Thursday, December 10, 2009

Change on the way: accounting in education, housing and charities

Today I am heading for London. I am on CIPFA’s FE/HE Panel. One of the items on the agenda is convergence towards International Financial Reporting Standards in the accounting for the education, housing and charities sectors (so-called UK “public benefit entities”).

The week before last I was at a consultation event for these “third sector” sectors following an Accounting Standards Board discussion paper. A key issue for debate is whether there is a need for further sector guidance, possibly filling a similar role to the SORP guidance for these sectors. I think this a recognised need within the three sectors as they have together and individually particular issues. I am confident that accounting regulators are listening.

Monday, November 16, 2009

Pay day: salaries in the news

Today’s news that employers' group CBI and recruitment firm Harvey Nash have found that half of all British employers plan to freeze pay will no doubt stir the debates around pay and fairness.

I’m not a regular reader of The Times but on Friday I picked up a free copy last week and read a couple of articles about pay.

The inflammatory headline Public sector workers laughing all the way to the bank caught my eye. In fact the content was a bit more subtle than that. A typical public sector worker may now earn £74.20 a week more than their private sector equivalent. The figures are partly distorted by bankers joining the public sector. (One factor not mentioned is the fact that now a lot of the lowest paid jobs have been out-sourced by the public sector to the private sector.) Nevertheless in the run up to next spring’s election the pay and the public-private divide will be a sensitive issue.

There was also a report about criticism of “greed, bonuses and supersized pay packets” in the voluntary sector from the union Unite. I personally do not have a problem with high salaries for managers in the not-for-profit sector, including the general secretaries of my old union Unite. The key thing is transparency and payment for (good) results.

Wednesday, November 11, 2009

Code unknown: the third sector code of governance

In a couple of weeks the consultation ends on the revised third sector code of governance. When it was launched in 2005 the original code, Good Governance: a Code for the Voluntary and Community Sector (pdf available), was a real step forward for the voluntary and charitable sector. As there was more talk and even action on the third sector running public services, it was vital that the sector raised its game.

It was disappointing to read on the Third Sector website that more than a quarter of the respondents to the code consultation had not heard of the original code. There is still some way to go…

Going Dutch – self-regulation and the problems of housing associations in the Netherlands

The Conservatives’ plans for social housing will re-open the debate over regulation: if the TSA is abolished, many in housing associations (and certainly the National Housing Federation) will advocate self-regulation on the Dutch model. Meanwhile the housing associations in the Netherlands are having some problems.

Last week it was reported that Dutch housing associations had posted an average loss of €1.2m - the first time the sector has failed to make a profit in well over a decade. This will put under strain the sectors own arrangements to rescue troubled associations. While the financial problems may be largely outside the control of the associations, the self-rescue and the self-regulation arrangements tend to support each other.

Monday, November 09, 2009

Cuts: Labour and further education colleges

Yesterday’s Observer published confidential papers that show plans for £350m of further education cuts in 2010/11.

The paper listed options including:

- Cutting by 10% of the funding of adult apprenticeships.

- Delaying the introduction of "skills accounts".

- Reducing funding for Train to Gain scheme.

I hope FE colleges are preparing for the future whoever wins the election.

Saturday, November 07, 2009

Catchup - the Conservatives and regulation of social housing

Life has been busy - mostly working with organisations in the overlap of the public, charitable and education sectors. This month I will try to reserve more time for this blog.

This weekend I have been catching up on last month's issues of Public Finance. It was disappointing to see that the Conservatives appear to be planning to re-arrange the regulatory landscape for English social housing as part of the crusade against quangos. If the Tenants Services Authority is doomed, there will have to be a new regulatory regime otherwise lenders will be wary of lending to housing associations - or, if they do, it will be at higher margins.

Sunday, September 27, 2009

Can’t get no satisfaction (statistics): reporting performance

One of the most promising developments in public services in recent years has been the increasing attention to customer satisfaction - whether those customers are students, patients, residents, or whoever. Often regulators require the publication of satisfaction statistics. When the results show improvement, public sector organisations do no need much encouragement.

I was therefore interested in the latest newsletter from my local NHS hospital trust. The headline was "Survey reveals patient satisfaction is on the up":

Significant improvements since 2007 included:

- The hospital room or ward was very clean - up 12%
- Always offered a choice of food - up 12%
- Doctors always washed or cleaned their hands between touching patients - up 10%...

But where did that take the Trust? What were the new percentages? (How many doctors had dirty hands?) How do the new percentages compare with last year's? What were the old percentages? What about the average rates for other comparable hospitals?

There were no charts illustrating any of this. Just words.

Perhaps the article was not intended to report performance - only tell of how the Trust was on "on the up". But accountability is about reporting performance.

Death by Powerpoint

If you’ve ever suffered death by Powerpoint in meetings or training, this may amuse:

(I found the link on Jon Moon's website, which I have recommended before.)

Saturday, September 12, 2009

10:10 vision: making a carbon commitment

Last week I was pleased to see that public and third sector organisations making the 10:10 pledge i.e. committing to cut carbon emissions by 10% in 2010. There are ten universities as well as dozens of schools.

While some carbon-reducing measures will have cashflow and budget implications which may preclude speedy implementation at the current time, other measures may save money as well as the planet.

I am actively seeking to reduce my business mileage which is significant albeit driving a low carbon car. Making the 10:10 is consistent with that. I will sign up although I am no sure whether I do that personally or as Deed Consulting.

Monday, September 07, 2009

The Combined Code review – board evaluation and external facilitation

Another issue in the Financial Reporting Council’s Second Consultation on its Review of the Effectiveness of the Combined Code is the suggestion that the Code be amended to recommend that board evaluations should be externally facilitated at least every two or three years for some or all companies.

This proposal follows the Walker Review of the governance of the banks. The Walker Report recommended:

The board should undertake a formal and rigorous evaluation of its performance with external facilitation of the process every second or third year.

I certainly believe this is relevant to the public sector and third sector. (And its not just because I would happily facilitate, support or validate board evaluation.) While many organisations in these sectors have adopted board self-assessment (and in the case of housing associations board member appraisal), these processes can be lacking in rigour. Too many board members are asleep either metaphorically or literally. An outsider can more easily challenge a board member than his or her peers. Moreover, an external facilitator can bring an independent perspective and wider experience when some boards may not realise that they are not performing as well as they could or should.

No limits? Board renewal and good governance

Writing governance codes must seem like painting the Forth Bridge. It only seems like yesterday that the Combined Code was revised – now we have a new revision. In fact this summer saw the Financial Reporting Council issue a Progress Report and Second Consultation on its Review of the Effectiveness of the Combined Code.

I will not try to summarise the ideas kicked around in the Second Consultation. (KPMG’s Audit Committee Institute have published a useful guide in its Quarterly.) A couple of ideas did catch my eye.

