Change management towards good university governance in Indonesia: study at Islamic religious universities based on BLU mandate

Abstract

Globally, higher education institutions ideally have the characteristics of good academic governance. Higher education has the most significant obligation and responsibility in building the foundation of the nation’s competitiveness, namely by producing human resources who are pious, character, intelligent, creative, professional, and productive, create new findings and innovations through their research, and can capitalize on science, technology, and art to improve the independence and welfare of the nation through community service. This study examines two things, namely: first, to know and explain the process of transforming a work unit that is purely bureaucratic into a work unit based on public service agencies followed by good change management. Second, build an integrated system between the old institutional design and the demand system based on public services and formulate a framework for institutional management governance patterns. This study used a qualitative multisite design methodology. A total of twelve people who are directly involved in the decision-making process and management of the institution in developing and realizing a good university are used as research informants. The results showed that the transformation process from a pure work unit to BLU was carried out by revamping the structure and adding work tasks, focusing on transparent and professional financial governance, asset utilization, and compensation systems for lecturers and employees. Meanwhile, policies and models of good governance are formulated with the principle of openness built based on freedom, independence of professional management, ethical values, compliance with the law, and political will that lead to visionary policies. Therefore, universities with the BLU mandate must ensure good public services in realizing good university governance.

Keywords:

• Change management
• good university governance
• Islamic religious universities
• BLU mandate

REVIEWING EDITOR:

• Robert Read, Economics, University of Lancaster, Lancaster, UK

SUBJECTS:

• Sustainability Education, Training & Leadership
• Education Policy & Politics
• Education Studies
• Higher Education
• School Leadership, Management & Administration

1. Introduction

Education is an important thing to pay attention to. This looks like when applying for a decent job, of course, you need a diploma following the position you are going to use for. Similarly, a high place, of course, requires people who have high educational standards with their certificates. This university is required to be able to compete amid the rapid growth and development of similar universities (Bani, 2016). All universities try to attract as many prospective students as possible (Garaika & Feriyan, 2019). Such is the case with UIN Maulana Malik Ibrahim Malang and UIN Kiai Haji Achmad Siddiq Jember to compete and get value in the eyes of the community. Higher education is tasked with building the nation’s competitiveness by producing energy, knowledge, skills, and arts that are pious, character, intelligent, creative, professional, and productive, as well as increasing the independence and welfare of the nation through service to the community where they live (Law of the Republic of Indonesia Number 20 of 2003 Concerning the National Education System, 2003). The concept of higher education is (1) giving autonomy to universities; (2) improved increase in overall community participation; (3) Non-profit universities have the autonomy of running their organizations as centers for the application of the Three Dharmas in academic and non-academic universities (Government Regulation Number 4 of 2014 Concerning the Implementation of Higher Education and Management of Higher Education, Kementerian Sekretariat Negara Republik Indonesia, 2014).

If universities adopt excellent university governance, higher education autonomy can be attained; as a result, the idea of implementing higher education institutions is required and is then known as excellent University Governance (GUG) (Nurlatifah et al., 2021). Good University Governance (GUG) is guided by five principles: accountability, responsibility, transparency, independence, and justice (Risanty & Kesuma, 2019).

Globally, there is a tendency for higher education institutions to have the characteristics of good academic governance ideally (McCaffery, 2010), management of modern Information and communications technology (Suti et al., 2020), and entrepreneurship (Utama et al., 2022). The Higher Education Long-Term Strategy (HELTS) concept for 2003–2010 was introduced by the Ministry of National Education in response to this trend. It is founded on three fundamental pillars: autonomy, organizational health, and national competitiveness. In this context, the demand for GUG to become the norm must be realized to provide a better and responsible university education to the community (Putra & Roni, 2021). Good University Governance (GUG) means (1) focusing on organizational goals and outcomes for society and service users; (2) performing its functions and roles clearly and effectively; (3) increasing the value of the entire organization; (4) collecting information, make decisions and manage risks transparently; (5) effectively develop the skills and competencies of all university managers, and (6) involve all stakeholders and create real accountability (Bermingham, 2022; Gramling et al., 2004).

GUG in private universities is undoubtedly different from state universities because of differences in its characteristics. First, structural and legal differences affect governance. Second, other legal bases are used to guide government activities in engaging many public institutions. Third, there is a difference in size, where private schools have a relatively small number of students. Fourth, differences in sources of income (Sari et al., 2018). Therefore, GUG itself is not a standard concept in its application, except for the basic management principles. Its implementation can change based on the circumstances and values of a nation and society (Risanty & Kesuma, 2019).

State-owned enterprises established after 2000 require a legal framework for practical autonomy in improving university governance with measurable accountability (Gaus & Hall, 2016). Programs to strengthen governance, responsibility, and public image of universities are carried out through operational and legal tools to improve the status of higher education companies (Law of the Republic of Indonesia Number 20 of 2003 Concerning the National Education System, 2003). This elaboration affirms that higher education is the most optimal way, an accountable form of autonomy and that the institution is non-profit. As part of the transition to a legal and independent university, the government encourages State Islamic Religious Universities such as UIN Maulana Malik Ibrahim Malang and UIN Kiai Haji Achmad Siddiq Jember to form campuses based on the Public Service Agency (in Indonesian abbreviated as BLU) to be more effective and efficient in managing and handling its finances.

