The recent Ideagen Education Risk Report - Looming Mental Health Crisis and Other Key Risks Affecting Schools in 2023 highlights a number of issues that schools are grappling with. 

This is the first in a series of articles that discusses key findings in the Report. In this article, we provide a brief overview of the Report’s findings and focus on its findings regarding governance and leadership.

Overview of the Report

Some of the key challenges for schools that the Report highlights include:

Human Resources Concerns and the Teaching “Crisis”

• Survey respondents ranked human resources concerns as their top priority.
• 98 per cent of respondents have been significantly impacted by staff workload concerns.
• 92 per cent of respondents have experienced increased stress and burnout.
• 89 per cent of respondents have been somewhat or greatly impacted by difficulties in attracting and maintaining high quality teaching staff.
• 4 per cent of respondents have experienced some level of impact from staff shortages in schools.

Student Mental Health Challenges

• 5 per cent of all respondents have been somewhat or greatly impacted by increases in student mental health issues.

Managing the Compliance Burden

• The burden of complying with regulations is having a major impact on most schools. Compliance costs and resource allocation are significant challenges for all schools, particularly smaller schools which have fewer resources to meet their obligations.
• Several survey respondents expressed concern over the potential impact on their ability to align their staff with their religious order, potential conflicts in the school community, and their freedom to teach religious foundations.

Governance and Leadership Challenges: Action Required

• 59 per cent of respondents agreed that school boards are functioning as effectively as they should be. This suggests that there may be as many as 40 per cent of schools that have a lack of confidence in their boards.
• 43 per cent of respondents are preparing to make significant changes to their governance, risk and compliance requirements in the next 12 months.
• 54 per cent of respondents agree that their school has well-developed policies, systems and processes to manage cyber threats, which suggests that there are a substantial number of schools, up to 45 per cent, that may be without well-developed policies and systems to manage cyber threats.
• 8 per cent of respondents believe that their school manages funding and expenditure effectively, indicating confidence in proper use of funds.
• 2 per cent of respondents agreed that their school leadership prioritises creating a positive, safe and supportive school culture.

Focus – Governance and Leadership

Our survey on governance and leadership in schools revealed that 83.8 per cent of respondents believe that their school manages funding and expenditure effectively, indicating confidence in the proper use of funds.

School leadership prioritises creating a positive, safe and supportive school culture, with 78.2 per cent of respondents agreeing that their school models such an environment. This suggests that schools understand the importance of fostering a healthy and inclusive culture for student wellbeing and success.

However, school boards were found to be less effective, with only 59 per cent of respondents agreeing that they function as well as they should. This highlights the need for improvement in governance and decision-making processes in some schools and the need for boards to focus on greater transparency and better communication of board operations to the wider school community. This is part of a growing trend for people to no longer accept institutions at face value. This is often referred to as the ‘social licence to operate’.

Environmental, Social and Governance Issues

An August 2022 article by McKinsey discussed the renewed community focus on a companies’ performance in relation to environmental social and governance (ESG) issues. The article noted that 90 per cent of S&P 500 companies now publish ESG reports in some form. They then discussed four common ‘ESG critiques’:

• ESG is a distraction
• ESG is not feasible because it is too difficult to manage
• ESG is not measurable in any meaningful way
• there is no meaningful relationship between ESG and company financial performance.

 After describing these four critiques they said:

“The fundamental issue that underlies each of the four ESG critiques is a failure to take adequate account of social license—that is, the perception by stakeholders that a business or industry is acting in a way that is fair, appropriate, and deserving of trust.”

The same applies in a school context where schools and school boards frequently feature in media reports questioning board expenditure and are criticised for a lack of transparency in their processes and decision- making. Expectations on governing bodies include ensuring that expenditure decisions are appropriate and pass the ‘pub test’. There is also ongoing media scrutiny of independent schools’ capital expenditure.

GRC Action Is Planned But Yet to Commence

Regarding planned action, the survey results show that 43 per cent of respondents are preparing to make significant changes to their governance, risk and compliance requirements in the next 12 months. However, most of these respondents (88 per cent) are still in the planning phase. This suggests that many schools are aware of the need to improve their current approach to governance, risk and compliance and are actively exploring ways to do so, but are yet to actually introduce any changes.

Respondents shared specific changes that they plan to implement within their schools, including:

• restructuring and reorganising systems
• introducing enterprise-wide risk management systems
• improving risk governance through committees
• conducting regular risk assessments for key risks
• developing mitigation strategies
• monitoring risk controls
• enhancing risk reporting
• personnel and governance changes, including appointing new leaders
• involving staff through committees, training and professional development.

However, implementing these changes may not be easy, as some respondents cited challenges such as a lack of motivation from school leaders and the complex nature of compliance issues. Nonetheless, taking proactive steps towards improving governance, risk, and compliance can help schools better manage risks and ensure sustainable operations in the long run.

Conclusion

The Report highlights several critical issues facing schools in Australia. The critical issues that the survey results show around governance and leadership suggest that boards need to do better both to improve their GRC systems and processes and also do better at communicating what they are doing to increase community confidence in board operations.