In the section on Board Balance and Composition, one of the specific issues for further consideration is the question of:

whether the so-called “nine year rule” has resulted in a loss of continuity and valuable experience.

While the Combined Code applies to listed companies, it sets the pace for governance beyond – not least the public and third sectors.

The nine year rule is definitely an issue in the housing sector. A nine year rule has been recommended by the National Housing Federation for several years. It remains controversial. Several housing associations dodge the issue by starting the clock for the nine years when the rule was introduced rather than when the board member was appointed. Imagine the uproar if banks were so blatant in ducking best practice on board renewal! (I know that many long-standing board members bring commitment, experience and continuity but perhaps those board members could bring even more to other organisations as well as allow fresh blood.)

Sadly, there is barely an issue in the college sector where I have done work on governance since the mid-1990s. The Learning and Skills Council raise the issue in its guidance but in the absence of any code of governance for the sector, the recommendation lacks profile.

I hope that the Financial Reporting Council will keep the nine year rule although it needs to be framed appropriately and applied flexibly so that board renewal - with effective succession strategies – supports “continuity and valuable experience”.

Whatever happens, I’ll be stepping down as a board member in the not-to-distant future when my time is up.

Sunday, September 06, 2009

Post-16 education changes: things can only get better?

This week’s Public Finance reports that the Learning and Skills Council’s chief executive has warned of something close to chaos as the quango is dismembered – part becoming the Young Peoples’ Learning Agency and part the Skills Funding Agency.

Geoffrey Russell writes in the LSC’s annual report: ‘As the transition progresses over the next year, there are significant risks that the LSC will not be able to meet its objectives, staff morale will be affected and systems of internal control will break down.’

Those of us who have worked with colleges for several years will remember the dislocation caused when the Further Education Funding Council and forty-plus Training and Enterprise Councils were put together less than a decade ago – pulling organisations apart is even more disruptive than putting them together.

The histories of the FEFC, TECs and LSC suggest that the SFA and YPLA will share the same fate.

If the Conservatives enter government next year, the next upheaval may come even sooner. David Cameron’s rhetoric about a bonfire of quangoes chimes with noises from his party about resurrecting the FEFC – re-creating a funding body with a narrower remit than its successors and removing from local authorities their new funding role in 16-18 education.

We’ll have to watch this space.

Thursday, August 20, 2009

Regulation, governance and social housing: moving from self-assessment compliance to continuous improvement

A couple of flights across Europe offer the opportunity for catch-up. I used some time to read Governance: A discussion paper published last month by the Tenant Services Authority. The paper asks how the TSA should regulate governance on a cross-domain basis for all social housing providers – i.e. “across whole entities for not-for-profit registered providers and across the housing activities of for-profit providers”.

The discussion paper clearly sets out the issues and recognises the diversity of providers in a potentially mixed social housing economy. However, I am not convinced it faces up to the challenge of the kind of rigorous but focused regulation needed when addressing not-for-profit and for-profit providers. (I would argue that the financial turbulence buffeting social housing recently requires regulation targeted at promoting tenants interests and protecting public investment – which is not the same as more prescriptive or interventionist regulation.)

The discussion paper describes the current regulatory arrangements and notes that the self assessment compliance statement is “a key and significant part of our regulatory engagement”. The first question asked by the discussion paper is:

What elements of the existing approach to the regulation of governance should the TSA carry forward?

I would suggest that the self assessment compliance statement should be rejected or , at least, radically re-cast. I think it encourages a tick-box compliance mentality rather than fostering self-reflection. The TSA should ask where they see weaknesses and areas for action rather than requesting a “compliance statement”.

A document based on identifying scope for improvement should then be validated against an organisation’s financial and operational performance – internal and external audit reports, audited financial performance, reported operational performance indicators, etc.

The TSA says:

We are considering applying a range of assessment methodologies including:

- self-assessment by registered providers’ boards

- feedback/assessment from residents

- and stakeholders

- benchmarking and peer review

- independent validation/audit of a particular function/s

- accreditation

- the TSA’s assessment of certain key indicators of good governance

If that is focused and rigorous validation of performance about ensuring that governance is delivering for customers and protecting the public interest, I am in favour. But social housing providers do not need a paper chase.

Sunday, August 09, 2009

School league tables: past performance is not necessarily a guide to future performance

Many of the opponents against choice in public services rely on weak arguments. “The middle class will benefit” – yet they already win by having the resources to choose through moving into catchment areas (or buying in the private sector); ”the poor don’t want choice” – yet surveys demonstrate otherwise; “what people want is a good local school/hospital/whatever” – yet choice (with competing providers) is a means to that end.

I was therefore interested to read an article in the latest bulletin of Bristol University’s Centre of Market and Public Organisation, Research in Public Policy. The authors of Are league tables any use for choosing schools?

George Leckie and Harvey Goldstein studied the statistical significance of value added scores and concluded:

... when taking account of this uncertainty, the comparison of schools becomes so imprecise that, at best, only a handful of schools can be separated from the average school or from one another with an acceptable degree of precision. This implies that publishing league tables to inform parental choice of school is a meaningless exercise, as parents are using a tool which is not fit for that purpose.

In particular, they noted the lag of over five years between the parents looking at league tables when choosing a school and the children sit their exams. Five years a long time in the life of a school.

Does this information problem blow a hole in the argument for empowering parents and other customers of public services? I would suggest not – there are other measures of performance other than exam league tables. (There may, of course, still be value in value added league tables if failing or coasting schools raise their game through being either “named and shamed” or spurred by fear of falling school rolls.) Nevertheless the research does pose more of a challenge than the arguments usually wheeled out against choice.

Friday, August 07, 2009

Board members, finance committees and financial monitoring – need to know basis?

I recently heard a partner of an accountancy firm (and provider of audit services to the housing sector) say that housing association board members did not need any quarterly financial reports – as long as the board had a finance committee doing the board’s financial monitoring. My immediate response was one of both disagreement and disbelief.

In case I had missed something. I thought I would consider Treading the Boards (pdf available) – the Housing Corporation’s self-assessment framework for board performance. (A guide to housing association governance published in 2001 but still relevant. It also informed the Corporation’s regulatory expectations).

Treading the Boards stated that the “key roles or functions” of a board include:

Monitor[ing] the association’s performance against agreed targets and milestones through regular critical appraisal of financial, operational and development information

It made it even clearer saying that the board should be able to demonstrate that it:

regularly and critically reviews management information on financial and operational performance against budget /targets, the previous year’s figures and external benchmarks

It interprets regularly as monthly or quarterly.

But can board members contract out their financial monitoring role to a finance committee?

Larger, more complex, associations may have established business activity sub-committees that can address the critical issues in more detail than would be possible for the main board.

