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ABSTRACT
The study examined the relationship between Corporate Governance and Financial Performance in
four Public Universities in Uganda. The study was prompted by Institutional turbulences as a result
of adhoc policy and decision making processes and poor financial performance of Public
Universities.
The study aimed at establishing the relationship between corporate governance, Board roles,
contingency, board effectiveness and financial Performance of Public Universities. A cross
sectional and correlational study was conducted in four public Universities in Uganda. Statistical
Package for Social Scientists (SPSS) was used and Spearman Correlation Coefficient and Multiple
Regression Analysis to determine the magnitude of the relationship and prediction of financial
performance respectively were applied.
The findings revealed that corporate governance variables namely; board size, had a negative
effect on financial performance while policy and decision making had a significant positive
relationship with financial performance. Corporate Governance had a significant positive
relationship with board roles, board roles had a significant positive relationship with board
effectiveness, and contingency had a significant positive relationship with board roles and
effectiveness.
There is need for Public Universities to formulate policies and make decisions that can stand test of
time. Constitute manageable Council and Senate committees, understand their roles, manage
contingency and improve on board effectiveness to realize improved financial performance.
Key words: Corporate Governance, Contigency, effectiveness and financial performance
computer and medical fees. This caused unrest in the student community to the
extent of students disrupting lectures at MUBS campus (Daily Monitor
Publications October 18, 2005). Mbarara University of Science and Technology
has a debt of Shs 420 million as compensation to former owners of University Inn
buildings since 1989 which the University Council and Top management have
failed to settle and instead continue to appeal to Government for their rescue
(MUST Annual Financial reports 1990 2005) . The University is under threat to
be sued, (Red Pepper News paper September 11, 2006). The University Council
and Top management by now could have put up measures to generate funds to
clear the debt, therefore the continued indebtedness may cripple the financial
performance of the University and may also retard the institutional life cycle. Red
In the Red Pepper News paper September 11, 2006, Gulu University Academic
Staff had a sit down strike protesting non- payment of Salary Arrears and non
remittance to NSSF (NSSF Annual Reports 2005- 2006) and URA (URA Annual
financial reports 2005 2006) monies deducted from their salaries,. Public
Universities continue to experience low revenue collections that do not match the
expenditure figures, as evidenced in table 1.1below.
Table 1.1: Actual Revenue and Actual Expenditure for the Financial Year
2004/05
University Actual Revenue
Actual Expenditure Variance
Kyambogo 20,345,236,770
22,345,632,123
-2,000,395,353
Gulu
6,050,535,230
6,567,254,246
-516,719,016
Makerere
54,658,205,038
56,933,077,000
-2,274,871,962
Mbarara
12,456,743,520
12,865,290,340
-408,546,820
Source: Financial Reports 2004/5 of the four Universities.
The question that remains to be answered is: Do councils function effectively in
setting up appropriate policies, decision making and monitoring the performance
of public Universities? Therefore there is need to investigate the institutions
financial performance.
Statement of the problem
Although council and senate in public Universities exist, Universities have
continued to experience governance problems such as fees determination
problems, payment schedules not respected, Student and staff unrest, staff welfare
problems, legal action against councils, which could be attributed to corporate
governance and institutional turbulence. If corporate governance and institutional
turbulence remains unchecked, the Universities financial performance may be
crippled.
Purpose of the study
The purpose of the study was to establish the relationship between corporate
governance and financial performance of public Universities in Uganda.
Research objectives
a)
To establish a relationship between Corporate Governance and board
roles.
b)
To establish a relationship between board roles and board effectiveness.
c)
Corporate Governance
Board size
Policy & decision making
Board
Effectiveness
Board Roles
Skills &
Knowledge
Committees
Delegation
Risk management
Financial
Performance
Revenue collection
Performance
Expenditure performance
Efficiency
Contingency
Management experience
Institutional turbulence
Institutional life cycle
complement each other. The decision making style of the board has been linked to
corporate performance Pearce and Zahra, (1991). Prior research has investigated
the immergence of corporate governance in developing economies in the context
of corporate governance reforms, Rwegasira, (2000) has examined Africa.
