BOARD OF DIRECTORS - University of Malaya

ENHANCING THE ROLE OF BOARD OF
DIRECTORS OF AUTONOMOUS UNIVERSITY
AS AGENT OF CHANGE
SIRI KEPIMPINAN & GOVERNAN UNIVERSITI MALAYA
UNIVERSITI BERSTATUS AUTONOMI : ISU DAN CABARAN
DATIN PADUKA SITI SA’DIAH SHEIKH BAKIR
DIRECTOR & CORPORATE ADVISOR
KPJ HEALTHCARE BERHAD
27 AUGUST 2014
MALAYSIA’S TRANSFORMATIONAL JOURNEY
 Government Transformation Programme - introduced by the Prime Minister, YAB Dato'
Sri Najib Tun Razak, in April 2009 - Malaysia to become a high income nation by 2020,
inclusive & sustainable
 All sectors should contribute towards this transformation journey… public, private sectors
including universities …need to be more autonomous in managing their affairs
AUTONOMOUS UNIVERSITIES OF THE WORLD
Formed in 1636
by Govt
Now Private Ivy
League RU
World’s Largest
endowment : @
2012, $159m in
reserve for
students, &
a $4.093m Pell
Grant reserve
A public university;
now a collegiate
research university
Receives some
public money from
govt., but entirely
self-governing
[could choose to
become entirely
private by rejecting
public funds]
Established by
Govt in 1845
 Transformed into
an independent
autonomous
university with
powers to award
and accredit its
own degrees and
qualifications, via
the Universities
Act 1997
AUTONOMOUS UNIVERSITIES IN MALAYSIA
GRANTED AUTONOMY STATUS IN YEAR 2012
GRANTED AUTONOMY STATUS IN YEAR 2013
Have the 7 Autonomous Universities in Malaysia fulfilled
the definition of Autonomous University?
MALAYSIA AUTONOMOUS UNIVERSITIES : CURRENT SCOPE
Institutional governance :
Formulate own policies
Finance & wealth generation:
Generate income thro’ investments
Talent Management :
Recruitment & retention of top talents
Decide on students’ fees & intake
Self-accreditation
Controls & manages
its own
corporate
governance.
However policies made
are in line
with Ministry of
Education’s objectives
MALAYSIAN AUTONOMOUS UNIVERSITIES :
CHALLENGES FACED BY THE BOARD OF DIRECTORS
NON-AUTONOMOUS UNIVERSITIES
 Financial : Fully
dependent on govt. thus
limited freedom in
decision-making
 Management : must go
thro’ the Ministry &
various agencies for
approval
 Academic Freedom :
Limited / Bureaucratic &
Time consuming
AUTONOMOUS UNIVERSITIES
 Financial : HOW to manage
inflow & outflow to fulfill all
needs & obligations?
 Management : WHAT is the
best leadership /
management model to
move forward?
 Academic Freedom : How to
become the PREFERRED
university?
KPJ HEALTHCARE BERHAD
TRANSFORMING A
STATE GLC ENTITY
INTO AN ENTREPENEURIAL
INDUSTRY LEADER
~ SINCE 1981
KPJ HEALTHCARE : MALAYSIA’S LARGEST PROVIDER
OF PRIVATE HEALTHCARE SERVICES
MALAYSIA
25 hospitals,
1 university college
& 2 branches,
2 aged care centers,
…more hospitals in the pipeline
INDONESIA :
2 hospitals
THAILAND :
1 hospital
BANGLADESH
1 hospital &
1 nursing school
AUSTRALIA :
1 aged
care center
KPJ’S HIGHLIGHTS
• Established in 1979 as Sdn. Bhd. &
operational in 1981
• Listed on Main Board of the Malaysian
bourse since 1994
• MSQH & JCI Accredited hospitals
• >1,000 medical consultants &
10,000 staff
• >2.5 million patients annually
• >RM2 billion revenue annually
• Market cap of >RM3.5 billion (2014)
9/9/2014
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KPJ’S VMCV
VISION
Preferred Healthcare Provider
MISSION
Deliver Quality Healthcare Services
CORE VALUES
Ensuring
Delivering Service With
SAFETY
COURTESY
Exercising
PROFESSIONALISM
Performing Duties With
INTEGRITY
Striving for
CONTINUOUS
IMPROVEMENT
KPJ’S TRANSITION INTO INDUSTRY LEADER
KPJ underwent a successful growth process in 4 phases
in 30 years :
1st : Devt.