I read that as giving finance committees a role of detailed scrutiny – not the rest of the board ducking out of this key function. (While I am a great believer in the value of committees in governance structures, I’ve seen governance failure arising from boards being oblivious to the concerns being raised about financial issues in committees.)

What about guides to good practice outside the world of social housing? The 2003 Review of the role and effectiveness of non-executive directors by a committee headed by the now late Sir David Higgs noted:

Non-executive directors should scrutinise the performance of management in meeting agreed goals and objectives, and monitor the reporting of performance.

That report considered this to be a “key element”. Subsequent events in social housing as well as the wider world have surely proven this and reminded everyone that we live in financially hazardous times.

Anyone suggesting that board members can pass the buck of financial monitoring to a finance committee should also pause and consider the fact that housing association board members will generally have the duties of a company director and/or charity trustee. These cannot be evaded in some kind of governance pass-the-parcel.

Thursday, July 23, 2009

The NAO on the LSC: Train to Gain taking the strain

The recent select committee report on the Building Colleges for the Future programme received plenty of coverage in the media. The LSC escaped similar publicity following this week’s National Audit Office report on Train to Gain: Developing the skills of the workforce.

The NAO report concluded on the scheme’s value for money:

In our view, however, over its full lifetime the programme has not provided good value for money. Unrealistically ambitious initial targets and ineffective implementation have reduced the efficiency of the programme. While the rapid changes to the design of Train to Gain to gene rate employer demand have presented a considerable challenge for the LSC, inconsistent management and communication have led to confusion among employers, training providers and skills brokers, and have increased programme risks. Some providers have achieved high learner success rates, but for a minority success rates have been poor. Half of the employers whose employees received training would have arranged similar training without public subsidy, though it is possible that some of these learners (any not already qualified at level 2) were entitled as individuals to receive full public funding for such training.

In its recommendations the report went onto make a link with the Building Colleges for the Future crisis:

It is vital that Train to Gain avoids the pitfalls of the further education capital programme which became severely over-committed.

Perhaps it’s too late as many colleges face a financially and operationally difficult year as a result of their 2009/10 employer responsive funding allocations from the LSC.

Pandemic flu, absence rates and risk management

It now appears that the number of people off work due to coughs, colds and flu is three-times higher than normal for the time of year. What will happen when pandemic peaks? What if it comes back worse in the autumn?

What we do know is that many organisations risk management will be tested in the near future.

Over the last few years many people were disinterested in preparedness and tended to humour those of us were encouraged attention to the issue. I suspect this was, in part, due to the Year 2000 risk that never materialised. Hopefully next time people will look at the facts and assess the risks objectively.

Sunday, July 12, 2009

Telling Fritz: lessons for the public and third sectors?

This weekend’s FT reports on the resurrection of General Motors. I was interested to see that the GM Chief Executive Fritz Henderson is to have a Tell Fritz website where employees and consumers can voice their views and concerns.

Perhaps organisations in the public and third sectors could so something similar. Certainly one or two organisations have drifted out of touch with heir customers and other stakeholders. I would allow engagement, involvement etc for those without the time and/or inclination to attend meetings or fill in questionnaires.

I would be interested in any examples of where organisations delivering public services are imaginatively using blogs to open up communication channels.

Wednesday, July 08, 2009

Ethics – not expenses?

It now seems that the expenses furore has died down. Its effects will be legion. One effect will doubtless be in the audit plans that internal auditors propose and audit committees consider.

Thousands of internal audit days will be devoted to checking the processes for expenses as internal auditors and audit committees will have been unsettled by the Westminster expenses scandals. If anyone needed a reminder of the seriousness of reputational risks, they have had it. (It’s worth noting that the ripples of the expenses row have reached both the BBC and charities.)

Will those internal audit days be well-spent? Definitely, sometimes.

Where expenses policies are poorly worded, inadequately applied and widely disrespected, some lessons may be learned and culprits may be caught. However, I do wonder if elsewhere the internal audit resource might be better deployed looking more widely at the ethical environment of organisations.

How often do internal auditors look at:

1) How a culture of ethical responsibility is fostered across the organisation?

2) How well codes of ethics are agreed, communicated and bought-in to?

3) How responsibility for ethical matters, legal compliance and reputational risk is allocated?

4) How effectively are social, environmental and ethical risks integrated into risk management?

5) How does the board set itself ethical standards (along the lines of the IoD’s Standard for Directors)?

The answer is not very often and maybe not very well. There is a risk that these kind of reviews degenerate into empty tick-boxing.

I am aware that some housing associations have renamed their audit committees as audit and ethics committees. It will be interesting to see if that means more than a nod in the right direction.

Certainly audit committees do need to look at the wider ethical scene rather go searching for duck houses.

Monday, July 06, 2009

Independent advice: governor training

The Independent website is carrying an article from the Chair of the Association of Colleges announcing the setting-up of a Governors’ Council to provide support and guidance. The Council is a useful addition to the college sector landscape.

John Bingham notes both the value and the limits of institution-specific induction and training.

I would also suggest that college governors (and other board members) can get value from being briefed and challenged by an external trainer or facilitator. (I declare an interest.) Too often colleges exclusively rely on “insiders” (the college’s own managers and auditors) to provide training on how to monitor performance (of managers and auditors).

Sunday, July 05, 2009

A pre-election fix for the local government pension scheme?

This weekend’s FT reports that the government is thinking about allowing the local government pension scheme to have more relaxed funding levels than private sector schemes - as local government has “constitutional permanence” ie it does not have the same risk of going bust. This resolves a thorny problem – it makes the next actuarial valuation (and coverage of the funding black hole) in spring 2010 less of an issue in the run-up to an election.

What is less clear is how this would leave entities outside local government – notably some housing associations and all FE colleges – whose support staff are members of the local government pension scheme. These entities do not have the same permanent. Perhaps they will still face increased pension costs in 2010 and into the foreseeable future with implications for both their finances and their services.

Friday, July 03, 2009

Capital mistake: halving public investment

Amidst the arguments about cuts versus investment (and the unfortunate reference to “zero per cent” public spending rises by Gordon Brown), there is the undeniable fact that the government is winding down capital investment – the government plans to halve in the four years from 2009/10.

Earlier in the month Public Finance carried a useful survey of Capital Punishment - the implications of reduced capital spending. The college sector is already feeling the pain with dozens of rebuild projects being turned down for funding.

Thursday, June 18, 2009

The FT on governance and risk management

Today’s Financial Times has a Special Report on Corporate Governance (available for free pdf download on I’ve not yet read the full suite of articles but there is a good piece on risk management in the light of recent corporate failures.

Jeremy Grant notes:

… [T]here is much work to be done to figure out what kinds of risk management systems boards should have in the wake of the financial crisis. That exposed how information flowed far too slowly up to the board level to allow early diagnosis of problems.

