members. In others, parents were represented and there were pupils on governing bodies in some local authorities. The Taylor Report was critical of this diversity, and also the lack of action by LEAs to widen the range of representation, stating that: and ‘governing bodies very commonly continue to have a majority of LEA elected members or at least of LEA nominees’ (Taylor Report, 1977: 22).

The Taylor Report (1977) argued for a consistent approach to school governing across England and Wales and that the interests of the teaching staff, parents and others such as past pupils needed to be reflected in the constitution of school governing bodies. It argued governing body membership should comprise the four principal stakeholder groups represented equally: the LEA, staff, parents and the local community. These four groups could, ‘contribute towards the establishment of a partnership based on their common interest in the welfare of the school’ and would ‘be able to speak with knowledge and experience over the whole range of matters which are likely to come up for discussion’ (Taylor Report, 1977: 22). The report made recommendations on the size of governing bodies based on pupil enrolment and proposed standardized appointment and election processes.

In many ways, the Taylor Report (1977) was very far-sighted and radical in its vision for school governing and its proposals. It explains very clearly the basis for school governing in England and Wales. Thus the report’s rationale for retaining LEA interests originates from their experience of council business, together with their knowledge of the opinions and aspirations of local communities. Further although it proposed reducing the number of LEA governors, the report deemed LEA participation in school governing as central to the success of schools. The report rejected arguments advanced by the National Association of Headteachers at the time that headteachers should not be governing body members and their presence should be advisory. It claimed: ‘that so far as possible, those with a direct interest in the running of the school should participate fully’ in the governing of the school – in the deliberations and in its decisions. In line with that principle, the report also argued that both teaching and support staff should be represented and that the representatives of the two groups should be chosen in separate elections. Similarly, the report recommended that parent governors should be elected by parents. The idea of pupil governors was rejected on the grounds that school governors cannot lawfully be under the age of 18 years. However, it did recommend a change in the law to enable students over the age of 16 years to become governors.

In addition to LEA, staff and parent representation, the Taylor Report also proposed representation of the school’s wider community school governing bodies. Such representatives should:

take due account of all the expectations of the local community and of all the various external pressures and demands made on the school (such as those of employers, examining bodies or institutions of further and higher education) in school governance’. (Taylor Report, 1977: 30)

Implementing Taylor and After

The proposals for the constitution of school governing bodies set out in the Taylor Report (1977) were enacted by legislation passed in the 1980s. Although a number of LEAs had experimented with teacher participation on governing bodies during the 1970s (New, 1993), the 1980 Act formally enabled them and parents of pupils to be school governing body members. The Education Act No. 2 1986 reduced the number of teacher members and local authority members and it increased the numbers of parent governors and governors from the school’s wider community. In both England and Wales, the Education Reform Act 1988 accorded governing bodies significant powers and responsibilities in the management of schools. In 1999, education was deemed a devolved service in Wales and consequently, school governing in England and Wales now operate under different frameworks.

The number and categories of governors vary and are specified separately in regulations in Wales (Welsh Government, 2010) and in England (DfE, 2015) with separate guidance available for governing bodies who wish to change the way they are constituted (DfE, 2014a). In Wales, the numbers of governing body members in the various categories are specified in considerable detail in the regulations (Welsh Government, 2010). They vary according to: the type of school, for example, whether it has a religious foundation or is a community school; the phase, for example, infant or secondary and the size of the school.

In England, the regulations on school governing body constitution have changed significantly in recent years. A major driver of the change has been the development academy schools, which are directly accountable to central government. At the time of the 2010 election, there were 203 academies in England, which were all secondary schools. In October 2014 there were over 4200 academies (DfE 2014b) a large proportion of which are secondary schools.

The new governance regulations for maintained schools in England (DfE, 2015) specify that school governing bodies should have no fewer than seven members and comprise: at least two parent governors; the headteacher unless the headteacher resigns the office of governor, one staff governor; one local authority governor and two coopted members. In the case of foundation schools, the governing body must also include at least two (but no more than one-quarter of the total) partnership governors. This reconstitution to smaller governing bodies reduces the potential for stakeholder involvement in school governing.

Academy school governing bodies have much greater freedom in their membership. The academy governance model is flexible and it allows schools to constitute a governing body on the basis of their school needs (http://apps.nationalcollege.org.uk/resources/modules/academies/academies-online-resource/ac-s4/ac-s4-t4.html). This allows academy schools to move away from the stakeholder model, which schools in Wales are not permitted to do. Academization therefore has the potential to threaten the model originally proposed in the Taylor Report. The new regulations for England are very directly focused on ensuring that governing bodies are ‘constituted with governors who have the relevant skills to contribute to effective governance, encouraging ineffective governors to stand down and be replaced by new strong governors’ (Nash, 2014).

Realities of the Stakeholder Model

This section explores the operation of the stakeholder model of governance in practice drawing together a range of evidence about the participation of key stakeholders. We review the positions of the various stakeholder groups and issues relating their roles and we also analyse the stakeholder approach to governance itself.