Of Hospitals
(1980-1993)
- Introduction
with own
built hospital
& started
acquisition
2nd :
Strengthening
The Business
(1994-2001)
- Became a
PLC, built own
hospitals, &
acquisition
(domestic &
abroad)
3rd Phase :
Integration &
Consolidation
(2002 – 2005)
-Streamlined
structure,
strategic smart
partnerships,
exporting
management
expertise
4th Phase :
Transformation
(2006-TODAY)
- KPJ fully
established as
industry leader :
continuous rapid
growth incl. as
Bursa’s Top 100
Companies since
2007
KPJ – PLANNED & OPPORTUNISTIC STRATEGIC JOURNEY
Strong value creation achieved thro’ :
CAPACITY
BUILDING
Continuous
Growth
TALENT
MGMT.
‘Ordinary’ To
‘Extraordinary’
INNOVATION
GOING BEYOND
THE LIMIT
1. KPJ : STRATEGIC JOURNEY ~ THRO’ CONTINUOUS CAPACITY BUILDING
 KPJ Created Own Opportunity : build 1st hospital in Johor Bahru in 1979
 Optimised New Opportunities : 1st acquisition in Kuala Lumpur in 1988
 Expand the Business : acquired hospitals facing stalled growth & took over ailing hospitals
 KPJ’s purpose-built hospitals : build new big hospitals / build from abandoned structures
 Strengthen KPJ’s Integrated Network : acquisition of profitable hospitals / stand alone
hospitals
 Relocation of hospitals
 Constant expansion & upgrading of existing hospitals
KPJ Johor
KPJ Ampang Puteri
 Foreign ventures in Indonesia, Thailand, Bangladesh & Australia
 KPJ Hospitals contribute to Economic Transformation Programme (ETP) : Total Investment
of RM814m, GNI of RM1.32b, Create Jobs : >3,000 (incl. doctors)
2 . KPJ : STRATEGIC DIRECTION ~ THRO’ PEOPLE
 Board of Directors
- Well balanced & diversified backgrounds (including medical specialists)
- Embrace Transformational Leadership : leaders & followers raise one another
to higher levels of motivation & morality
- Open communication & continuous co-operation with Management
 Unceasing Talent & Intellectual Development
-Value creation thro’ in-house training & collaboration with renowned varsities
- Creation of own leaders & managers to run the business
- Partnership with >1,000 of nation’s best medical specialists
(including several Award winners)
 Established KPJ Healthcare University College from a Nursing College in 1991
(pioneer, Diploma programmes)
- Trained more than 5,000 nursing & >1,000 allied health professionals
- Currently training post graduate specialists in 5 medical specialties
(Blue Ocean Strategy)
3. KPJ : STRATEGIC DIRECTION ~ THRO’ INNOVATION
 Embed Culture of Innovation & Creativity
 Created own Business model : autonomous & sustainable
 Adopted innovative financing scheme – Healthcare REIT
 Created own integrated Information System
 Implement Quality and Patient Safety Accreditation programmes
 Creative branding via publications & electronic media, OOHM,
Health Tourism, Conferences
 Develop KPJ intrapreneurs
- unleash internal talents to set up spin-off businesses
- strategically convert Cost Centers into Profit Centres
KPJ : KEY MILESTONES
o 2007 : > RM1b turnover @ RM1.11b
o 2008 : > RM100m PBT @ RM114.1m
o 2009 : > RM1b mkt cap @ RM1.37b; #91 on Bursa’s Top 100
o 2010 : > RM2b mkt cap @ RM2.08b; #85 on Bursa’s Top 100;
o 2011 : # 75 (m/cap RM2.74bn) on Top 100; received
Healthcare Service Provider of the Year (Frost & Sullivan)
Innovative Leadership in Globalisation (Healthcare) (MID)
Best Performing Stock : Highest Returns Over 3 years
(Trading/Services) (The Edge 100 Billion Club)
o 2012 : >RM3b mkt cap; met RM2b revenue target
Continuous Awards, Accolades & Recognition
o 2013 : market cap >RM4b ; achieve >RM2b revenue
o 2014 : market cap >RM3.5b (August 2014); continuous awards &
recognition at national & international levels
BOARD OF DIRECTORS
OF MALAYSIA’S UNIVERSITY
- APPLYING INDUSTRY PRACTICES
AT
UNIVERSITY LEADERSHIP
BOARD OF DIRECTORS :
APPLYING INDUSTRY PRACTICES AT UNIVERSITY LEADERSHIP