These demands are expressly stipulated in (Regulation of the Minister of Finance of the Republic of Indonesia Number 202/PMK.05/2022 Concerning Amendments to Regulation of the Minister of Finance Number 129/PMK.05/2020 Concerning Guidelines for Management of Public Service Agencies, 2022), which authorizes the management of the Public Service Agency (BLU) to (1) manage finances flexibly; (2) managing assets; (3) managing goods; (4) managing cash; (5) managing investment funds; (6) managing revolving funds; (7) administering the endowment; (8) manage to spend; (9) managing receivables and payables; (10) managing budget surpluses; (11) manage managed funds; and (12) manage income and expenditure. These twelve aspects clearly show that BLU managers at State Islamic Religious Universities must have a deep cognitive understanding to manage assets or wealth effectively (wealth management). BLU aims to provide public services with management based on the authority delegated by its parent agency (Juliani, 2018).

Government agencies mandated for BLU must meet at least three conditions, namely: (1) substantive requirements related to the delivery of public services; (2) technical requirements related to service performance and financial performance; and (3) administrative requirements related to the fulfillment of documents such as governance, business strategic plans, minimum service standards, financial statements, and audit reports (Waluyo, 2021). Therefore, BLU managers at State Islamic Religious Universities are responsible for improving the quality of their academic services.

For Indonesia to develop competitive human resources, higher education implementation is entirely the government’s responsibility (Government Regulation Number 4 of 2014 Concerning the Implementation of Higher Education and Management of Higher Education, Kementerian Sekretariat Negara Republik Indonesia, 2014). On the other hand, universities in Indonesia compete with many other universities worldwide. Therefore, with all its authority, the government takes a policy of full autonomy for several state universities in Indonesia. The Public Service Agency is a response to the government’s responsibility to account for higher education to the public. With the mission of the BLU work unit, universities will be able to implement the GUG concept well so that Indonesian universities can compete in the global arena (Government Regulation Number 74 of 2012 Concerning Amendments to Government Regulation Number 23 of 2005 Concerning Financial Management of Public Service Agencies, 2012).

However, there are still many problems that are pretty diverse for universities that have received a BLU mandate, including UIN Maulana Malik Ibrahim Malang and UIN Kiai Haji Achmad Siddiq Jember. These two universities converted from a purely bureaucratic work unit to a BLU work unit and continued in a good direction. In addition, change control, lack of political support, will of university leadership, and internal stakeholder culture are old-fashioned, and the system is not integrated between the old institutional design and the BLU request system. As a result of initial observations and discussions in January 2023, most Islamic universities are very different in understanding and implementing the BLU concept. There is no uniformity in implementing university governance according to the BLU mandate, from institutional to financial management. Thus, it becomes interesting to dismantle the BLU concept at UIN Maulana Malik Ibrahim Malang and UIN Kiai Haji Achmad Siddiq Jember. The argument is that BLU can realize Good University Governance in the governance of Islamic religious universities that are good and competitive.

This study aims at three things: first, to reveal in-depth about bureaucratic work units that are approached with various approaches. At least this study will try to find the transition of the old work unit to the new work unit carried out at Kiai Haji Achmad Siddiq State Islamic University Jember and Maulana Malik Ibrahim State Islamic University Malang, as well as the organization and work procedures of both. Second, analyze the institutional system as an idea for higher education development in the demands of BLU to have strong performance integrity. Third, to answer the institutional system between the old institutional design and the BLU demand system in campus development that will form a superior university with a quality public service agency system in facing the needs and demands of the world of Islamic religious higher education in the future as the basis of an attitude of independence. Finally, Edwards argues in formulating a Governance Framework for Higher Education Management that governance refers to an organization’s internal direction and the procedures and structures employed to help it reach its objectives. Governance is crucial regarding how organizations relate to each other and their stakeholders (Edwards, 2002). In the free definition, governance is the government’s action, which deals with decisions in determining expectations, giving power, and verifying performance. The two campuses that organize the BLU system are significant for having governance, with the Good Governance system as a basis for future institutional development. Thus, have all these systems been implemented at UIN Maulana Malik Ibrahim Malang and UIN Kiai Haji Achmad Siddiq Jember or them? Therefore, it is essential to conduct a comprehensive study to see the extent of applying this theory to the two universities.

2. Literatur review

This study uses two perspectives as analysis tools: change management and good university governance. To read the change management problem, it is necessary to elaborate on the ontological aspect. According to Ade and Hidayatulah, (2010), Change management is the process by which significant strategic changes are implemented within an organization in a systematic and regulated approach to overcoming change resistance, empowering the organization, and increasing engagement. Good university governance is now a constitutional process run by the university itself (Shattock, 2006).

