Beyond PMSA’s Assessment of the PMSA Governance Reform Announcement
Background
On 14 September 2018, the PMSA released its Governance Reforms paper which summarised the outcome of its recently completed governance review process. The review process was conducted with the assistance of the Australian Institute of Company Directors (AICD).
Disappointingly, (as foreshadowed by the PMSA in previous communications) the full AICD report and its recommendations has not been released. The announcement of 14 September 2018 merely provided a summary of the key changes that the PMSA proposes to adopt in response to community concerns in respect of the future governance of PMSA Schools. The announcement outlined the PMSA’s decisions on which AICD recommendations it would adopt and foreshadowed the potential for “further possible changes”.
(A full copy of the PMSA’s “Governance Reforms” paper is accessible HERE https://pmsa-schools.edu.au/library/files/PMSA%20Governance%20Reform%20FINAL.pdf)
The PMSA has clearly undertaken a substantial internal exercise with the AICD to arrive at a decision point on individual reforms. However, the detail contained in the announcement was limited, and in many respects this constrains a proper analysis of their potential effectiveness to resolve community concerns. Whilst many of the changes are needed and welcome, there are some that either don’t go far enough or are unremarkable in terms of their obvious need and the ease and speed with which they ought to have been implemented long ago.
The PMSA have established a Governance Steering Committee that is charged with prioritising the changes into a “project implementation plan”. The PMSA have indicated that some of these changes require amendments to the PMSA’s Constitution, to which the PMSA Board and both Churches must agree.
The PMSA stated that the implementation of the governance reforms that it has elected to adopt will “clarify and reset roles, responsibilities and reporting arrangements for the PMSA Board, the School Councils and Committees.” The PMSA also stated that “These governance changes, combined with the new PMSA Strategic Plan for 2019-2023 and our ongoing commitment to change and continuous review, are part of a new collaborative culture that focuses on working together, building strong relationships and leveraging collective strengths.”
Motherhood statements? Perhaps. But the ground under the PMSA has shifted significantly, and the movement has been occurring for a long period of time without redress.
This blog will review and provide our critique on the true value of the announced reforms to our schools. It will also put the effectiveness of those reforms in context by explaining why (in our view) the whole process is, at this stage, still an exercise in “putting the cart before the horse”. The key conclusion in our analysis is that, whilst the PMSA should keep going further down the path of change - we need to reset the “compass”, not the “clock”. Fundamentally, we still have entrenched structural risk that will continue without deeper reform at the constitutional level and for as long as the PMSA remains incorporated under Letters Patent.
Five Key Areas of Announced Reform
The PMSA Council has now been rebranded as the “PMSA Board” and the PMSA’s Governance Reforms paper announced that the PMSA would embark on implementing changes in the following five key areas:
1.0 PMSA Board and School Council Roles and Responsibilities Changes
1.1 Announced Reforms
The PMSA has accepted an AICD recommendation that School Councils should have a “more active role in the governance of school affairs while the PMSA Board should function as an overarching board and focus primarily on governance matters at ‘a group level”.
Appointments to the PMSA Board and School Councils should be “capability-based”, the available pool of candidates should be widened and available positions should be more widely advertised. The PMSA has confirmed that it has already changed its own Constitution (in June) with the consent of the Churches to remove the restriction that PMSA-appointed Board members must be a member of the Presbyterian or Uniting Church. The changes announced by the PMSA include the following:
School Councils will be responsible for establishing school plans, monitoring risk and ensuring adherence to all policies and procedures;
School Councils will oversee and recommend new School Council member appointments;
School Principals will report directly to School Councils;
The name of the PMSA Council (as mentioned above) will be changed to the “PMSA Board”; and
The PMSA Board will primarily focus on “group-wide matter” that “enhance the efficiency and effectiveness of the PMSA as a whole”.
1.2 BPMSA Response
The change of name to the “PMSA Board” is presumably intended to better reflect a PMSA aspiration to take on a more “strategic” governance role, rather than the clearly “operational” function that it has selectively engaged in for a long period of time.The commitment to change the focus of the PMSA to primarily focus on “group-wide matters” is a promising proposition, but one which lacks sufficient explanation over how that will be achieved in practice without deeper structural reform being undertaken – namely moving away from incorporation under Letters Patent. In our assessment, a change of name of itself can do little to alter the current operational mindset of the PMSA.
