Smithsonian Institution:

Board of Regents Has Implemented Many Governance Reforms, but Ensuring Accountability and Oversight Will Require Ongoing Action

GAO-08-632: Published: May 15, 2008. Publicly Released: May 15, 2008.

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The Smithsonian Institution's governing body, the Board of Regents (Board), has developed a set of actions to address governance and accountability breakdowns that came to light in 2007. These actions were aimed at problems in three main areas: (1) executive compensation, benefits, ethics, and operational policies and controls; (2) flow of information to the Board, transparency of Board operations, and relationship with stakeholders; and (3) the Board's responsibilities, structure, and performance. GAO was asked to assess the extent of the Board's progress in each of these areas. GAO obtained information and data from the Board's regents, Smithsonian executives, and other stakeholders and also analyzed other organizations whose boards had faced similar governance challenges.

The Board has implemented several reforms related to executive compensation and benefits, but the development of policies for broader operational matters such as travel, event expenses, and contracting is still under way. Actions implemented include a revised salary range for the Smithsonian's Secretary-elect and a unified compensation policy for other executives. The Smithsonian is reviewing policies related to travel and other matters, including internal controls. Effectively implementing the new policies and procedures developed during these reviews is likely to depend on effectively training staff and establishing accountability, both of which may be challenging due to a level of standardization and requirements that did not exist before. The Board has completed the actions it proposed for improving its access to information and making its operations more transparent, but actions to improve communication and relationships with stakeholders are less far along. The Board now has avenues for obtaining information directly from senior officials rather than through the Office of the Secretary, and it has taken such steps as creating a Web page to better publicize its operations and decisions. The Board is studying how to improve links with its 30 advisory boards and has developed an overall strategy for communicating with the larger network of stakeholders, but neither action is far enough along to assess its potential for addressing past problems. The Board has largely completed the actions it proposed for clarifying regents' responsibilities and studying possible changes in its size and structure, but actions for assessing Board performance are still being developed. The Board altered its committee structure but decided that more fundamental changes in its size and composition were unnecessary. To provide further expertise where necessary under the existing structure, the Board is encouraging the addition of nonregents to committees. Thus far, however, the Board has not developed a process for assuring transparency and accountability in selecting nonregents and using them to enhance governance. The Board is also developing a self-assessment process, but it remains to be seen how the Board will hold regents accountable if they neglect their duties. Given the extensiveness of actions taken and still under way, it is likely that the effectiveness of some changes will only be evident over a longer time. The Board does not currently have plans to conduct a broader evaluation of its governance reform actions after such time has passed to determine if the actions taken have addressed governance and accountability problems which led to its reform actions.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In May 2008, we reported that the Board of Regents has no authority to remove regents for cause, such as persistent neglect of duties during a regent's term. We found that other organizations can remove board members whose performance is inadequate or not up to expectations, and that a key challenge for the Board of Regents would be how to hold all regents accountable for individual performance. We therefore recommended that the Board of Regents evaluate actions it could take in the case of neglect of regent duties. In response to our recommendation, the Board's staff evaluated actions the Board could take, and the Governance Committee modified and accepted the staff's proposal to 1) the initial counseling be provided by the Chair of the Governance Committee in conjunction with the board annual self-assessment, and by the Chair of the Board if necessary, and 2) should such counseling fail to result in improvement, the matter will be referred to the full Board for appropriate action. With such policies in place, the Board creates leverage to police itself and provides for a course of action to hold all regents accountable for individual performance.

    Recommendation: To improve the accountability of regents in fulfilling their newly clarified roles and responsibilities, the Board should evaluate what actions it can take in the event of persistent neglect of duties by any regents or their liaisons to strengthen its governance reform efforts.