2.1. Change management

The goals of change management are to understand new rules and the effects of the resultant changes (Jayatilleke & Lai, 2018). Process changes are usually associated with task and structure changes. A comprehensive change management strategy aligns with desired objectives, creates a sense of belonging, enables continuous and measurable improvement, and builds capacity to deal with future change (Anderson & Anderson, 2002). Lewin’s traditional three-step change process model and Kotter’s eight-step planning, action research, and organizational development are some methods that can be used to manage organizational change (Appelbaum et al., 2012). In change theory, Lewin explains that tissue transformation consists of three phases: thawing, transformation or movement, and refreezing (Crosby, 2020).

The new settings must be understood since change management focuses on the outcomes of the changes that will be made (Pawar & Charak, 2017). Process change usually applies to task and structure changes and can be appendual, transformational, or situational. A thorough approach to change management should result in the desired outcomes and foster ownership, allowing for continual, demonstrable progress and strengthening the capacity to handle future change (Ade & Hidayatulah, 2010). An organization must transition from its current state to a predicted future state to become more effective. Organizational change can be influenced by both internal and external factors, including administrative procedures, corporate growth, people, social and economic restructuring, labor markets, new technologies, increased competition among organizations, and international law and government needs (Mogogole & Jokonya, 2018)

Change can happen to us and around us even if we don’t realize it is happening (Appelbaum et al., 2012). To establish where change is headed, the forces that drive change and resist it must continually contend with and contradict one another (Anderson & Anderson, 2002). Change can happen quickly and non-linearly, leading to a chaotic environment and making a difference seem strange since it is difficult to hold. What had been effectively held without blurting farewell broke (Kasali, 2005). Most system changes result from the system’s internal and external environment becoming chaotic (Anderson & Anderson, 2002).

This study argues that change can happen to us or around us. Sometimes, we don’t even realize that it’s happening. As in both institutions under study, forces push for change, and other troops resist it. Changes that resist because they occur quickly and irregularly allow for a messy state to be created. Things that we already hold tightly can suddenly disappear without notice. Therefore, the desired change in this study is a response to chaos in the environment, both from within the system itself and from the external environment, to realize institutional progress.

2.2. Good governance

The concept of governance is increasingly recognized as one of the essential elements in sustainable and equitable development (Kardos, 2012). The prevalent understanding is that governance involves how an organization functions and the systems and structures it uses to accomplish its goals and objectives. Different players define governance in different settings (Edwards, 2002). A state that is under the authority of governments, markets, or networks, whether through families, tribes, formal or informal organizations, or territory, and through laws, power, norms, or language, is said to be under ‘gouvernance’ (Syakhroza, 2005). There are many different terms for governance because it is a highly contextual concept whose theory and definition rely on the context. Examples include monetary, economic, public, and corporate governance (Iqbal & Lewis, 2009). This confirms that good governance is a form of management that is transparent and accountable for using human, natural, economic, and financial resources to achieve justice and sustainable development (Blackmore & Lund, 2022).

Additionally, from the checks and balances perspective, governance is the transfer of decision-making authority (Begashaw, 2019). The decision-making officer must be subject to checks and balances as part of the delegation process. From the point of view of decision-making, governance is connected to the effectiveness of the decisions (Iqbal & Lewis, 2009). The structure of relationships informs organizational coherence, approves plans, policies, and choices, and accounts for their integrity, responsiveness, and cost-efficiency concerning the effectiveness of governance decision-making (Amaral et al., 2003).

There is no good governance model that an ideal organization can directly use. Good governance has three components: structure, mechanism, and principles. These three tools are administrative system tools and will operate as a single entity (Figure 1).

Figure 1. Governance model pattern developed (Syakhroza, 2005).

The theory described above focuses on structure in the context of organizations. According to this theoretical view, organizational structure can be interpreted as patterns of coordination and control, workflow, authority, and communication that connect the activities of organizational members (Ahmady et al., 2016). Furthermore, structure is a framework that determines how governance principles can be shared, implemented, and controlled (Hinings et al., 1996). Particular emphasis is given to the control aspect of organizational governance, arguing that control is significant. This is related to responses to the question of who controls whom, which arises from the need for separation between those who make decisions and those who control interests (Syakhroza, 2005). In this context, governance structures are designed to support the responsible and controlled course of organizational activities. The details of the governance structure are explained in depth, including the levels or layers of committees, and describe the primary roles of each. Each committee level has different roles, accountability, and responsibilities depending on its implementation in the organization’s context (Ahmady et al., 2016).

2.3. Public Service Agency/Badan Layanan Umum (BLU)

Refers to (Government Regulation Number 74 of 2012 Concerning Amendments to Government Regulation Number 23 of 2005 Concerning Financial Management of Public Service Agencies, 2012) mentioned that the Public Service Agency (abbreviated as BLU) is a government body established to provide services to the community by selling goods and services without placing a priority on profits and conducting their operations following the principles of productivity and efficiency.