The role of a governing body like the PMSA should NEVER be to interfere in day to day operational matters of schools or to second-guess or otherwise impede the functions of the highly skilled and experienced educators and administrators employed at the individual school level.The lack of required expertise and the composition of recent PMSA Councils demonstrate with perfect clarity the ABSOLUTE risk that our schools are faced with under a Board that sees one of its primary roles as having an operational focus. Beyond PMSA’s view is that role of the PMSA as a governing body, if it is needed at all, should be:
to oversee issues of strategic asset management;
assisting to provide a collaborative interface between the schools;
group reporting (but under a dramatically improved reporting framework);
interface with government and regulatory bodies; and
ensuring the effective delivery of the Christian mission of both Churches.
Beyond those important strategic functions it should have no role. FURTHERMORE, A CLEAR STATEMENT OF “PURPOSE” INCORPORATING A DEFINITION OF FUNCTION IS ESSENTIAL FOR ANY ORGANISATION. AT THE MOMENT IT IS MISSING, AND THIS IMPORTANT MACRO ISSUE MUST BE AT THE VERY TOP OF THE PMSA’S LIST OF PRIORITIES.
Our schools SHOULD be run by competent School Councils, with Principals acting as CEOs, and so the change of reporting lines proposed by the PMSA is a “no-brainer” and we give it a cautious tick of approval.But ultimately, it is a paper change without meaning if the PMSA cannot guarantee greater autonomy for School Councils and Principals without an ever-present risk of uninformed and poorly executed interference.Risk events at our schools have often crystallised through operational interventions by the PMSA over many decades. On many occasions this has had disastrous and costly results.What we saw in 2017 was nothing less than “management by pigeon”.Twelve months on, we’re all still trying to clean up that mess!
Unfortunately, an ownership structure under Letters Patent (where ownership vests in each individual PMSA Board member from time to time) taints any of these proposed changes as purely “cosmetic” because the entrenched structural risk of future interference remains.Whether the present PMSA Board provides assurances that such interference will not occur in the future is irrelevant.Boards will always operate within the limits of the authority vested in them and will be tempted to use powers bestowed upon them.Who knows where we will be in 10 years, who will be sitting on the PMSA Board at that time, what the composition of appointments will look like, or what influences may control the decision processes?
Boards that truly seek to represent the interests of stakeholders need limits.Boundaries are an important check on both accountability and transparency. The lessons of 2017 tell us that the PMSA’s boundaries need a clearer re-definition.
2.0 PMSA Board and School Council Structure and Representation Changes
2.1 Announced Reforms
The changes announced by the PMSA to the structure of representation on the PMSA Board and each of the School Councils include the following:
The maximum size of the PMSA Board will reduce from 15 to 13 members;
The maximum tenure of both PMSA Board and School Council members will reduce to 9 years;
The maximum size of School Councils will increase from 8 to 9 members; and
The number of PMSA Board representatives on each School Council will reduce from 3 to 2.
2.2 BPMSA Response
These changes are largely numerical. We have no significant comments to make about them. They ought to have been very easy decisions to make, and they should easy to implement.
The reduction in maximum tenure of PMSA Board and School Council members is both a welcome and long overdue reform that should encourage renewal and the introduction of fresh ideas and perspectives to those bodies. The proposed reduction of PMSA representatives on School Councils is also welcome if the effect will be to improve the composition of School Councils to allow for a greater mix of skills, diversity of experience and opinions.
One of our consistent criticisms has been the lack of value and respect placed on the role of independent School Councillors. This is greatly needed and has been noticeably and inexcusably lacking – to the material detriment in the quality of decisions affecting in our schools. No mention of the role of independent Board and Council members has been made in the announced reforms. Further definition around how these crucial roles will be filled and how they will operate at both the PMSA Board and School Council levels is essential if the PMSA is to rebuild trust in its governance model.
The welcome announcement that appointments will no longer be tied to a requirement for membership of the Presbyterian and Uniting Churches will improve the available pool of talent. However, greater clarity will be required on the issue of School Council composition before we can provide a scorecard on this announcement. One of the most critical issues that the PMSA MUST address is the process for selection of the Chair of each School Council. It must NEVER default to a PMSA Board member (as is presently the case). The important role of School Council Chair should always be filled by the most qualified member of the School Council through an election process. That way the Chair will enjoy the confidence and trust of her or his fellow School Council members and school principals. That’s how properly functioning school boards should operate.