Krambia and Psaros (2006), investigated the implementation of Corporate
Governance principles in an emerging economy of Cyprus and the findings
indicated only a minimal impact unless it is supported by other initiatives. Further
noted that Cyprus was making serious endeavors to improve the corporate
governance of its listed companies.
Solomon et al., (2000, 2003) argues that for developing countries to be
internationally competitive and attract foreign capital they need to adopt
commonly accepted standards of corporate governance implies standards based
on the Anglo-Saxon model. Rwegasira (2000) states that for the Anglo- Saxon
model to be effective, company shares need to be owned by widely dispersed
owners.
The Organisation of Economic Co-operation and Development (OECD), (2004)
provides the most authoritative functional definition of Corporate governance:
Corporate governance is a system by which business corporations are directed
and controlled. The corporate governance structure specifies the distribution of
rights and responsibilities among different participants in the corporation, such as
the board, managers, shareholders and other stakeholders and spells out the rules
and procedures for making decisions on corporate affairs. By doing this, it also
provides the structure through which the company objectives are set and the
means of attaining those objectives and monitoring performance.
Witherell ,(2004) noted that regional roundtables on corporate governance set up
in partnership with the world Bank have allowed the OECD principles to become
a widely accepted global benchmark that is adaptable to varying social, legal and
economic contexts in individual countries.
Indeed the out come of a survey by Mckinsey in collaboration with the World
Bank in June 2000 attested to the strong link between corporate governance and
stakeholders confidence (Mark, 2000).
Corporate governance is important because it promotes good leadership within the
corporate sector. Corporate governance has the following attributes; leadership for
accountability and transparency, leadership for efficiency, leadership for integrity
and leadership that respects the rights of all stakeholders, Institute of Corporate
Governance of Uganda, (2000). Lack of sound corporate governance has enabled
bribery, acquaintance and corruption to flourish and has suppressed sound and
sustainable economic decisions. Some key pillars (Private Sector Corporate
Governance trust, (1999) on which good governance is framed include;
The institution must be governed with a framework which should provide an
enabling environment within which its human resources can contribute and bring
to bear their full creative powers towards finding solutions to shared problems.
Rossette,(2002) carried out the extent to which board composition affects team
processes, (orientation, communication, feedbacks, coordination, leadership and
monitoring), board effectiveness and performance of the selected financial
institutions in Uganda.
the considerable amount of effort in research on board size for more than a decade
there is still lack of consensus among researchers on its relevancy. This
inconclusive nature in board size research quality and experience of independent
directors on the board than sheer numbers of individuals (Keegen & Gilmour,
2001).
There has been considerable debate on whether large boards perform better than
smaller boards. Daily (1995) argue that greater number of directors might increase
available expertise and resource pool while Bonn et al., (2004) contends
expanding the size of the Board provides an increased pool of expertise,
information and advice quality not obtained from other corporate staff. In
contrast, the difficulty inherent in coordinating the contributions of many
members can be complex, hindering them to use their knowledge and skills
effectively (Forbes & Daniel 1999, Epstein et al., 2004).
From agency perspective, increase in board increases the Boards monitoring
capacity but costs that accrue from large boards may facilitate CEO dominance
over board members. For instance large boards have difficulty in building the
interpersonal relationships that further cohesiveness, or maintain high board effort
norms owing to social loafing that exists in large boards (Forbes & Daniel, 1999).