An Evaluation of the Stakeholder Model

In the previous section, we have focused on the individual stakeholders and discussed their involvement and participation in governing bodies. In reviewing the stakeholder model, the major issue is the extent to which schools are governed effectively by the range of stakeholder interests in the school. In other words, does the stakeholder model of governance ensure that schools continually reflect on and improve their performance? If it does not, then what are the alternatives to this and would they be more likely to develop and promote improvement?

The literature on school performance is extensive (Harris and Jones, 2010; Sammons et al. 2011) with a number of factors identified as important in success but there is little evidence on the approach to governance. The stakeholder model is not reviewed per se but it is the case that in many schools, there has certainly been a shift to incorporating particular skills sets in new governor selections. The promotion of the skills based model of governance has been influenced by the increased pressure on schools to be effective. There is a divergence here between the existing practice in Wales and the regulations that are being introduced in England. These regulations will be introduced as amendments to the 2012 Constitution Regulations and will take effect from 1 September 2015. These indicate that when recruiting governors, governing bodies need to ‘focus on finding people with the necessary skills’. Further, it suggests that governing bodies conduct a review of their ‘effectiveness, membership and structure and make changes to ensure it is not just fit for purpose, but that it is dynamic and highly professional in its approach’ (Nash, 2014). Clearly, governing bodies can be constituted on the basis of the stakeholder model and at the same time, have the requisite skills among their membership. However, the new focus and drive on performance and improving standards has put pressure on the traditional stakeholder model, particularly for schools in England.

As an alternative to the stakeholder approach, the skills model is more closely focused on board members being appointed for their individual skills, usually rooted in professional experience and qualifications. There is an expectation that the board will use their skills to more effectively challenge school management to improve the organization. In governor appointments, this would mean reviewing the existing skill set and to recruit governors where there are gaps in this. Currently, both community and coopted members are appointed and governors might invite individuals to join on the basis of their ‘skills or expertise’ rather than their ‘stake’.

The National Governor Association in England encourages all governing bodies to undertake a skills audit when a vacancy arises and use this to find a new member (http://www.nga.org.uk). Clearly, this is intended to focus on the acquisition of skills both within individual governors and also across the governing body as a whole. One of the key findings of Taylor and O’Sullivan’s (2009: 690) research is that boards ‘should move away from a traditional representative structure in favour of a more focused, corporate style board’. The message given to sports boards was that a more corporate style of board in which individuals are recruited for their skills rather than representation was what was required in order to improve performance. In contrast to this view, there is limited evidence to suggest that the highest performing public organizations are those with the most corporate style of board and one might point to failures in the UK private sector, including the Royal Bank of Scotland and Lloyds bank for support of this. In essence, effective organizations are associated with a range of governance approaches.

Rather than being seen at opposite ends of the spectrum, the skills and the stakeholder models can combine to create governing bodies which are made up of a range of members. This flexible interpretation of the existing stakeholder model may suggest that there is no need for reform. Governing bodies can be made up of members with their stakeholder interests and who also fill a gap in relation to what they can contribute. It is this model, labelled a ‘stakeholder+’ approach, which was proposed in the Welsh Government’s review of school governance (Wales Government, 2014). In this, governors would represent the traditional stakeholder groups and when vacancies arise, would actively seek stakeholder members who are also skilled. A range of different approaches to this have being adopted in different parts of the public sector. Taylor and O’Sullivan’s (2009) research is concerned with the structure of UK sports governing boards. Their review of governance structures suggests that instead of sports boards always being made up of membership of the key stakeholder groups, individuals should also be included who have ‘specific business expertise as well as a greater element of non-executive monitoring’ (Taylor and O’Sullivan, 2009: 681). The authors argue that national governing bodies ‘should move away from a traditional representative structure in favour of a more focused, corporate style board’ (Taylor and O’Sullivan, 2009: 690).

One of the main debates around the stakeholder model is whether the model enables the constitution of governing bodies which collectively have the full range and depth of capabilities required to govern the school effectively. Here, the argument is that the skills based model would ensure better and more secure governance. However, this model would call into question whether such governors would be motivated to undertake the considerable workload entailed in school governing (Balarin et al., 2008) without remuneration when they have no substantial interest in the school. The existence of a range of ‘independent’ governors, viewed as essential by increasing numbers of private sector bodies, has much to commend it and remains a strength of the existing arrangements.

Clearly, from the way school governing bodies are constituted, a range of stakeholders are engaged in the governing of schools in England and Wales. In reality, there will be ‘power differences’ between the various stakeholders ‘round the table’. The literature suggests that the headteacher can be the dominant figure in determining the school’s direction and vision and some governing bodies can play a comparatively minor role – see for example Ranson et al. (2005) and James et al. (2011). This suggests that some bodies, constructed on the stakeholder model, may struggle to fulfil their responsibilities. This includes being able to ‘call the headteacher’ to account, for example. However, there is evidence to suggest that such a conclusion does not apply in all cases and underplays the role of governing bodies and the reality of school management and governance.