Again, any structural changes through numerical refinements can only be viewed as cosmetic if the entrenched structural risks associated with the existence of the PMSA’s Letters Patent and the overlay of powers reserved to the PMSA Board under the School Council Charters remain. At this point, these announced changes are a positive step, but ultimately create the “illusion” of greater autonomy while maintaining the reality of continuing risk.
3.0 Reporting and Transparency Changes
3.1 Announced Reforms
The changes announced by the PMSA regarding reporting and transparency include the following:
All newly amended charters for the PMSA Board, Committees and School Councils will be published;
The PMSA’s policies and processes for the nomination and appointment of PMSA Board and School Council members will be published;
Breakdowns of schools’ operational income and expenditure will be published and the governance section in each school’s annual report will be enhanced;
All vacancies on the PMSA Board and School Councils will be advertised for expressions of interest, noting the desired capabilities of applicants; and
Governance sections on the PMSA and school websites will include expanded information such as relevant skills and experience of PMSA Board and School Council members.
3.2 Beyond PMSA Response
The decision to ensure publication of charters, policies and processes receives a “tick”. The content of the charters, policies and processes will always be an issue, but at least the community will finally have access to and be able to question their sufficiency. At a macro level it would be expected that publication of this material ought to place pressure on the PMSA to ensure that those arrangements are wholly defensible by aligning with best practice standards and encouraging continuous improvement. However, on that measure, we must reserve judgement.
The announcement that the PMSA will publish breakdowns of each school’s operational income and expenditure within the individual annual reports for each school receives a cautious “conceptual” tick. However, without understanding the level at which this reporting will be delivered, the format of the reporting and the standards with which such reporting will comply, we are unable to give an endorsement of this measure. In theory this promise can be satisfied with a two line report which provides no further material or useful information than is presently accessible at the the individual school level via the My Schools website or at PMSA group level via the ACNC register. We have never accepted that increased disclosure levels compromise the competitive advantage of our schools if they are well run and profitable.
Ultimately, we hold the view that greater financial transparency can only be properly assured under a corporate structure that is not defined by Letters Patent. There are so many reasons why this is the case, not least the fact that a more modern basis of incorporation will require structure and reporting requirements that will truly embed the trust and transparency that are so desperately needed to build sustainable funding for our schools. In a future where the pool of available public funding will only decrease, it is critical to establish a “high trust” culture that encourages improved funding from private sources. The PMSA must establish improved trust as financial stewards, and that can’t happen under the current structure regardless of announced reporting intentions. This is a critical issue that still needs to be addressed.
Greater transparency around the process for filling PMSA Board and School Council vacancies is long overdue and we endorse the prospect of this changing. Publishing further details about the skills and experience of appointed Board and Council members is a positive development and one which we hope will contribute to improving the calibre of future members and encouraging qualified applicants to step forward.
4.0 Culture, Communication and Stakeholder Engagement Changes
4.1 Announced Reforms
The PMSA acknowledged that “The consultation process revealed many issues relating to the PMSA’s culture, communication and stakeholder engagement.” The PMSA’s response to addressing these issues is that by implementing the AICD’s recommendations to “enhance reporting and increase transparency” they believe that “over time, the changes….to the PMSA Board and School Councils will significantly improve organisational culture and stakeholder relationships.”
The PMSA has also committed to developing and implementing a stakeholder engagement plan. To support this, the PMSA has stated that it will (together with School Councils) “provide better mechanisms and channels to engage with the school community and facilitate more open dialogue with the community regarding the operation of each school.” The stated aim is to “ensure the PMSA rebuilds relationships, restores trust with key stakeholders and enable [the] four schools to continue to thrive.”
4.2 Beyond PMSA Response
Of all of the failings of the PMSA, poor culture lies at the very heart. There are many reasons for this, but ultimately, the poor culture of the PMSA has been directly enabled by the existence of its Letters Patent. This has lead to an almost total destruction of trust in the PMSA as an organisation.
Trust in a Christian context means “faith”. People have faith in their God, but they don’t always have faith in the person sitting next to them that they’ve only just met. Bafflingly, they also don’t always have faith in their school Boards! And that’s not something that is necessarily aligned with concepts of ‘mistrust’ or concern that people are doing the “wrong” thing. It can be as simple as people not having faith that hard working and well meaning people at the helm perhaps aren’t really across the issues at play or completely versed in the best solutions and the best ways to implement them. Or maybe they just feel that those at the helm aren’t focusing on what’s important to them as stakeholders?
