Higher education institutions are vibrant workplaces where administrators, faculty, and staff all move toward a common purpose of educating our future leaders and innovators. While the mission and purpose have not changed, the process and economics of how they achieve that mission has. Since higher ed institutions tend to change at a pace slower than corporations, the shared governance model has had to respond to many threats - including, but not limited to, employee retention and employee benefit cost. In my previous role, I lead Benefits Department for a state institution. My experience there affords me the ability to understand both the challenges and benefits to the shared governance model. Now as a consultant, I am sharing this blog to highlight the model as well as share some common practices.
What is Shared Governance?
Per the Chronicle of Higher Education: shared governance is a delicate balance between faculty and staff participation in (1) the planning and decision-making processes and (2) administrative accountability. A higher education institution’s retirement plan committee is accountable to that balance by ensuring that the plan is not only fair and equitable to the participants, but also fiscally responsible to the institution.
Committee Structure
Many people may think that only the economics faculty or the head of administration should be members of the committee, but that may not be fully representative of the institution. Committees are welcome to invite both staff and faculty senate members, as well as thought leaders and business leaders on campus to join. In previous roles, I have seen this work successfully, but I have also seen a committee be gridlocked in decision making. In determining the appropriate committee representation, I believe a few considerations should be made:
- Members should be empowered to make decisions. Each committee member should have the full support of the corresponding area they represent in the decision making process. The collective committee then can share decisions made with senior leaders knowing they have the full backing and not fear retaliation.
- Members are fully aware of fiduciary responsibility. The Department of Labor requires employers to educate committee members on their roles and responsibilities and each member should have an understanding of what it means to be a plan fiduciary.
- Members should be engaged and able to commit to decision making calendar. Engaged committee members are within reason, able to commit to the meeting schedule and be prepared to discuss issues at hand.
Decision Making
Generally, decisions made will fall in two buckets, fiduciary or settlor. Fiduciary decisions must be made in the best interest of the participants and beneficiaries of the plan. Settlor decisions are made by the organization, not acting in a fiduciary capacity. Committees and institutions must be able to determine which decisions related to the plan are fiduciary and which decisions are settlor decisions in order to avoid the conflicts that come from fulfilling their fiduciary responsibility versus representing the organization’s best interests.
Committee Reporting
In most cases, the committee does not act in a vacuum. Periodically, the committee shall present a report to the entity that delegated authority to the Committee. Many times, in a shared governance model, that may be the Board of Trustees or members of senior administration who delegate the day-to-day activities of plan administration to the committee. Committee chairs often hold the responsibility of making these periodic updates to the Board.
In closing, the retirement committee has a unique position managing the delicate balance between faculty and staff participation in planning and decision-making and play a vital role in the success of the institution.
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