While boards have policies and processes for risk, the critical information is not getting though in time. (I’ve certainly seen that in the public and third sectors – the private sector has no monopoly on risk management failure.)

The article also reports he wariness of some experts about whether the issue of risk management is too big for audit committees.

Monday, June 15, 2009

Latest instalment at Glasgow Housing Association

The situation appears to be worsening at the Glasgow Housing Association (GHA). It appears as if the Scottish Housing Regulator (SHR) is about to step in triggering a loan covenant default. (This isn't a good thing when such breaches lead to increased financing costs.)

The GHA with over 100,000 customers was created through a huge stock transfer.

We'll soon now more about what is going on when the SHR issues its new report on the association. One lesson that I think we’ll learn when we look back on this stock transfer is that changing a huge local authority housing department into a housing association in a big bang poses certain problems. Big is not always beautiful.

Thursday, June 11, 2009

The feeling's mutual: building societies in the news

Today is carrying good and bad news about building society mutualism. The government is looking to promote and strengthen the mutual model in finance. Meanwhile, it looks like the West Bromwich Building Society may have to give up its independence and merge.

Saturday, June 06, 2009

College principals’ pay shock!

Sorry. The figures don’t really justify the headline. Last year college sector principals had fairly modest pay rises - especially sixth form college principals. This would appear to contrast with chief executives in the universities sector.

With the data on college accounts published by the Learning and Skills Council, I calculated the median pay for principals in 2006/7 and 2007/8. I also separated general further education (GFE) and tertiary colleges (TC) from sixth form colleges (SFC). (I chose the median as it is less likely to be distorted by, for example, large severance packages or interim principals.)

In 2007/8 the median GFE/TC principal was paid £111k – up 5.7% the previous year. The median SFC principal was paid £87k – up 3.6% on 2006/7. (These figures omit the value of non-pay benefits.) Between August 2007 and July 2008 the RPI fluctuated between about 4% and 5%.

(If anyone would like more details, please get in touch via my website.)

With the public finances being increasingly squeezed, it looks like principals are leading by example.

UPDATE: The Universities and Colleges Union has also looked at the data. UCU have a different perspective. They also use the figure for pay rises given by colleges rather than calculating the rise in pay (which includes bonuses).

Friday, June 05, 2009

DIUS deceased

As was speculated this week the Department for Innovation, Universities and Skills is no more. It is now merged into Lord Mandelson's BERR business department.

When public finances (and hence public services) are under-pressure, the short-lived DIUS cost over £7 million to set-up - around £10,000 per day over its short and unhappy two years.

Thursday, June 04, 2009

Re-shuffling bureaucracies

Today’s Financial Times indicates that Downing Street is thinking about “another Whitehall restructure” – i.e. re-shuffling departments as well as cabinet ministers. Earlier in the week there were suggestions at the Association of Colleges’ Finance Directors’ Conference that the Department for Industry, Universities and Skills might be merged into Department for Business, Enterprise and Regulatory Reform. (What would you call the offspring of such a union?)

It is a sad fact that the government periodically lapses into bureaucratic shuffling as if merging, de-merging or re-naming departments will fix problems. (Readers of this blog will know that I believe that genuine reform is more likely to involve creating customer choice and competing providers in he delivery of public services.)

Sometimes re-arranging bureaucracies is appropriate but it involves time, effort and resources which could be used for other purposes. How often is the cost-benefit analysis done?

DIUS has existed less than two years. It has major issues on its agenda – like the LSC capital funding debacle. Let’s hope the rumours are unfounded and DIUS can get on with its job.

Monday, June 01, 2009

What do you call a group of college finance directors?

Tomorrow I am off to the Association of Colleges’ Finance Directors' conference. The cynics might suggest that a meeting of a few hundred accountants would never be fun but this year there'll be extra despondency thrown in with LSC capital funding crisis and the imminent tightening of the screw in public finances.

This week’s Times Education Supplement quotes the chair of the College Finance Directors’ Group suggesting that half of England’s FE colleges could be categorised as economically vulnerable over the next two years. He also predicts swathes of redundancies across the country.

Governors Needed: effective governance in schools

Today Radio Four broadcast a documentary on the challenges facing school governing bodies. Hopefully Governors Needed will be made available on the BBC’s listen again.

The programme highlighted the obstacles that can hinder effective governance and result in rubber-stamping. Many of the themes will be familiar to those charged with governance in other parts of the public and third sectors.

The documentary featured comments (and concerns) from the National Governors' Association. If you are a school governor, it will probably worth looking at the resources available on the NGA website.

Sunday, May 17, 2009

Tortoises and hares: public sector pay and pensions in the news

Yesterday several newspapers carried articles about a PricewaterhouseCoopers study of relative pay and pensions in the public and private sector. The good or bad news – depending where you sit – is that public sector pensions are shifting balance of advantages towards he public sector.

The PWC study assumed the private sector Hare and the public sector Tortoise both started work in 1981 at age 21. The Hare earned and spent more up to the stock market peak in 2007. Thereafter, a more broken employment history and a much less secure and generous private pension meant that the Hare ends up losing. The accumulated non-pension wealth of the Tortoise is higher from around age 55 and, by the time both die at age 80 in 2040, the Tortoise has accumulated non-pension wealth of around 30% more than the Hare to pass on to his descendants.

We can all query some of the assumptions but the delicate issue of public sector pay remains.

I would be interested in the relative positions of the Tortoise and Hare’s female equivalents. When the affordability of public sector pensions is queried, the unions (quite legitimately defending their members’ perks) point out that many public sector pensions are looking forward to “tinfoil” pensions rather than “gold-plated”. The reasons for the small size of pensions reflects the structure of public sector pensions – with their final salary basis which favours full-time career civil servants rather than those female members who are often part-time and passing through the public sector. It would be good to see the unions promoting the interests of their female works in the debate about the fairness and affordability of public sector pensions.

Friday, May 15, 2009

Charities harnessing the power of the internet?

The research consultancy nfpSynergy have issued the results of its Virtual Power survey on The power of the internet for charities. (The report can be downloaded if you register.) the report has some interesting figures although I hope some analysis is to follow as 345 pages is a lot to go through.

Some figures do stand out. It was perhaps surprising to read that 48% of charities are now using social networking sites. (I do wonder how many public sector organisations do likewise.) Less surprising is that only 28% bother to blog.

Strangely the latest survey shows fewer organisations look at the possibility of SMS and mobile telephony as a communication tool. Similarly fewer are using these tools. I do wonder if the mix of respondents may have changed in the recent surveys.

Only a quarter of respondents agree with the statement: “My charity is making the most of the internet".