1. Twin Focus on Development & Commercialisation :
 Introduce transformation : embark on revolutionary change to balance between :
Development
Commercial
 High value graduates
 Students’ Fees
 Competitive ‘Services’
 Financial Management (2-entry
accounting – P&L/Balance Sheet) : for
sustainability
(instead of Programs)
 Research & Development
 Talent Management : Hire & Fire
 Ranking
 Evolving Structure & System
 Administrative & Educational
Governance : relevancy
 Branding, Positioning & Marketing
of the University’s Strengths
 Accountability to stakeholders (govt.,
Ministry, students, communities)
 Accountability to investors / contributors
BOARD OF DIRECTORS :
APPLYING INDUSTRY PRACTICES AT UNIVERSITY LEADERSHIP
2. Full Corporatisation of Universities in Malaysia : start now!
 Universities aged >40 years & above in Malaysia should be fully autonomous
in phases & ultimately managed like an income-generating business e.g. UM
paved the way (pioneer) towards full autonomy
 Consider full autonomy or partnership with industry player
 Positive readiness towards autonomous position as Universities have
built strong brand & education excellence
 Full fees payment but initially govt. sponsorship for poor & needy
 Board to challenge the conventional ‘planned approach’ & adopt
a more ‘opportunistic approach’
21
 Strategy
Planned
Opportunistic
 Structure
Elitist
Pluralist
 Systems
Mandatory
Discretionary
 Staff
Individuality
Team Spirit
 Skills
Maximise
Meta-mise/New ventures
 Style
Managerial
Transformational
 Shared
Hard Minds
Values
9/9/2014
21
Soft Hearts
CORPORATISED UNIVERSITIES : A MODEL OF PARTNERSHIP
 Management of universities and businesses can be parallel
e.g. the partnership of Ohio State University & Ford Motors
 Corporatised universities are expected to:
(a) raise a much greater proportion of their own revenue
(b) enter into business enterprises
(c) acquire and hold investment portfolios
(d) encourage partnerships with private business firms
(e) compete with other universities (in the market for higher education) to
students who are now regarded as customers
William W. Bostock
The Global Corporatisation of Universities: Causes and Consequences
BOARD OF DIRECTORS :
APPLYING INDUSTRY PRACTICES AT UNIVERSITY LEADERSHIP
3. Asset Re-evaluation for Capital Generation
 As a potential business entity, must increase income from self-generated programmes;
lower dependency on grants
FEES
GRANTS
 Innovative Method ~ Real Estate Investment Trust :
 Asset Light Strategy to unlock value of assets for future growth
 Increase cash flow
BOARD OF DIRECTORS :
APPLYING INDUSTRY PRACTICES AT UNIVERSITY LEADERSHIP
4. Collaboration & Merger between Universities:
 INCREASE effective collaboration between
universities or MERGE universities to create
larger academic entities with access to greater
resources – larger talent pool, bigger funds
 Too many duplication of services &
programmes/wastage of resources/redundant
 Be part of a larger/bigger organization vs. stand
alone – reduce risk of being marginalized
BOARD OF DIRECTORS :
APPLYING INDUSTRY PRACTICES AT UNIVERSITY LEADERSHIP
5. Embody Transformational Leadership Towards Autonomy:
(a)
Board Composition : engaged & balanced
(b)
Be a catalyst for change : innovation as a corporate culture with entrepreneurial dynamism
(c)
Effective Communication between Board & Management
Overpowering
Over-empowering
(d)
Remaining committed to mission
(e)
Creating a high-level blueprint for change : what the transformed organisation looks like
(f)
Accept leadership responsibility / accountability
For autonomous universities
to fulfill their potential,
the Board of Directors MUST lead the universities
to be financially independent entities…
which will enable the universities
to achieve excellence and success in all areas

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