Based on paragraphs 1 and 2 of Article 1 as stated in the government regulation, some keywords must be considered by all government agencies that carry out duties as BLU work units to know that they must prioritize several principles, including:

1. Effectiveness and efficiency. It pertains to the effectiveness and efficiency of public services and the security of state assets under the management of pertinent agencies. Budget usage must be more efficient, effective, targeted, and efficient.

2. Flexibility. BLU work units are granted flexibility regarding budget execution, including revenue and expenditure management, cash flow, and procurement of products and services. In addition, BLU can hire qualified non-civil personnel and pay employees according to their contributions. As a result, no income must be initially placed in the public treasury before being used.

3. Productivity. The productivity being discussed here is a way for the State Budget to improve operational effectiveness. Consequently, the released budget must be based on the outcomes of execution.

4. They are not prioritizing profits. According to Government Regulation Number 74 of 2012’s Article 9, public service organizations may collect fees from the general public in exchange for the goods or services they provide. The compensation above is calculated as a tariff based on calculating costs per service unit or profit per investment, people’s purchasing power, considering aspects of service continuity and development, ethical standards, and healthy competition.

5. Able to practice healthy business methods. After receiving approval as BLU work units, government agencies can launch business operations associated with their principal function.

So, if we look closely, the government regulation gives limited authority to government agencies to provide services to the community.

2.4. The concept of work units of government agencies and public service agencies

In the perspective of university service governance, a work unit is any office or work unit within the central government that is domiciled as a budget/asset user or budget/asset user power (Minister of Finance Regulation Number 119/PMK.05/2007 Concerning Administrative Requirements in the Framework of Proposing and Establishing Work Units of Government Agencies to Implement Financial Management of Public Service Agencies, 2007). Along with the reform period in Indonesia, this policy has been implemented in many fields. One is public finance reform, which aims to create a new paradigm shift in general financial management. This is proven by the issuance of various government regulations, including (1) (Law Number 1 of 2004 Concerning State Treasury, 2004), (2) (Law Number 17 of 2003 Concerning State Finance, 2003), and (3) (Government Regulation Number 74 of 2012 Concerning Amendments to Government Regulation Number 23 of 2005 Concerning Financial Management of Public Service Agencies, 2012). In this regulation, State finances that emphasize the foundation of operational efficiency in budgeting provide an essential foundation for the new direction in Indonesia. So, if we look closely, the government regulation gives limited authority to government agencies to provide services to the community. Therefore, all government agencies authorized as BLU work units can innovate in flexibility, business activities through investment, lending capital to third parties, recruiting professional general employees, performance through the compensation system, and productivity of each program.

3. Method

With a multisite design and a case study methodology, this study takes a qualitative approach. As a direct data source, information is gathered in the natural world (Knopp & Biklen, 2013). In this study, researchers revealed in depth the phenomena and symptoms, found them thoroughly and comprehensively, and described Good University Governance at Islamic Religious Universities with BLU Mandates (Multisite Change Management Study at UIN Maulana Malik Ibrahim Malang and UIN Kiai Haji Achmad Siddiq Jember). Researchers not only stop at substantive conclusions depending on their research’s focus but also at formal conclusions or research statements.

This study used data collection methods with participatory observation, in-depth interviews, and documents. Informants contained in this study are included in Table 1.

Table 1. Institutional transformation process.

No	Initial inform	Department	Agency
1	MA	Vice Chancellor 1	UIN Kiai Haji Achmad Siddiq Jember
2	MC	Vice Chancellor 2	UIN Kiai Haji Achmad Siddiq Jember
3	HZ	Vice Chancellor 3	UIN Kiai Haji Achmad Siddiq Jember
4	MR	Head of BLU Center	UIN Kiai Haji Achmad Siddiq Jember
5	NH	Employee	UIN Kiai Haji Achmad Siddiq Jember
6	SM	Student	UIN Kiai Haji Achmad Siddiq Jember
7	MZ	Rector	UIN Malana Malik Ibrahim Malang
8	IN	Vice Chancellor 2	UIN Malana Malik Ibrahim Malang
9	AM	Vice Chancellor 1	UIN Malana Malik Ibrahim Malang
10	SLM	Head of BLU Center	UIN Malana Malik Ibrahim Malang
11	MH	Employee	UIN Malana Malik Ibrahim Malang
12	SQ	Student	UIN Malana Malik Ibrahim Malang

Furthermore, because the design of this study is a multi-location study, data analysis is carried out in two stages: first, a single data analysis stage and individual data analysis for the second stage. Data was collected through observation, interviews, and document analysis. After the data is collected, researchers perform a series of analysis steps that involve examination, solidification, interpretation, and inductive inference. This means that in a single data analysis, the collected data is carefully examined to understand its contents, after which the data found is condensed or compacted for easy management and analysis. In addition, researchers also provide interpretations of the data, trying to understand the implications and relationship with the research questions carried out. Then, conclusions are drawn inductively from the analyzed data, forming preliminary findings.