Only 23% of charities agree with the statement: "Our trustees are involved with our internet strategy". (That may be due to a lack of such a strategy!) Meanwhile 32% of the respondents agree either strongly or slightly that "Our internet strategy is ratified and approved at Board level". That sounds like a rubber stamp being applied – uninvolved approval!

I’d recommend charities (and others) have a look at the survey. The questions – even more than the answers - should get you thinking.

Friday, May 08, 2009

Thought for the day: finance and strategy

Many members of the boards of not-for-profit organisations seem to turn off when finance is mentioned. I can remember doing governor training at a college when a governor arrived late and said: “Oh, it’s finance training? If I’d known I would not have turned up”.

I have come across some wise words from Emmanual Faber (CFO at Danone) who noted:

Finance without strategy is just numbers, and strategy without finance is just dreaming.

Friday, May 01, 2009

Church told to practice good risk management

Following a large financial shortfall left after last year’s Lambeth Conference of bishops, a review was commissioned into the financial management of the Conference. The report published last week found control was insufficiently robust given the risks involved in such a major event.

The report includes the commandment:

overall governance arrangements need to ensure that challenges can be identified, options offered for their resolution, and solutions agreed by the appropriate parties and then implemented in a timely manner.

The FT on the Hiddink Effect and “the lasting appeal of interims”

My enthusiasm for football is fairly limited but I was interested to read Stefan Stern’s article on the FT blog about Guus Hiddink, Chelsea’s interim manager. (My interest may have something to do with working as an interim Finance Director with several organisaions over the years – and I am available for hire very soon!).

According to Stefan Stern, Hiddink’s performance in turning around Chelsea is typical:

This is what the best interim managers can do. They go in to a difficult situation, inheriting problems that have been created or left unsolved by previous managers. They bring a fresh perspective. They rejuvenate tired and stale employees. And then they clear off.

The fact that so many organisations in all parts of the economy are being convulsed by the recession and need support suggests that demand for interim managers will continue its recent growth trend.

Thursday, April 30, 2009

If swine flu can't be arrested, can colleges carry on regardless?

The World Health Organization’s latest upgrading of threat level for swine flu and the public information campaign run by the UK government as well as the media coverage means that many organizations will now really treat the issue seriously as one of risk management.

Colleges have for some time had guidance from central government. I suspect not many managers or governors have read it. It is useful about the basics about communication strategy, infection control, etc. It is less good at promoting imaginative thinking about continuing to deliver teaching and learning:

Consider whether resources and materials can be prepared for students to work independently from home. Consider what arrangements might be needed to support such working.

That's not much of a steer.

I hate the over-use of the word “innovation” but there really is a need for some innovation here. Colleges have to start thinking about how they can respond to disruption and even closures by carrying on with podcasts, blogs and other technological responses.

Monday, April 27, 2009

The housing market: gloom and green shots?

According to today’s Financial Times house prices fell at the lowest monthly rate for a year in April. The latest Hometrack survey found that house prices fell by 0.3% in the month taking prices down by 10.1 per cent over the last 12 months. Hometrack report that buyer interest and sales are up too. The website have designated the Hometrack survey as Pointless survey of the week – although that might be premature at its only mid-morning on Monday.

The May issue of the excellent housing magazine ROOF includes the journal’s 2009 Affordability Index. It finds affordability has hot a five year high.

Of course, (more) affordable house prices are essentially theoretical until prospective buyers can access the mortgages which they need. Here there is gloom rather than green shoots. The BBC is reporting today that the number of mortgages approved for house purchases fell to 26,097 last month - down 6.8% from February and 25% lower than a year earlier.

It looks like more of the same for the moment. That means challenging times for housing associations as well as families, builders and developers.

Social enterpreneurship in the news

Those involved in the social enterprise movement - and those who may have been prompted by the recession to think of starting something up – may be interested in the set of articles about the movement on the Timesonline website.

Sunday, April 26, 2009

The swine flu threat: how prepared are we?

There is a lot of uncertainty this weekend over the significance of the pandemic threat posed by swine flu from Mexico and now reported in the US, New Zealand, France, Israel, etc. (The spread is being mapped on Google Maps.) However, the World Health Organisation is concerned.

While parts of the UK public sector have been preparing for a pandemic for some time, other organizations in the public and third sectors are less advanced – or even asleep to the threat. (When I have raised the issue of pandemic preparedness, I have always sensed that these issues are seen as a bit of a joke.)

Hopefully the spread will be contained. If not, this poses a real test of organizational risk management. In the aftermath of the First World War over 100 million died in an pandemic flu outbreak.

Friday, April 24, 2009

Biting the bullet: campaigning against bullet points

Ever since I was a teenager I have been a bit of an activist for all sorts of causes. I have just learned of a new campaign which may lack the idealism of the elimination of nuclear weapons or the end of world poverty, but could transform our working lives. It’s the Campaign for WiT at Work.

The writer and trainer Jon Moon is a valiant fighter against the excessive use of bullet points. He argues that “bullets almost seem to encourage poor writing”:

Many bullet lists are incomplete, inconsistent, in the wrong order and grammatically jumbled

His Campaign for WiT at Work aims to replace many of these bullets with what he calls Words in Tables. I would recommend you have a look at Jon Moon’s website or even buy his book, How to make an impact, to find out more about WiT. He has even re-formatted the Cabinet papers that ministers carelessly display to photographers outside No 10.

Wednesday, April 22, 2009

Public spending growth: there are bad times are just around the corner

While there is some good immediate good news for further education and social housing, the FT is warning of "one of the longest and sustained squeezes on departmental spending since the second world war" with real terms reductions".

From April 2011, current spending will rise by only 0.7 per cent in real terms - a li ttle more than half the plans for 1.2% growth announced five months ago in the pre-Budget report.

KPMG are warning against false optimism:

The message for the public sector is stark. All public sector organisations need to take a cold, hard look at where they spend their money and make difficult choices about priorities; they need to implement radical new approaches in the delivery of public services.

Budget: Good news for colleges shock

As well as £250m in extra funding for Sixth Forms, the Budget Report has tucked away on page 120 some good news on helping to resolve the Building Colleges for the Future crisis:

The 2008 Pre-Budget Report brought forward £442 million in total from 2010-11 to 2008-09 and 2009-10 to accelerate the Learning and Skills Council’s (LSC) Building Colleges for the Future programme, to support Higher Education (HE) building projects and to bring forward the development of scientific research facilities and improvements to universityresearch infrastructure. In 2008-09, over 100 Further Education (FE) college building projects were completed as a result of nearly £550 million of investment, of which £110 million had been brought forward as part of the fiscal stimulus. Building on this, Budget 2009 announces an additional £300 million of capital funding for investment in Further Education colleges in the 2007 Comprehensive Spending Review (CSR) period. This will enable the Learning and Skills Council to fund a limited number of further projects through the Building Colleges for the Future programme starting in 2009-10, based on prioritisation criteria to be agreed with the LSC and the sector.