Studies such as Bonn et al., (2004) have also supported previous authors and
concluded that when the board size is very large, the disadvantages such as lack of
cohesiveness, coordination difficulties and fractionalization are most severe and
they became less prevalent as board size decreases. In contrast very small boards
cannot enjoy the advantages of the pool of expertise, information and advice of a
larger board and these benefits emerge when the board becomes larger. To date
there are still wide views on an optimal board size. According to Leblanc &
Gillies (2003), an 8-11 persons board may be considered optimal. In a recent
study by Epstein et al., (2004), a board of 9-13 members is typically right for most
companies but too small for large ones. Goshi et al., (2002) considered an average
of 16 directors (3 within and 13 outside directors) to be appropriate for larger
companies, though respondents in this study believed that 12 is the most effective
board size. The study by Connelly & Limpaphayom (2003) revealed that the
average board size of insurance firms in Thailand was 10 but ranged from a low
number of 4 members to a high number of 16 members. The current study is
focused on Board size in terms of the number of University Council and Senate
Members as stipulated by the Statute.
Policy and decision making
The final function that a board needs to consider is its duty with respect to
delegating authority. Given the complexity of the business environment, it is
impossible for the board to be the sole decision making body in the company.
Instead, each board needs to work on developing an appropriate method and level
of delegation of authority. Obviously this will again vary with the context facing
the board but, in all circumstances, the board needs to clearly articulate and
document the delegations it makes Gavin and Geoffrey, (2004).
Board roles
Board effectiveness occurs via the execution of roles set that is conceptualized by
different researchers in different ways Hung, (1998), Johnson et al, (1996), Lipton
and Lorsch, (1992). What is clear is that the roles of the board have evolved over
time. Defining a clear role set is difficult as different disciplines concentrate on
different areas of interest. Pettigrew, (1992) identified six themes of academic
research on the role of managerial elites such as chairpersons, presidents, Chief
executive Officers (CEOs) and Directors. These include the study of interlocking
directorates and the study of institutional and societal power, the study of boards
and Directors, the composition and correlation of top management teams, studies
of strategic leadership, decision making and change, CEO compensation and CEO
selection and succession. There are, however board roles that receive board
support Gavin and Geoffrey, (2004) as explained below.
Monitoring and control
The first role of the board is controlling and monitoring management, a role made
necessary by the separation of ownership from control Berle and Means, (1932).
They added a separate strategizing role of the board. This role is normally
subsumed under advising role. The strategizing role is included for three
reasons; the increasing performance pressures being applied by institutional
stakeholders Black, (1992), board perception of the importance of the strategizing
role Tricker, (1984) and recent legal precedent that places corporate goal setting
and strategic direction squarely within the boards charter Baxt, (2002), Glaberson
and Powell, (1985), Kesner and Johnson, (1990).
Strategizing
The boards objective in strategy formulation is to ensure that the strategy of the
company will lead to the long-term creation of shareholder wealth or other stated
major goals of the organization. However, the level of board involvement will
vary from company to company. For example, the board may see its role as
developing the strategic questions for management to answer, when another
approach sees the board setting broad objectives for management to implement,
Gavin and Geoffrey, (2004).
Accessing resources
All companies what ever their size or nature of business, need access to outside
resources if their businesses are to succeed. These resources vary enormously
from company to company, but fall into main categories, as information and
physical resources. Developing business networks and working to promote the
reputation of the firm are two other important ways that a board can add value to
the company. By acting in an open, professional and ethical manner in their
dealings with people outside the organization, board members also raise the
profile of the firm and enhance its reputation Garvin and Geoffrey, (2004).
Advice and counsel
The role Directors play in providing advice to the chief executive officer (CEO) is
a link between the direction of the company and the day to day implementation of
the direction which is the responsibility of the CEO. The board is a key source of
knowledge and experience for the organization it governs. Therefore it is
important for the board to share its experience with management, particularly the
CEO, to serve the interests of the company Gavin and Geoffrey, (2004).
Advising the CEO is widely acceptable Lorsch and Maclver, (1989) and also
resource dependence perspective, which envisages a role for directors in
providing access to resources, including information Pfeffer, (1972).