In cross-site analysis, the findings resulting from data analysis are confirmed through a series of verification steps. In the next step, the data and findings are examined through careful observation to ensure consistency and accuracy. After that, various data sources (observations, interviews, documents) are verified with each other to confirm the validity of the results. Then, the research findings are discussed and verified by peers to gain additional views and input and assess whether all relevant aspects have been covered in the data inventory. In the last step, run an audit to evaluate the integrity and reliability of data and research findings. By following this set of steps, researchers can ensure that the data collected and the resulting findings are reliable, relevant, and highly objective.

4. Result

4.1. Transformation process

The work process of each management process and management system has been documented in quality procedures and standard operating procedures. This quality approach has been recorded, socialized, and applied in every department and other work unit. With quality procedures, each work unit’s application or processes of service and performance are expected to be carried out according to the quality manual. This workflow can also be used as a document to evaluate the performance and efficiency of each running process (Table 2).

Table 2. Institutional transformation process.

No	Domain	Finding data	Site
1	Institutional Transformation Process	Changes in Organizational Structure Updating Standard Operating Procedure Changes in the Financial System	UIN Kiai Haji Achmad Siddiq Jember
2	Institutional Transformation Process	Business Strategic Plan Business Plan and Budget Service Fee Supervisory Board Internal Audit Unit Minimum Service Standard Document Standard Operational Procedure.	UIN Malana Malik Ibrahim Malang

Prior to the implementation of Financial Management of Public Service Agencies, UIN Kiai Haji Achmad Siddiq Jember was established following the following structure as per the Decree of the Minister of Religious Affairs of the Republic of Indonesia Number 6 of 2015 concerning the Organization and Work Procedures of IAIN Jember: Committee of Trustees. Institute Senate. Rector and Assistant Rector. Faculty of Tarbiyah and Teacher Training, Sharia, Ushuluddin, Adab and Humanities, Da’wah, Islamic Economics and Business, Postgraduate Program, Internal Control Unit, Quality Assurance Institute, Research and Community Service Institute, Bureau of General Administration of Academic and Student Affairs, Technical Implementation Unit: Library, Language Development, Information Technology and Database and Ma’had (Interview, MC, 2023).

UIN Kiai Haji Achmad Siddiq Jember implemented organizational changes to execute Financial Management of Public Service Bodies based on Government Regulation of the Republic of Indonesia Number 23 of 2005 concerning Financial Management of Public Service Bodies. After the introduction of BLU, a new organizational structure, consisting of the Supervisory Board and the BLU organizational structure, was created at the UIN Kiai Haji Achmad Siddiq Jember. While developing the organizational structure of the Business Centre, which is responsible for boosting the university’s financial sources to enhance services to the community, the supervisory board is charged with improving the university’s internal control system. The Chancellor and Vice-Chancellor are listed as BLU Leaders, the Head of the General Administration Bureau is listed as a Financial Officer, and the Deans of the Faculties and Heads of Other Work Units are listed as Technical Officials (Interview, MA, 2023).

While at UIN Maulana Malik Ibrahim Malang, according to the rector’s narrative, before this university was not yet, BLU still used the old work system, so campus development was not too significantly developed. The campus organizational structure was not much different from the campus organizational structure in general, which was only limited to the senate, rector and vice rector, dean and staff, and heads of institutions. From this structure, everything is more focused on pure academic review (Interview, MZ, 2023). The development of the Public Service Agency Financial Management System encompassed various research areas once the facility was transformed into an official BLU facility, according to Maulana Malik Ibrahim Malang, director of the BLU Management Centre at UIN. These included Corporate Strategic Plan, Business Plan and Budget, Service Pricing, Supervisory Board, Internal Control Unit, Minimum Service Document Standards, Standard Operating Procedures, bureaucratic integration with BLU management, Institutional support, personnel support and commercial potential of BLU (Interview, SLM, 2023)

However, even though this facility already has a BLU work unit, especially in terms of finance, there are still many weaknesses, including (1) still complying with applicable financial regulations; (2) the quality of human resources managing BLU work units is still low; (3) the new model has not yet been realized; (4) lack of preparation of human resources to become BLU work units; (5) the existence of flexible thinking makes financial abuse very likely; (6) reduce government subsidies; (7) the transfer of income related to the BLU Work Unit in universities; and (8) timid flexibility due to disrespect for clear rules. So this year, we compiled a new Organization and Work Procedure to refresh the old work system and replace it with a new one. The preparation of this Organization and Work Procedure has been 95% of the process, which we will later submit to the rector as the head of BLU on this campus (Interview, IN, 2023).

4.2. Integrated institutional system

Higher education is an institution in the sense of an organization. There is a governance structure where students, faculty, and staff become members of the organization. The goal is to educate learners to become intelligent human beings, be ethical and demonstrate personal integrity; conduct research and disseminate research results so that science continues to develop; see community service as an opportunity to implement research results in the community; and improve the welfare of campus stakeholders so that these three goals can run well. To achieve this goal, there must be clear game rules where every stakeholder consciously feels bound and responsible to implement the practices properly (Table 3).