Monday, April 20, 2009

Balancing the books – efficiencies, no-frills and co-payment

According to the media today, Wednesday’s budget will include £15billion of efficiency gains in 2010/11 to assist in balancing the public sector’s books. While any impetus to get more out of public spending is welcome, we need to remember that there are allsorts of issues with how efficiencies are measured. Moreover, if it is not possible to get “more for less”, we will all get “less for less” – the kinds of cuts seen so often through the 1970s, 1980s and 1990s.

Perhaps “no-frills” public services are inevitable – even if they are no one will admit it this side of an election. One thing that I am fairly sure about is that we will see more “co-payment” – that’s the jargon for users paying something towards the cost of services. (There was discussion of this as part of the Blairist approach to public service reform but it largely faded away with the arrival of Brownism - apart from in the NHS where the issue developed its own momentum due to NICE decisions.) We’ve got co-payment in higher education already. Where next? Or rather, where after the next election?

Risk management “a must” – not least for social housing

Today’s Financial Times has a Special Report on Risk Management and how it is “a must for decision-makers during uncertainty”.

The lead article on Difficult decisions on how to stay safe surveys key business risks in this recession. It struck me how many of the risks have a particular salience for social housing providers: supply chain, fraud, remuneration, cashflow.

Last Sunday’s Observer had an article about housing associations being ripped off with “soaring losses” and “rocketing fraud”. The sensationalism aside, there is a need for social landlords to be awake to fraud risks, including those associated with development.

Saturday, April 18, 2009

A bad week for building societies

It’s not been the best week for building societies. Mid-week the ratings agency Moody's downgraded several societies to near junk-bond status. Even Nationwide go downgraded from B to C-. There was also the news coverage of allegations about the robustness of the FSA’s regulation of building societies.

This is not entirely news. The building societies movement has for some time been rescuing its weaker members. While the Treasury stepped in with the Dunfermline Building Society, generally building societies have not needed huge bail-outs from the taxpayer.

Now is certainly a time for building societies to remember that they should not try to mimic banks.

This week does not disprove the argument made by the FT’s Financial Adviser in 2005:

Mutuals add value to the efficiency of the financial services market by giving more choice and a measure of integrity, value and transparency that is not often experienced by consumers. They are a reminder to plcs of corporate objectives over and above maximising returns for investors, including addressing the concerns of consumers.

Thursday, March 26, 2009

A couple of weeks off

I'm in Central Asia so may not be blogging much.

Building colleges, keeping minutes and tabling papers

Andrew Foster’s report on the crisis in the LSC’s college re-building programme (and possible solutions) is due before Easter. It may be a good read.

Last week the Guardian quoted the FE minister Sion Simon saying:

"The minutes of LSC council meetings tend not, over the course of the last year, either to have referred to this at all or referred to it in any great detail"

The Guardian article also reported:

Sources close to the [LSC] council confirmed, however, that there was some delay in keeping members informed of the growing problem. Reports tended to be "tabled" at meetings and not made available for reading in advance, one said.

There are a range of opinions on whether minutes should be Hansard-like or something briefer outlining the nature of discussions leading to decisions. There is less debate on the potential for tabled papers to causes problems for governance.

Monday, March 23, 2009

Public sector pay in the news

We live in interesting times – and pay is always interesting. Public sector pay is news-worthy too. Last Thursday’s Times had a couple of articles about pay in public services.

In the first article, the Times reported that public sector pay rose by 3.7% in the year to January 2009 while private sector pay fell by 1.1%.

In the second, the paper surveyed the remuneration packages of university vice-chancellors. One earns more than £500,000 including benefits. Almost two thirds are on salaries of over £200,000. Their average pay in 2007/8 rose by 9% on the previous year.

If the public and private sectors respond differently to falling RPI inflation, the whole issue of public sector pay could become a political minefield in an election year. (And don’t forget the toxic issue of public sector pensions – with triennial valuations next Spring.) On the other hand a public sector pay freeze could raise the temperature of industrial relations.

I think we’ll be seeing some business risks appearing in this area before too long

Sunday, March 22, 2009

Friday, March 13, 2009

Back to the future? Public services after the next election

The pundits are thinking about the election due in or before next summer – the above advert was commissioned by the Independent for an article about what the 2010 election advertising might look like. Boards and managers should be looking forward too. They need to think through what the aftermath may be for them. Now is the time to start adding some policy risks to risk registers and maps.

It does look like a Conservative government is a real prospect. Since the New Year the opposition has opened up a big lead over the government. While opinion polls are very volatile and a lot can happen, spread betting odds point to a Conservative majority.

What does that mean? Of course, since 1997 Labour has continued with some pre-1997 reforms and innovations. For instance, City Technology Colleges as Academies; PFI as PFI; the NHS “internal market” as choice, competition and contestability in the health sector and beyond. Likewise some Conservative policies like Michael Gove’s on school choice are to some extent pursuing Tony Blair’s own plans.

If the Conservatives are elected, they are likely to indulge in institution re-arranging. However, there has been plenty of merging of quangoes and the demerging of ministries under Labour so we should be used to that. (It’s probably time to invest in the letterhead and nameplate industries.)

Arguably the biggest change and uncertainty would be around spending plans. Public services have had year on year real increases in resources. According to the Institute of Fiscal Studies’ Green Budget (pdf available) total public spending has risen from just over 36% of national income in 1999/2000 to almost 42% in and after 2006/7. (The Labour government maintained the Conservative spending plans for their first two years in office.)

What now with public spending? It’s going to be tough whoever wins the 2010 election. But it would appear that the Conservatives are turning up the rhetoric on this issue.

Monday, March 09, 2009

Not all that glitters is a Golden Peacock: Satyam’s prize for corporate governance

As a film fan I am wary of judging a film by the number of Oscars that it scoops (or not). My scepticism has been confirmed today when I learned that the scandal hit Indian out-sourcing giant Sayam won a Golden Peacock award from the World Council on Corporate Governance.

I think this may devalue Golden Peacocks – not that they had a very high profile before. It’s not the first embarrassed accolade – Enron scooped a prize and praise for its risk management.

Saturday, February 28, 2009

(Very) lean years for public services: it’s official

There has been lots of media coverage of the Times article by the Audit Commission chief executive Steve Bundred about public debt Armageddon. This sentence effectively summarises his warning to the public and third sectors

Any managers of a public service who are not planning now on the basis that they will have substantially less money to spend in two years time are living in cloud-cuckoo-land.