Contingency , board roles and board effectiveness
While all boards are required to undertake activities within the spectrum of this
roles set, they contend that each organization will need a different emphasis
among these roles. Thus, there is need to explicitly incorporate a contingency
perspective Heracleous, (2001), Donaldson and Davis, (1994), Johnson et al ,
(1996). Since a particular board composition or behavior that is advantageous for
one corporation may prove inappropriate or even detrimental in another
Heracleous, (2001). There is need to identify the control variables and gaps in
understanding how the board can impact on firm performance.
The particular contingencies that will impact on board roles corporate
performance would include organizational size Daily and Dalton, (1992), Dalton
et al,. (1999), diversity Siciliano, (1996), management experience CoulsonThomas,(1993) industry turbulence, industry lifecycle, and firm lifecycle Johnson,
(1997). It is these contingencies that moderate the relationship between board
roles and board effectiveness. Thus the current study includes external and
internal contingencies to moderate the relationship between board role execution
and board effectiveness.
This study will use management experience, University turbulence, University
lifecycle as contingencies that will impact on board roles and corporate
performance.
Board effectiveness
Individuals perceive effectiveness partially or in different ways. The social
constructionists conception, for instance, holds that there only judgments of
effectiveness, thus effectiveness are judgmental (Herman et al., 1997). According
to Triscott, (2004) effectiveness is about doing the right things to achieve the
results. In terms of measurement, Novick (1997) suggests that the current
approaches measure elements associated with effectiveness rather than
effectiveness rather than effectiveness itself. Board effectiveness can be
conceptualized as a function of overall contribution of the board to the
organization performance, standard of support provided by the organization,
individual contribution of directors to organization performance, board dynamics,
Board performance evaluation and review Van der Walt and Ingley, (2001). Close
inspection of earlier literature revealed that board effectiveness is almost based on
individual experience Jackson & Holland, (1998). According to Higgs &
Dulewicz (1998), the issue of measuring team outcomes is a difficult one and the
literature abounds with debates around team performance, which mirror those
surrounding organizational performance. However, while there are various
definitions of group effectiveness, Huat & David (2001) argue that board
performance has been measured along the dimension of the boards ability to
perform its functions. Indeed, an earlier study by Forbes & Daniel (1999) defined
board effectiveness as the boards ability to perform its control and service tasks
effectively. From empirical perspective, Bardwaji & Vuyyuri (2003) found that
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METHODOLOGY
Research design
The Research study used cross sectional and analytical research designs. These
research designs were used to collect a snap shot of data and analysis of the
relationships between study variables.
Study population
The study population size of 221 constituted 91 council and 130 senate members
of 4 public Universities namely; Makerere University,, Mbarara University of
Science and Technology, Kyambogo University and Gulu University. The unit of
analysis was Universities.
Sample size and sampling design
A sample size of 142 council members and senate members was used as
determined from Krejcie and Morgan (1970) table.
Proportionate stratified and simple random sampling designs was used to select
the sample of 142 members as shown in Table 1 below.
Table 1: Population and sample size
Institution
Population size
Sample size
Council
24
22
24
21
91
Senate
65
19
19
27
130
Council
15
14
15
14
58
Senate
42
12
12
18
84
Makerere University
Kyambogo University
MUST
Gulu
TOTAL
Source: Secondary Data
Sources of data
The two sources of data were primary and secondary data. Primary data was
obtained from primary source on Corporate Governance, board roles, board
effectiveness and contingency. Secondary source provided secondary data on
financial reports and number of council and senate members.
Data collection methods
Questionnaires and abstraction methods were used in collecting data. Semi
structured questionnaires were used to collect primary data directly from the field.
Abstraction method was used to collect secondary data from financial reports.
Measurement of study variables
The independent variable which was corporate governance had to be measured in
terms of board structure / size and decision making. Board roles were measured in
terms of monitoring and control, access to resources, strategy and advice and
counsel. Board effectiveness was measured in terms of committees, risk
management, delegation, skills and knowledge. Contingency was measured in
terms of management experience (Coulson Thomas, (1993), institutional
turbulence, institutional life cycle (Johnson, (1997). All indicators were subjected
to a four point likert scale of strongly agree, agree, disagree, and strongly
disagree. Financial performance as dependent variable was measured in terms of
the revenue collection performance ratio of actual revenue over budgeted revenue.