Table 3. Institutional integrated system.

No	Domain	Data coverage		Site
		Old	New
1	Institutional Integration System	Pure Bureaucracy Centralized Finance Fixed assets	Addition of Work Tasks Financial Transparency Asset Utilization (Development)	UIN Kiai Haji Achmad Siddiq Jember
2	Institutional Integration System	Pure Bureaucracy Centralized Finance Fixed assets	Compensation Remuneration Performance appraisal system conversion	UIN Malana Malik Ibrahim Malang

Vice-Rector 3 UIN Kiai Haji Achmad Siddiq Jember said that the campus has begun to revamp the institutional work system, which is an integrated system from the old system to the BLU demand system. This is evidenced by updating the structure and adding work tasks, and focusing on transparent and professional financial governance, in addition to the utilization of assets as one of the developments of universities through several businesses such as hotel management of multipurpose buildings UIN Kiai Haji Achmad Siddiq Jember, Aqua (mineral water), and Rice as well as rental of Business center buildings (Interview, HZ, 2023).

One of the employees of UIN Kiai Haji Achmad Siddiq Jember, also said that the businesses managed by BLU, such as hotels, mineral water, and rice, in addition to contributing to the development of this campus, also have a very beneficial value to the community by buying products from this campus (Interview, NH, 2023). Likewise, as conveyed by one of the students of the Faculty of Islamic Business Economics at UIN Kiai Haji Achmad Siddiq Jember said that the existence of rice and mineral water managed by the BLU campus is felt by the community because the products are not only sold in the campus environment but also found in many markets in several areas in Jember, In addition, rice produced by this campus is also circulating in basic food shops in several regions of Jember (Interview, SM, 2023).

Meanwhile, UIN Maulana Malik Ibrahim Malang implements an integrated system by implementing policies and compensation systems for lecturers (educators) and education staff (employees) to strengthen a transparent, professional, trustful, and responsible financial system. With the concept of compensation, all income transactions received by lecturers and staff (net salary) will be tracked and recorded as Single Entity Payment (Interview, SLM, 2023).

According to one of the employees of UIN Maulana Malik Ibrahim Malang said that with this remuneration or salary, it is felt by us as employees to further increase morale in the development of this campus for the better in the future because very minimal employee salaries can get the proper compensation using an accurate work appraisal system (Interview, MH, 2023). In addition, the impact of this remuneration is also felt by students, as conveyed by one of the students of the Faculty of Tarbiyah and Teacher Training at UIN Maulana Malik Ibrahim Malang, who said that since this campus became a BLU, the services provided to us are straightforward and fast so that we are no longer complicated by academic staff on this campus (Interview, SQ, 2023).

Since enacting the remuneration policy in 2016, UIN Maulana Malik Ibrahim Malang has won many achievements and awards, including increasing the effectiveness of the Tri Dharma of Teacher Training College (teaching, community service, research), financial performance, and service and qualified, educational, and non-educational. No less critical, compensation payments are calculated online through an integrated performance appraisal system for lecturers and education staff. There are three main imperatives in determining the conversion of a performance appraisal system from manual to digital. First, it is faster because it can be accessed anytime and anywhere. Second, it is more economical because everything is done online without having to print documents, and third, most importantly, it is accurate because it helps avoid double counting. Revenue received (Interview, AM, 2023).

4.3. Institutional management framework

In addition to work units and integrated systems, this study also focuses on policies or models of good governance in realizing good governance. Researchers found in both large East Java campuses that implement the Public Service Agency system (abbreviated as BLU). Vice Rector III UIN Kiai Haji Achmad Siddiq Jember said that in formulating policies as a model of governance on this campus, the Rector and Vice Rector have applied the principle of openness based on freedom of information flow so that parties who need information can immediately receive it. Additionally, independence is professionally managed, free from conflicts of interest or pressure from anyone who does not uphold ethical standards and legal requirements, and respects the rights of institutional stakeholders in an equitable and just manner following applicable laws and legal agreements (Interview, HZ, 2023).

Such was the case conveyed by Vice Rector I: Here, the institute’s organs are encouraged to make decisions and carry out activities, and campus governance policies are developed. These policies are always based on high ethical standards, compliance with relevant laws and regulations, and awareness of the institution’s social responsibility to stakeholders. In addition, let us increase the contribution of universities to support the progress of the world of education and the improvement of the nation’s morale (Interview, MA, 2023).

While at the UIN Maulana Malik Ibrahim Malang campus, policies are carried out with effective and efficient behavior. Campus leaders position themselves as political will, meaning that the rector has full authority to advance the campus better because without setting himself as political will, the campus will have no development, so the rector of UIN Maulana Malik Ibrahim Malang always has visionary policy innovations with the target that this campus is not completed as a campus that has a BLU mandate. Still, later, this campus became a legal entity campus (Interview, MZ, 2023) (Figure 2).