Interestingly Bundred gets his history wrong when he says Mrs Thatcher secured an opt-out from the Maastricht Treaty on public debt levels. (She had retired to he House of Lords by 1992 and indeed attacked the Treaty.) However, he is right to ring the alarm on the implications of public debt levels for public services – whoever wins the election. The inevitability of the forthcoming lean years were clear to those who looked but the implications of the credit crunch and recession upon public borrowing have been less foreseeable twists.

Friday, February 27, 2009

College websites: in the eye of the beholder

I’m spending my morning collating information off college websites. Its interesting to see that some colleges are doing new things such as welcome videos. I know it’s not revolutionary but it’s a start.

What I find less hopeful is the way that so many colleges do not have a welcome from the principal. (Some even have a “Principal’s statement” without either a name or a face.) I am no fan of the cult of the individual but a college principal should be the human face of a college – so why not show her or him?

Even more perplexing is the fact that some colleges do not seem to bother with search engine optimisation. It’s not hard to promote yourself through google and other search engines. Yet some colleges do not appear to be seeking make their website top of google rankings – even letting pretty bad publicity sit at the top of the list. It’s as if these colleges are oblivious to the reputational damage which may be ongoing.

Thursday, February 26, 2009

Less than zero: housing association business plans, rents and deflation

Earlier this month I mentioned that the new social housing regulator was urging housing associations to check that their business plans were robust in the face of a negative RPI measure of inflation impacting on the rent-setting formula. This week there has been the example of the train operators who have their regulated prices set in relation to RPI too.

I do wonder if housing associations (and, indeed, other social landlords) have realised that things are pretty serious. While CPI inflation is now around 3%, the RPI measure is close to zero – tugged down by falling housing costs. IDS have calculated that the average expectation of seven leading forecasters is RPI inflation reaching as low as minus 2.7% in September 2009 – the month when rents for 2010/11 will be set.

(Of course this will be good news for the tenants who have just been told that their rents in 2009/10 will be rising at an inflation-busting rate as a consequence of the RPI peaking in September 2008.)

How will housing associations cope with that squeeze on their rental revenues? They had better start thinking about it now.

Wednesday, February 25, 2009

Housing market: crash, bang, wallop, and more decline?

With a rush of house price statistics due over the next couple of days, its worth having a look at the latest issue of Roof with its depressing Housing market healthcheck. The article by Julian Birch includes a depressing graph from Nationwide which features on the website. The graph shows the four cycles of boom and bust in the UK housing market since 1970. Basically the graph shows that house prices remain above their trend – for now…

House price falls are likely to be given a shove by the on-going credit drought. I was cheered up to hear one commentator refer to the end of the banking crisis. But then we had last weekend’s twitchiness in the USA about Bank of America and Citigroup.

Earlier this month The Economist made reference to Alt-A mortgages in the USA. After sub-prime this may trigger a sense of déjà vu. These mortgages have what might have once been called “innovative” features such as payments that are less than interest – so the debt grows for several years. Financial institutions have been digesting these rather toxic assets. As American borrowers come to the end of their not-even-interest-only periods, I suspect that even more misery will result. (House prices in the USA have fallen 25% already.)

Back to the latest issue of Roof … I would recommend you buy it if you want to read several articles on how the credit crunch is affecting the housing market and policy. However, it’s not an uplifting read when it looks like in 2009 the number of repossessions may be greater than the number of house-building starts.

Friday, February 13, 2009

Learning from the credit crunch: a series of unfortunate incidents (and examples of bad governance)

There’s lots of food for thought around risk, governance and regulation in the revelations from the former chief risk manager at HBOS, Paul Moore.

For people looking for some analysis about the lessons for governance arising from the credit crunch, I would particularly recommend a couple of documents.

There was an interesting article about Flaws at the top in the December issue of the Institute of Directors’ magazine The Director. The article quotes one observer as noting:

Corporate governance itself hasn't failed—the banks have failed corporate governance by not complying with it.

There certainly appears to have been a lack of challenge (and maybe understanding) of the risks that some of the banks were running.

A fuller survey of governance, regulation and the credit crunch was published by the Association of Chartered Certified Accountants (ACCA) in November. While a lot of the analysis was of an accounting technical nature and sometimes banking-specific, Corporate Governance and the Credit Crunch (pdf available) made points of wider relevance to boards in all sectors.

The ACCA made the general observation:

Many of the causal factors seem to be inextricably linked to a failure in corporate governance. Regulatory boxes may have been ticked but fundamental principles of good governance were breached. There should be more emphasis in the performance of corporate governance than with its regulatory compliance.

My personal view is there can be a sense that governance can become ritualistic as an unforeseen effect of rigid and poor regulation.

On the issue of risk management, the report noted:

Risk should have been more fully taken into account when making decisions about strategy or operations. Risk management tools have not always been fit for purpose.... More use should have been made of scenario planning as a risk tool. The risk management function needs to earn, and be accorded, higher status.

I would concur although it is worth remembering that the best sensitivity analysis and scenario modelling would not have necessarily factored in some of the arguably unforeseeable events that have come to pass.

The report links matters of risk to the ever-present fact of life whether we are talking about multi-national banks or community groups: the information imbalance between executives and non-executives. It usefully re-states the obvious:

There is a temptation for managers to make sure that information prepared for non-executive directors does not raise too many difficult questions. A partial explanation for boards not understanding their organisations’ risks is that information is sanitised by the time it reaches them.

It may not be much of a silver lining but hopefully board members will learn some lessons from what lay behind the current financial crisis.

Sunday, February 08, 2009

Challenging boards: responding to the credit crisis with fresh thinking

I’ve spent most of my weekend at the National Housing Federation Board Members’ Conference hearing about the credit crunch and change (in the case of social housing, there is a transformed regulatory and investment landscape). Therefore, it was particularly timely to read in the McKinsey Quarterly an article by Andrew Campbell and Stuart Sinclair on Mobilising boards for change. (The article can be read and/or downloaded after registering.)

The article made the case for shaking up the natural rhythms of boards and challenging directors to re-examine their thinking. More than that it gave chairs some ideas about how to do it. For example, it argues:

Mobilizing the board to tackle the economic crisis requires a fundamental overhaul of how its members interact. The only solution is to force change. The chairman needs to underline the gravity and urgency of the situation by summoning the board to extraordinary “credit crunch” meetings, “survival” meetings, “does our plan still make sense” meetings, and “how can we turn this pain into an opportunity” meetings. Without disrupting the rhythm, anchored thinking will continue to dominate.

The housing association board that I sit on as vice chair had a credit crunch breakfast which was useful in terms of thinking afresh at the implications of events.

The article suggests the use of outsiders in challenging assumptions and facilitating a change in style. (I think this is a good idea and I charge very reasonable rates!) The authors refer to how one board was assisted by an outsider:

In one board, the work involved identifying the six to ten premises of the company’s plan for 2009. The outsider then interviewed each director and asked them to offer their opinions on each premise confidentially. When shown to the group, the results demonstrated that most of the board no longer believed the premises were valid.