Expenditure performance ratio of actual expenditure over budgeted expenditure.
14
Value for money was measured as a ratio of actual revenue over actual
expenditure (efficiency).
Validity and reliability tests
Content validity index (CVI) was used to measure the relevancy of the questions
used to measure the study variables of Corporate governance, board roles,
contingency, and board effectiveness. A four point scale of relevant, quite
relevant, somewhat relevant and not relevant was used to collect the responses
from two experts in the area of study. A proportion of relevant and quite relevant
was computed to get the CVIs of the two experts. The CVIs were 0.6974 and
0.5789. Since the questions were relevant to the study variables.
The reliability tests performed using cronbach alpha coefficient to determine the
internal consistency of the likert scales used to measure the study variables
indicated alpha coefficients for all variables above 0.60.
Data processing and analysis
Primary and secondary data was coded, edited and analyzed using the Statistical
Package for Social Sciences (SPSS) version 10. Descriptive statistics and chisquare test was used to examine Corporate Governance, board roles and
contingence. Variance analysis was performed to examine the level of financial
performance. Spearman correlation was used to measure the relationship between
Corporate Governance, board roles, board effectiveness and performance.
Multiple regression was used to predict financial performance of public
Universities in Uganda.
The limitations of the study
The study involved council and senate members of the four public Universities
with busy schedules. Several appointments had to be made by the researcher in
collecting the questionnaires. With the permission of academic registrars,
University bursars and University secretaries of the four public Universities over
70 % of the questionnaires were collected which took a period of over 3 months.
The researcher was patient enough in this regard. The combined effort of the
researcher and the research assistants enabled the collection of over 70% of the
field questionnaires from the four public Universities in Uganda. The study was
limited financially and time constrained due to the wide spread nature of public
Universities. However the researcher used the limited resources available and
with research Assistants helping in collection of data. Financial reports from some
institutions were not easily accessible due their sensitivity. Therefore the
researcher had to write specific letters emphasizing confidentiality of the data
obtained to the University Bursars to allow access to the financial reports.
Despite the above limitations, the researcher collected sufficient data for the study
and was able to come up with results that answered the study research objectives.
Findings of the study
Factor analysis
Factor analysis using principle component analysis and varimax rotation methods
extracted components with eigen values greater than 1 that measured board roles,
contingency and board effectiveness. Only items with correlation coefficients
greater than or equal to 0.3 were retained.
Board roles
15
1.000
-.155
1.000
BOARDROLES (3)
.211*
.358**
1.000
BOARD FFECTIVENESS
(4)
.094
.344**
.455**
1.000
-.193
.185
.139
.225*
1.000
REVENUE
PERFORMANCE (6)
-.337**
.321*
.113
.113
.240*
1.000
EXPENDITURE
PERFORMANCE (7)
-.337**
.332**
.113
.113
.240*
1.000**
1.000
EFFICIENCY (8)
-.928**
.308*
.324*
.099
.341**
-.064
-.064
1.000
FINANCIAL
PERFORMANCE (9)
-.337**
.316*
.113
.411**
.324*
1.000**
1.000**
-.064
CONTIGENCY (5)
16
1.000
17
Constant
1.692
0.213
2.324
0.000
Board size
-0.456 0.165
-0.472
-4.054 0.000
Board roles
0.455
0.233
0.352
3.167
0.000
Board
0.651
0.057
0.543
4.498
0.000
effectiveness
Policy & decision 0.420
0.431
0.363
3.267
0.000
making
Contingency
0.562
0.213
0.431
3.687
0.000
R- Square =0.490, Adjusted R- square = 0.484, F= 4.400, Sig = 0.000
There was a linear relationship between corporate Governance, board roles,
contingency, board effectiveness with financial performance (F = 4.400, Sig =
0.000).