Figure 2. BLU-based state Islamic higher education management framework.

The framework above shows that the policy model carried out in the two State Islamic religious universities makes the principle of openness built based on freedom carried out by positioning leaders as political will who have visionary policy directions by considering the independence of professional management with ethical values that Based on the applicable legislation, so that with the management framework in Islamic religious universities, this country can make management changes that can realize good university governance.

5. Discussion

5.1. Institutional transformation of Islamic religious universities at BLU

Institutional transformation is needed in universities that are transferring status, and this can be done through changes in organizational structure, Standard Operating Procedure Updates, changes in the financial system, business strategic plan, business plan, and budget, as well as service tariffs and various other strategic plans. This is consistent with effective university governance, founded on moral principles, ethical principles, academic standards, organizational structures, and processes that promote transparent and accountable institutional administration (Kardos, 2012).

A college that practices good university governance will use all its resources best to carry out its vision and mission (Putra & Roni, 2021). Some experts see accountability as a central issue in governance (Iqbal & Lewis, 2009) and liken it to different sides of the same currency. Accountability relates to the questions: who is accountable, to whom, how, and for what to be responsible (Slamet, 2014; Syakhroza, 2005). So, when this accountability is linked to governance in the process of institutional transformation, it will lead to the question of who is accountable to control (control) the university and how the control mechanism accountability can be achieved.

When considered in terms of organizational structure, the difference between BLU-based State Islamic Religious Universities and purely Work Unit-based lies in the existence of the Technical Implementation Unit, Business Development Center, and Supervisory Board. The Business Development Center, which functions as the spearhead in asset management, still has technical characteristics and has not been considered a strategic work unit. To achieve the goal of agensification in BLU-based State Islamic Religious Universities, the specialized ministry needs to review the Organization and Work Procedures and Statutes, incorporating the interests of BLU more substantially.

The study above links work procedures with Sedarmayanti’s view that work procedures refer to efficient task implementation methods, considering various factors such as goals, facilities, work equipment, labor, space, time, and costs (Sedarmayanti, 2001). Work procedures and work systems are explained as a series of work procedures related to each other, forming governance patterns in a particular task. In conclusion, this study highlights the structural differences between BLU-based Islamic Religious Universities and pure Work Unit-based, so a review is needed to accommodate BLU’s interests more substantially. In addition, work procedures and systems are essential in explaining the implementation of work, functions, duties, authorities, and responsibilities in a task.

5.2. Institutional integration system of Islamic religious universities mandated by BLU

The integration system in universities with different statuses requires seriousness that stakeholders must do. This can be done by adding work assignments, financial transparency, asset utilization (development), compensation, and remuneration. Refer (Government Regulation Number 74 of 2012 Concerning Amendments to Government Regulation Number 23 of 2005 Concerning Financial Management of Public Service Agencies, 2012). According to Article 9, the public may be charged fees in exchange for the goods or services rendered. A recent audit report or a statement of willingness to be independently audited is one of the administrative requirements, along with a statement of ability to improve service performance, finances, and community benefits, governance patterns, principal financial statements, a business strategic plan, minimum service standards, and six other items.

Both receipts and payments must be reported, preferably as BLU receipts and payments. BLU revenue sources include (a) income produced from services supplied to the community, (b) income derived from the State Budget or Regional Revenue and Expenditure Budget, (c) grants from communities or other agencies, and (d) the outcome of cooperation with the parties. As a result, the BLU corporate governance pattern is an internal regulation that establishes responsibility, transparency, and organization (Juliani, 2018; Nurlatifah et al., 2021).

A system is a complex set of interacting elements (Bertalanffy, 1968). This systems thinking involves a whole discipline, aiming to discover general principles that apply to any system. In available systems theory, the main focus is on interactions between elements. The center of attention in the relationship emphasizes that the behavior of elements when interacting can be different from that of elements autonomously. Another core principle is the distinction between open, closed, and isolated systems. In an open system, there is an exchange of energy, matter, people, and information with the outside environment. The application of this system theory concept can be found in the context of universities that have a BLU mandate. BLU-based universities view themselves as a system of complex entities with various elements such as organizational structure, operational policies, and interactions with external stakeholders. The concept of interaction and exchange with the outside environment explained by Bertalanffy can reflect the relationship of BLU universities with society, industry, and other related parties.

Research (Nchukwe & Adejuwon, 2014) states that most developing countries struggle to trigger public sector transformation. This is due to the lack of performance improvement and state institutions that do not implement the special autonomy that has been granted due to the embedded old bureaucratic and administrative systems that are very strong. Meanwhile, agentification of government agencies aims to achieve agencyization or agency, where the institution becomes autonomous without much interference from the central government as its parent entity. In this context, research conducted by Lorsuwannarat, (2014) explains that agencification is a change from a bureaucratic system to autonomous, separate bodies to increase efficiency and effectiveness in the public sector.