Groupthink is unhelpful at any time. At exceptional and fast-changing times like this it is particularly dangerous.

Saturday, February 07, 2009

Words of warning and wisdom from the TSA for housing association boards

I am attending the National Housing Federation's Board Members' Conference. Yesterday's opening speaker was Anthony Mayer, the Chair of the new housing regulator, the Tenant Services Authority (TSA).

Anthony Mayer repeated TSA themes about the importance of boards. He stated that the TSA would be relating to both execs and non-execs. The TSA see boards as directing strategy and scrutinising executives. (Of course this is the theory of good governance – but sometimes the practice of being a rubber-stamp is far too common.)

Mayer warned of up-coming issues arising from the recession and credit crunch:

1) Re-financing: housing associations need to check on how much finance they have as banks are expecting significant re-pricing of interest when re-financing is necessary.

2) Impairment: with declining asset values there may be some collateral damage (my pun – not his) on association balance sheets.

3) Negative inflation: as rents are set in relation to RPI, budgeting and financial forecasting could be complicated if/when inflation turns negative.

Mayer told board members to ask about these issues. They are potentially ticking bombs in need of defusing – or, as part of robust risk management, at least contingency arrangements if they explode.

Thursday, February 05, 2009

Size doesn’t matter: evidence on college size and organisation performance

As someone interested in how size and mergers affect organisational performance in the public sector – particularly FE and housing – I was pleased to stumble across a study published by the Department for Innovation, Universities and Skills last year.

The study entitled The Evidence Base on College Size and Mergers in the Further Education Sector reviews the subject of college mergers including some economic theory. Laura Payne of DIUS observes:

Economic theory suggests that there may be potential for larger colleges to be more efficient.

The review certainly sets out the potential benefits of merger and the economies of scale. There is also some reference to diseconomies.

The most interesting aspect of the report is a statistical analysis of the performance of General FE colleges. It finds:

There is no evidence of a relationship between college size and success rates. There is some correlation between size and average OfSTED inspection grade, but the correlation coefficient is small and does not suggest a strong relationship.
...There is no relationship between college size and financial health.

The good news is that mergers do not on average do any harm:

There is no evidence to suggest that merged institutions perform any better or worse than institutions that have not been involved in a merger.

Monday, February 02, 2009

Ten (or eleven) things for audit committees to do in 2009

The KPMG-sponsored Audit Committee Institute has re-issued and up-dated its Ten To-Do’s for Audit Committees. Compared with the 2008 version, the 2009 edition reflects the issues of the credit crunch and recession weighing on corporates (and assumes the absence of the kind of finance committee seen in several sectors like FE and HE) so some of the content is less salient to not-for-profits. Nevertheless, the document is very useful in giving audit committee’s things to think and talk about.

I would recommend that all audit committee members download the document and regularly look at the Audit Committee Institute website.

Some issues raised in the document are worth reiterating here. The Ten Do’s urges audit committees to thoroughly review risk management processes:

With the benefit of hindsight and possible “lessons” from the financial crisis, consider the adequacy and effectiveness of the company’s processes for managing risk (management’s processes and the board’s.)

The document also reminds audit committees to do things that they often forget such a rigorously appraising their own performance and monitoring organisational culture and “tone from leadership”.

One thing that I would add as an eleventh thing to do is for audit committees to meet their auditors at least once a year without executive management being present. This may only take five minutes of a meeting but it is a vital way to get assurance.

Saturday, January 31, 2009

Not-for-profits, strategy and finance: what they do teach you in Harvard Business Review

Almost anyone who has done a course related to business will have come across some fancy matrix for distinguishing different products in terms of market share, growth and/or profitability. Sadly many of those boxes don’t appear that helpful for the chief execs and boards of charities and others whose business is not-for-profit.

Last month’s Harvard Business Review had an article on Delivering on the Promise of Nonprofits by Jeffrey L Bradach, Thomas J Tierney and Nan Stone. It included the matrix above for developing financial and strategic clarity. It’s not rocket science but it does conceptualise the issues for organisations thinking about new developments as well as existing portfolios.

Friday, January 30, 2009

Three million homes – or not?

On this blog I encouraged people to sign up to the epetition on the Downing Street website urging a re-statement of the three million homes by 2020 target. Does the response do this? I don’t think so. Look at it here.

It’s a pity that the epetition only clocked up just over 2000 signatures. Building affordable homes in sustainable communities and sustaining the flagging construction industry (with new home starts halving last year) are now more important than ever.

Thursday, January 22, 2009

Welcome to short notice inspection?

This year lots of providers of social housing (as we will soon be calling housing associations, ALMOs and council housing departments) will be getting a call from the inspectors. With the completion of the Short Notice Inspection pilots, its time for the real thing.

As SNI involve only a couple of inspectors on site for about three days, inspectors go a lot further. However, the good news from those that have been inspected is that SNI appear to be a step forward. For a start, there isn’t the months of inspection preparation (and distraction). The short, sharp shock of SNI would certainly appear to reduce compliance costs.

Perhaps there might be some more good examples of regulatory reform in 2009. I certainly hope so.

Friday, January 09, 2009

Decisions, risks and Chief Executives

McKinsey have just published the results of a survey of over 2000 executives into decision-making - and what practices are associated with good results.

The survey conformed the value of:

1) Performing sensitivity analysis and creating financial-risk models
2) Including comparable situations from one’s own or the firm’s experience
3) Examining the risks of a project combined with the risks of other projects in the firm’s portfolio
4) Creating a detailed financial model of the decision

This accords with my experience. Far too often I have seen risk analyses that look at each risk in isolation or are hurriedly undertaken as little more than a ritual. (I also think that exit strategies and other contingency planning is even more neglected.)

Interestingly it appears that Chief Executives play a large role in instigating both the most and the least successful decisions. The report suggests that Chief Execs may be more likely than others to gamble on bets with big upsides and downsides - or may be better able to secure approval for such bets. It certainly demonstrates the need for boards to act as an effective challenge to Chief Execs.

Thursday, January 08, 2009

Public libraries as “recession sanctuaries”

As someone with pessimistic tendencies, I do try to look for a bright side. In the case of the credit crunch and recession, it is more challenging. One interesting possibility may be public libraries.

I read on the Freakonomics website that there are signs of a startling revival in the fortunes of libraries in America. Libraries are becoming “recession sanctuaries”. Will we see the same here?

My understanding is that libraries in the UK have been showing a declining trend (in books at least) in recent times. (And tightening public finances will pose a threat to their survival in the near future.)

As public space promoting knowledge and understanding as well as building civil society, any revival of public libraries would be welcome good news.