Board size, policy and decision, board roles, contingency and board effectiveness
explained 48.4% of financial performance of public Universities.
Board effectiveness (Beta = 0.543) explained more to the financial performance,
followed by contingence (Beta = 0.431), policy and decision making (Beta =
0.363), and board roles (Beta = 0.352). This implied that increase in board
effectiveness, management of contingences, proper policies and decisions and
board roles led to increase in financial performance.
Board size however, negatively impacted on the financial performance (Beta =
-0.472). This implied that increase in the size of council and senate led to the
reduction of in financial performance of public Universities.
Removing the contingency variable in the regression model, indicated a reduction
in the financial performance of public Universities as only 45.6% of the total
variance of the financial performance is explained as shown in the table 4.12
below. Board size continued to impact negatively on firm performance
(Beta = -0.427) while board effectiveness (Beta = 0.465), policy and decision
making (Beta = 0.336) and board roles (Beta = 0.314) explained positively the
financial performance of public Universities.
Table 4: A Regression model for Corporate Governance, board roles, board
effectiveness and financial performance.
Model
Unstandardized
Standardized
coefficients
coefficients
T
B
Std. Error Beta
Constant
0.562
0.142
0.987
Board size
-0.436 0.021
-0.427
-3.054
Board roles
0.396
0.450
0.314
1.917
Board effectiveness 0.496
0.165
0.465
3.550
Policy & decision 0.420
0.312
0.336
2.727
making
R- Square = 0.469, Adjusted R- Square = 0.456, F= 3.865, Sig = 0.000
18
Sig
0.000
0.000
0.000
0.000
0.000
Table 5: Budgeted and actual revenue and expenditure for the financial Year
2004/05
University
Kyambogo
Gulu
MUK
Mbarara
Budgeted
Revenue
21,743,298,750
7,331,560,811
54,899,764,000
13,452,879,550
Actual
Revenue
20,345,236,770
6,050,535,230
54,658,205,038
12,456,743,520
Budgeted
Expenditure
21,743,298,750
7,331,560,811
54,899,764,000
13,452,879,550
Actual
Expenditure
22,345,632,123
6,567,254,246
56,933,077,000
12,865,290,340
Variance
-2,000,395,353
-516,719,016
-2,274,871,962
-408,546,820
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(2000) results were similar to all the above that a positive relationship existed
between board effectiveness and organizational performance.
Relationship between Corporate Governance and financial performance
There was a significant relationship between Corporate Governance and financial
performance of public Universities. (Results are consistent with earlier ones
obtained by Masibo, (2005) whose results showed a relationship between Board
Governance and firm performance. Results are also in agreement with Mckinsey
quarterly survey Mark (2000), that a link existed. Furthermore Matama, (2005)
obtained a positive relationship between Corporate Governance and financial
performance of selected commercial banks.
Relationship between Corporate Governance, board roles, contingence,
board effectiveness and financial performance
Financial performance was significantly explained by Corporate Governance,
board roles, contingence and board effectiveness.
The multiple regression model indicated that 48.4% of the financial performance
of public Universities was contributed by Corporate governance, board roles,
contingence and board effectiveness. Board effectiveness contributed more to
financial performance followed by contingence, policy and decision making and
board roles. However board size had a negative effect on the financial
performance of public Universities. Results are also consistent with Bonn et al.,
(2004) whose findings showed a negative relationship between board size and
performance of Japanese firms. Results above are consistent with Masibo, (2005)
who established that good Governance, board effectiveness and board process
positively explained firm performance and also found out that increase in board
size reduces on the firm performance. Furthermore, the results are in line with
Gavin and Geoffrey, (2004) who established that corporate governance, board
roles, contingency and board effectiveness led to improved firm performance.