And whether that’s true or not is irrelevant. If you’re a Board member or a Church sitting behind them, saying – “look, just trust us – have faith in us” it’s not going to cut it any more. Not in 2018. That might seem unfair to those making the decisions, it might also offend their personal values. But it’s true. Trust is everything, but unlike 20 or 30 years ago, trust has to be “demonstrated” in a 21st Century educational environment. There is an expectation that it should be QUANTIFIABLE. People want to be able to validate their decision to give their trust. And so successful modern schools must function as “high-trust” organisations. It’s a fact, and it requires more than aspiration statements of intention. Adopting recommendations to “enhance reporting and increase transparency” is to be applauded, but we submit that the recall and cancellation of the PMSA’s Letters Patent is the ONLY way to establish trust and build a successful future for our schools.
5.0 Services and Functional Changes
5.1 Announced Reforms
The issue of Services and functional changes was the final key area of reform to be addressed. Apparently the AICD recommended (and “many respondents” held the view that) the PMSA “could do more to leverage the collective strengths of our group” but in ways that “do not adversely impact the individual character of each school.” The PMSA has pledged to “explore back office areas where our schools would benefit from sharing some services, purchasing as a group, learning from each other and collaborating together.”
Other functional “improvements” that the PMSA have announced include:
induction training and professional development will be improved for new members of the PMSA Board and School Councils;
external recruitment services will be “improved” to be “more transparent and robust”; and
functions within the PMSA Corporate Office will be “expanded to better support the PMSA's governance model.”
5.2 Beyond PMSA Response
Improved opportunities for professional development and more transparent and robust recruitment processes are welcome, but further details on the latter are required.
The precise nature of the “governance model” that the PMSA refers to (and which it states requires an “expansion” at the PMSA Corporate Office to support) is unclear. The absence of definition around this statement is important because the community wanted a “vision statement” which would define not only the PMSA’s governance reform trajectory, but the nature of its ongoing role. We mentioned this earlier in our blog and this is something that Beyond PMSA has consistently called for at a macro-level for months. It has not been delivered by the PMSA’s Governance Reforms paper. In our view, the announced reforms therefore represent an aggregation of individual reforms that lack a cohesive tie-in point – an aspirational destination point for the governance journey.
The services and functional reforms proposed by the PMSA talk about “expanding” the functions within the PMSA corporate office. No doubt the PMSA have need for additional administrative capabilities. However, we seriously question the appropriateness of expansion for the sake of creating greater relevance for the PMSA as an organisation without a better explanation of the value proposition for our schools. There has been no mention of PMSA operating budgets or reportable KPI’s. Should we be concerned about the absence of such an offering from the PMSA? Yes !
The PMSA should not need reminding that, overwhelmingly, members of the school community hold the strong view that a centralised “command and control” structure (of the likes of the “One School” proposition that was suggested in the leaked details of the Deloitte Report last year) is not only a threat to the individual strengths and traditions of our schools, but also devalues the strong contribution of highly skilled and experienced staff who deserve the respect of being entrusted with shaping these important decisions. Those types of management models are also highly outdated and ineffective constructs that reflect desktop driven “numbers-out” approaches which invariably fail to deliver sustainable collaboration through effective buy-in.
Where the PMSA can facilitate improved educational outcomes and cost savings through encouraging collaboration between the four schools, then this can be encouraged as a valid function. However, our repeated position is that this can only be effectively delivered by empowering the staff at our schools to identify and manage the best areas for such collaboration. If greater empowerment of staff is actively encouraged by the PMSA in our schools, then this can only improve educational outcomes increase prospects of staff retention and attraction, and deliver sustainable efficiencies across all four schools. “Sustainability” is incredibly important in this context and we will talk more about “sustainability as a key plank of successful governance reform at the upcoming Town Hall meeting.
In short, the community is telling us that they have absolutely no interest in a PMSA that is focused on empire building – especially when the announced reporting framework does not include performance measures for the PMSA itself. A return to focus on core business, assuring the sustainability and individual character and traditions of each of the four schools is paramount.