James et al.’s (2010) research also highlights that for the most part, school governing bodies can operate without much public attention, sometimes they can be very dynamic and susceptible to periods of change, amounting in some instances to turmoil. Here, the normal pattern of behaviour has been disrupted by an event, for example, a critical inspection report or a governor with a determined vision for the school that may be at odds with headteacher’s or other governors’, for example, which disrupts the ‘normal’ processes. These ‘events’ will typically reflect the concerns of stakeholders. There is evidence of the ability of governing bodies to manage such periods, and in so doing demonstrating considerable resilience, which indicates that there is huge value in the stakeholder model.

The renewed emphasis from inspection agencies on school governance and their ‘leadership and management’ of schools may well increase the contribution of the range of stakeholders in governance as their role as governors is subject to increasing scrutiny (Ranson, 2011). Recent Ofsted school inspections have involved greater involvement from governing bodies (http://www.gov.uk/being-inspected-as-a-maintained-school-or-academy). This enhanced scrutiny is facilitated by the publication of inspection reports and the interest of local and sometimes national media in these. Details of a school’s governing body members are typically available on the school’s website together and governors in the future may find themselves increasingly held to account.

Stakeholder membership of governing bodies does not exclude of course other vehicles for parents and staff in particular to make their views known. Thus as Munn (1998) pointed out, exit as well as voice can play an important role in parents ensuring that their views of the school can find expression. Indeed, those who might challenge the stakeholder model and who prefer a skills-based managerial model, may argue for such an approach with ‘advisory groups’ to influence a skills-based governing body. Such an arrangement is very different from the stakeholder model in which governors who are representative of those with a substantive stake in the school are responsible for its conduct. Further, whether members of the community as one example of a stakeholder group would be motivated to actively engage in an advisory role of that kind is debateable.

Perhaps understandably, there is no strong demand from within the education profession to shift away from the stakeholder to a skills-based governing body model. Arguably, a skills-based approach would shift school governing towards a more corporate business model and significantly away from the stakeholder model upon which the current system is based. Such an arrangement may well be ‘less comfortable’ for staff and headteachers. The abolition of school governing bodies altogether in which schools and headteachers were accountable directly to a ‘local authority’ or to central government would represent an even bigger challenge for many in education. The announcement by the Minister for Education in Wales in November 2012 about the need to secure educational improvements in schools perhaps reflects a changing relationship between the central government and schools and also their school governing bodies in Wales (Andrews, 2012). The setting up of the review group in the 2012–2013 year to review school governance was also focused on improving governance. The report finds that:

The existing school governance system in Wales has been in operation for some time. There are important aspects of this system that could be reformed so that the governance of schools better facilitates and promotes the improvement agenda. Governing bodies need to be more skilled in their governance role and also they need to be able to recruit more widely so that the very best individuals participate in governing schools. (Welsh Government, 2013: 3)

Any defence of the stakeholder approach of school governance is of course not arguing that the model cannot be improved. Whether changing the constitution of the governing body would lead to an improvement is open to debate. Balarin et al. (2008) and James et al. (2010) argue that the largely hidden nature and low profile of school governing generally and the lack of recognition of the contribution of school governors generally does not help to engage those with the right kind of capabilities from the various stakeholder groups to participate in school governing.

Conclusion

In this article we have reviewed the stakeholder model of school governance in England and Wales where a range of stakeholders including teachers, parents and the community are represented and are chosen by the stakeholders themselves. There is no doubt that this model is under pressure with a range of voices suggesting a more skills based approach to school governing.

Although the arrangements for ensuring stakeholder representation on governing bodies in Wales and England are broadly similar, there are some significant differences, for example, in the detail of the specification of the numbers representative of each stakeholder groups (more detailed in Wales), the number of local authority governors (more required in Wales) and the inclusion of sponsor governors (included in Wales, no longer in England). It is clear that the direction of travel for school governing bodies in England is much more skills based with less focus on stakeholder interests. Governing bodies in both England and Wales have been informed that they are going to be much more central in the school improvement agenda than has been the case in the past and ensuring good governance has to be central to this.

While there is a recognizable shift away from the stakeholder approach in recent years, it is clear that the school governing body membership as outlined in the Taylor model has had its challenges. The election of parents and staff has at times been less than perfect and in a number of cases, those elected have not played to the fullest the role anticipated. Putting this evidence to one side, there have been cases when parent and staff governors have made a significant and positive contribution and the parents in particular have drawn strength from their independence. But so long as the focus is on skills and competence and not representation, and while the validity and significance of representation is ignored, challenges to the stakeholder model are likely to continue. However, in our view these challenges are not sufficient to overturn the existing stakeholder model of governance. This approach to school governance has characteristics that distinguish it from the skills-based model and there are clearly tensions and challenges for each of the stakeholders as part of the board. However, the stakeholder approach to school governance continues to have much merit as it affords a degree of authenticity to those representatives as well as a degree of independence not easily replicated in the skills based approach.