Conclusions
Findings on the relationship between Corporate Governance variables and board
roles, indicated significant positive relationship. Board size, policy and decision
making as aspects of Corporate Governance had a positive effect on the board
role. The public Universities had no optimal number of members on senate and
council that were monitoring, controlling, strategizing, providing advice and
counsel.
Policy and decision making in public Universities is important in contributing to
financial performance.
Board roles significantly influenced board effectiveness and this meant that board
roles were important in determining the effectiveness of boards. This means that
for council and senate to be effective they must pay attention to their roles.
Contingency in terms of management experience, institutional turbulence and
institutional lifecycle significantly and positively influenced the impact on board
roles and board effectiveness. Public Universities therefore require use of
contingency measures to improve on the effectiveness of council and senate.
The size of council and senate of public Universities significantly reduced on the
financial performance. This means that public Universities have board sizes that
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Recommendations
The study on corporate governance and financial performance of public
Universities in Uganda was carried out. In line with the findings and conclusions
of the study the following were recommended;
From the findings on the effect of board size on financial performance which was
negative and for council and senate to be effective in performing their roles, there
is need to review the membership of council and senate to avoid having large
boards.
On the effect of policy and decision making on board roles, it is recommended
that council and senate should set up policies that can stand the test of time
whereby different view points, ideas and opinions from all the stakeholders are
considered.
Council and Senate should avoid rubberstamping of top managements
recommendations on policy issues. Instead thorough discussions on the
recommendations through sub-committees of council should be made.
Recommendations on board roles include;
Council and senate should set measurable objectives that permit monitoring and
control of public University performance this can be achieved through discussing
thoroughly their strategic plans.
Council members of the University must formerly evaluate the performance of the
top University executives. The students, academic and administrative staff should
evaluate the performance of the University management on the set objectives
according to the strategic plan.
Include both the internal and external board members on the intranets to enable
them have access to information within the University. Allow them access to
online and physical library resources within the University.
Boards should be given improved facilitation in form of retainer and sitting and
mileage allowances.
They should provide frequent advices and counsel to the top management of the
University.
Council and senate should be involved at strategic planning process of the
University to improve on their roles as board members which are in line with the
mission and vision of the University.
Council and senate must ensure that the Universities meet their legal obligations
like remittance of staff benefits to NSSF, NIC.
Council and senate should provide advice and counsel to top management of the
Universities on critical issues from an informed point of view if they are to
perform their roles effectively in order to have a significant impact on the
University performance. Universities should consider formation of advisory
boards independent of council to complement on the role of advice and counsel.
Contingence as an important moderating factor of board roles and board
effectiveness should be managed as follows;
To manage institutional turbulence like employee strikes or unrest, council and
senate should understand and make effective polices and decisions regarding
employee benefits and retirement plans. Good policies on terminal, medical and
long service award. At the time of appointment of each employee one should have
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all policies of the University as part of the appointment package which is not the
case now. Council and senate should put in place incentive schemes that provide
significant rewards for outstanding performance, for instance rewards to best
performing employee, students and provision of interest free loans to staff.
Council should appoint employees at top management level who posses vast
management experience.
Recommendations on board effectiveness;
Council should be constituted by members with required skills and knowledge in
order to provide technical expertise and also be able to direct and control the
public Universities. Performance appraisal tools should be designed to evaluate
annually the performance of council and senate members.
For effective performance of council there is need to delegate to its sub
committees some duties for instance appointments of employees to appointments
board, disciplinary to disciplinary sub committee and issues of benefits to staff
welfare committee and students welfare committee.
Council should have in place risk management procedures that encompass
financial, operational and environmental risk.
Suggested Areas of further research
The current study was conducted on public Universities in Uganda which are
funded by government, therefore there is need for a similar study to be carried out
in private Universities for comparison purposes.
A similar study could be carried out in Anglican church of Uganda, Catholic
church of Uganda and Uganda Muslim supreme council in Uganda since they
have governing boards that manage their income generating projects.
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