5.3. Management framework for Islamic religious universities mandated by BLU

The policy model in higher education needs to be one of the essential elements in realizing good university governance (Risanty & Kesuma, 2019). This mechanism can encourage university organs to make decisions and carry out activities based on the principle of openness built on freedom, independence, and professionalism (Begashaw, 2019). In addition, ethical values and compliance with laws and political will that lead to visionary policies can be realized (Nurlatifah et al., 2021). This governance model embraces stakeholders, networks, collaboration, and partnerships in policy (Ikeanyibe et al., 2017).

In the study’s definition of university governance, governance refers to an institution’s decision-making process (Putra & Roni, 2021). For whom, by whom, and with what resources (to whom) choices are made are the three commonly accepted characteristics of decision-making in organizational administration (Iqbal & Lewis, 2009). In the public sector, the introduction of a governance viewpoint signifies the end of the NPM (New Public Management) model historically (Ferlie & Steane, 2002).

Therefore, neoclassical public administration theories were introduced based on scientific observations and derived from the laws of human behavior. This theory also did not survive because it was rivaled by the theory of public choice and the NPA (New Public Administration). This NPA will be beefed up NPM from now on (Gruening, 2001). NPM also did not escape criticism because it was considered only to emphasize managerial aspects. Other aspects (non-NPM values, such as democracy) are not considered (Ferlie & Steane, 2002). Alternative views involving decision-making partnerships, networks, and interdependencies between various stakeholders emerge. This new perspective of governance is used for good university governance.

6. Conclusion

In implementing the Public Service Unit towards good university governance, UIN Maulana Malik Ibrahim Malang and UIN Kiai Haji Achmad Siddiq Jember are carried out through changes in organizational structure, Standard Operating Procedure Updates, changes in the financial system, and various other strategic plans. The Integrated System from the old system to the BLU demand system, evidenced by revamping the structure, adding work tasks, and focusing on transparent and professional financial governance, in addition to the utilization of assets and compensation systems for lecturers and employees to support the strengthening of transparent, professional, reliable, and responsible financial management. Meanwhile, good governance policies or models are formulated with the principle of openness built based on freedom, independence of professional management, ethical values, and compliance with the Law and Political will, leading to visionary policies.

This study recommends that universities with the BLU mandate respond to government policies dynamically to survive by running the wheels of the organization well. Autonomy is needed to maintain idealism and educational achievement with superior academic nuances. It is also essential to ensure that universities have good public services to realize good university governance.

This research is limited to the governance of state universities within the Ministry of Religious Affairs with the BLU mandate, which is dependent on descriptive analysis of limited data sets. Thus, further research is needed to examine the governance of universities in private institutions, which aims to make the equitable governance system of Islamic religious universities in Indonesia more dynamic and competitive.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Additional information

Notes on contributors

Erma Fatmawati

Erma Fatmawati is an Associate Professor at the Faculty of Tarbiyah and Teacher Training, UIN Kiai Haji Achmad Siddiq Jember, East Java, Indonesia—interested in Islamic Education Management, Curriculum, Islamic Boarding Schools, and Islamic higher education.

Babun Suharto

Babun Suharto is a Professor at the Faculty of Economics and Islamic Business, UIN Kiai Haji Achmad Siddiq Jember, East Java, Indonesia—interested in Management Science, Management Studies, Islamic Economics, and Islamic Boarding School Economics.

Shoni Rahmatullah Amrozi

Shoni Rahmatullah Amrozi is an Assistant Professor at the Faculty of Tarbiyah and Teacher Training, UIN Kiai Haji Achmad Siddiq Jember, East Java, Indonesia—interested in educational management, Islamic Studies, Islamic Boarding Schools, and Scientific Genealogy.

Wildan Khisbullah Suhma

Wildan Khisbullah Suhma is an Assistant Professor at the Faculty of Economics and Islamic Business, UIN Kiai Haji Achmad Siddiq Jember, East Java, Indonesia—interested in Financial Management Studies and Sharia Accounting.

Agus Yudiawan

Agus Yudiawan is an Associate Professor at the Faculty of Tarbiyah, Institut Agama Islam Negeri Sorong, Southwest Papua, Indonesia—interested in education management, Islamic Studies, Higher Education Management, Educational technology, Education Policy, and Education Quality Management.

Mukhamad Ilyasin

Mukhamad Ilyasin is a Professor at the Faculty of Tarbiyah and Teacher Training, UIN Sultan Aji Muhammad Idris Samarinda, East Kalimantan, Indonesia—interested in Islamic Religious Education, Islamic Education Management, Islamic Boarding School Education, and Curriculum.

Fihris Maulidiah Suhma

Fihris Maulidiah Suhma is an Assistant Professor at the Faculty of Tarbiyah and Teacher Training, UIN Kiai Haji Achmad Siddiq Jember, East Java, Indonesia—interested in Early Childhood Islamic Education, environmental health, nutritional science.