The Important Follow-up Announcement from the PMSA concerning Letters Patent that you may have MISSED
On 19 September 2018, the PMSA made a further announcement which commented on what Beyond PMSA considers to be singularly the most vital element of required reform if the future of our schools is to be assured. The announcement concerned the PMSA’s continued incorporation under its Letters Patent. In its announcement, the PMSA stated:
“We have also received comments regarding our plans to review the PMSA’s incorporation structure – Letters Patent. As you know, examining models of incorporation such as Letters Patent was outside the scope of the recent governance review. The PMSA would like to reassure you that we are committed to considering the PMSA’s best model of incorporation and ownership structure of our schools for the future. We recognise that good governance is a commitment to continuous improvement. We recognise that for our schools to continue to lead the way, we must ensure all aspects of our organisational design represents best practice. Although our immediate focus and priority is to implement the many governance changes recommended in the recent review, we will genuinely review the basis upon which the PMSA is incorporated under Letters Patent to determine whether this structure will deliver the best possible success for PMSA schools into the future. This process will take time and change requires joint approval from the Presbyterian and Uniting Churches. However, the PMSA is committed to continuing on our reform journey. We are also committed to continuing to openly communicate with the school community before, during and after this future review of our incorporation model.”
What does this statement mean, and why does Beyond PMSA consider that this statement is more important than any other announcement that the PMSA has made in the last 12 months?
This will be a key issue of discussion at the upcoming Town Hall meeting. What we can say is that, whilst the statement itself provides no guarantee of an outcome, what it represents, for the first time, is a public commitment to undertake a genuine review of the PMSA’s Letters Patent. This public commitment has been a hard-fought gain for the community, and Beyond PMSA assures all members of the school community that we will not let that commitment slide or allow it to move at a glacial pace. A decision-point must be forthcoming on this issue – and quickly. Holding the PMSA to account on delivery this measure will be a point of primary focus for Beyond PMSA in the coming weeks. A positive outcome on this key requirement would have the potential to change EVERYTHING for our schools – for the better.
A Final Word on “Change”
Change invariably creates dilemma. So why do schools (particularly faith based schools) have to respond and adapt, and what will happen to schools that dig in their institutional heels? This is the fundamental challenge that we face in this debate. The simple fact is that “change” DOESN’T always require moving away from familiar or longstanding ways of doing things. It doesn’t necessarily require moving away from values or traditions. But it DOES require a sober examination of the organisational behaviours and changes that are necessary for institutional success. And a governance framework for schools that is not supported by a foundation which embeds trust and accountability can never be sustainable in 21st century Australia. It will always be vulnerable to questioning, suspicion, attack, and ultimately - FAILURE.
The events of the last 12 months and strong community pressure must surely have brought clarity of focus, not only to the PMSA’s failure to recognise and adapt to developing changes in community expectations, but also to the absolute urgency with which it must implement the deep reforms that are necessary to ensure that our schools are positioned ahead of the curve.
Time, unfortunately, is not a luxury that our schools can afford, and the events of the last year demonstrate very clearly that (when compared to the governing bodies of many other schools) there is an entrenched structural dysfunction within the PMSA that impedes quality decision-making and an ability to effectively and efficiently respond to significant reform challenges. In our assessment, that dysfunction can not be removed as a consequence of the reforms that have been announced so far.
And the PMSA’s current governance structure IS uniquely dysfunctional. It’s incorporation under Letters Patent and its reliance on a decision hierarchy that is divided and dysfunctional creates “hobbled governance” – and that creates RISK. If you are a school Board anywhere, it makes absolutely no sense to entrench “risk” like this in your framework. It’s crazy.
Future crises will inevitably occur, and all systems and the humans that work within them are fallible. The question is, are we going to have a framework that can deliver strategic services to the schools, respond to future challenges and crises adequately all while not placing the whole institution of PMSA schools in the position that they were drawn into late last year? History would tell us that, despite the PMSA’s recently announced reforms, the current risk to our schools is unlikely to be removed unless there is deeper structural change. Without evolving and and making a positive decision to “grow up” by moving away from Letters Patent we’re all likely to be drawn back to October 2017 again. It’s just a matter of time.
Don’t Miss the Upcoming Town Hall Meeting (- rescheduled date to be announced soon !)
The upcoming Town Hall meeting (which has been rescheduled – new date to be announced) will focus specifically on the key challenge of ensuring “sustainability” in our future governance model. We will hear from a panel of experts about what best practice governance models should be capable of delivering to stakeholders.
We will also be discussing what “smart” schools are doing to respond to the huge challenges emerging in a sector where the landscape is being shifted by a complex combination of changes in social, business and educational dynamics. Our collective ability to respond to change and ensure institutional success for the future is where the focus of the current debate MUST shift to.
Finally, we can assure our supporters that Beyond PMSA is not giving up its demands for the PMSA to properly address and rectify the events of 2017, and it never will. Closure on those matters is necessary step towards healing and rebuilding trust.
See you at the Town Hall – and bring a friend !