    Agency Affected: Smithsonian Institution: Board of Regents

  2. Status: Closed - Implemented

    Comments: In May 2008, we found that the Board of Regents was addressing its need for additional expertise by increasing the use of nonregents on committees; however, the Board lacked a formal process for identifiying and selecting nonregents, and there was little transparency in how they were to be used or evaluated. We therefore recommended that the Board clarify and make public its process for selection and its policies regarding nonregents' roles, expectations, and performance. The Board has developed and posted on its web site the process used to recruit and select the eight additional nonregents that have been added to the Board of Regents' committees since our May 2008 report. The eight nonregents were recruited specifically from the various Smithsonian advisory boards and were vetted by the Secretary, the unit directors and advisory board chairs, the Board committee chairs, as well as the Chair of the Board of Regents and the Governance and Nominating Committee. The criteria for selecting these nonregents were based on their expertise relative to their committee's oversight responsibilities. At the April 12, 2010 Board of Regents meeting, the Board voted to amend its bylaws to reflect its policies regarding the appointment of nonregents and to clarify that the duties and responsibilities of nonregents will be defined by the committee charters and subject to review and, as appropriate, approval by the Regents. Nonregents will be considered "full and equal members" on the Regents' committees and will be subject to Regents' Ethics Guidelines and financial disclosure obligations. The Board's actions have strengthened its governance reform efforts by providing more transparency to the public and to the Congress on how the Board uses nonregents on its committees.

    Recommendation: To provide more transparency into the use of nonregents, the Board should clarify and make public the process used to select nonregents for service on its committees, the roles and expectations for nonregents, and how nonregents' performance will be evaluated to strengthen its governance reform efforts.

    Agency Affected: Smithsonian Institution: Board of Regents

  3. Status: Closed - Implemented

    Comments: In May 2008, we found that reforms related to enhancing the Board of Regents' relationships with important stakeholders remained under consideration and did not include mechanisms by which the Board of Regents could receive and consider unfiltered information from these stakeholders on a regular basis. We therefore recommended that the Board of Regents develop formal mechanisms to ensure consideration of and response to stakeholders' concerns. The Board of Regents has held two public forums and developed a formal mechanism by which comments received from these forums were considered and addressed. Additionally, the Chair of the Board of Regents now emails the chairs of the 30 Smithsonian advisory boards with quarterly reports describing significant activities of the Board of Regents and encouraging them to raise issues with her. In response to GAO's recommendation, at the April 12, 2010 meeting of the Board, the Board voted to revise the statement of the duties and responsibility of the Chair of the Board of Regents to include a responsibility to continue regular communications with advisory boards and other stakeholders. These actions have created more opportunities for exchanges of ideas and will help to ensure that issues and problems that may arise are brought to the Board's attention, thus making the Board better able to exercise its oversight functions.

    Recommendation: The Board of Regents should, in implementing the Governance Committee's recommendations related to stakeholder relationships, develop a regularly occurring mechanism that ensures an understanding of and meaningful consideration by the Board of the key concerns of advisory boards and other stakeholders, and a formal means by which the Board follows up on those concerns to strengthen its governance reform efforts.

    Agency Affected: Smithsonian Institution: Board of Regents

  4. Status: Closed - Implemented

    Comments: In May 2008, we reported that the Board of Regents had no mechanism planned to evaluate the implementation and effectiveness of the governance reforms after enough time had passed for the Smithsonian to operate in a fully reformed environment. We concluded that given the extent and pace of changes occurring at the Smithsonian, it was likely that many governance reforms would not be completely implemented for some time, and the effectiveness of some reforms would only be evident over a longer period of implementation. We recommended that the Board of Regents conduct such an evaluation after suitable time has passed. At the July meeting of the Governance and Nominating Committee, the Committee agreed upon a framework to conduct an efficient and meaningful review and the staff agree to prepare a report to synthesize governance progress. This report was prepared and provides updates and assessments of all actions taken to improve governance to date. The Board is committed to conducting a review every three years of the implementation and efficacy of its governance reforms. Completing these assessments creates assurance that governance reforms have been implemented and that continuous attention is put on the quality of governance at the Smithsonian, which will help the Board to effectively exercise its oversight functions and thereby help to ensure that the Board can address issues and problems that may arise.

    Recommendation: To ensure that the multiple governance and management reform efforts underway are effective in addressing the issues that led to governance and accountability breakdowns, and also to ensure that the Board is focused on continuous improvement of the governance and management practices at the Smithsonian, the Board should plan to have an evaluation of its comprehensive governance reform efforts conducted after a suitable period of operation in the reformed environment to strengthen its governance reform efforts.

    Agency Affected: Smithsonian Institution: Board of Regents

 

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