Governor workload and remuneration in FE Colleges: an Irish problem

While I am generally sceptical about board remuneration – particularly for smaller organisations – I can see a case for chairs of boards in the public and third sectors being paid. There was an article in the Irish press this weekend reporting that four of the six chairs of Northern Ireland's newly merged further education colleges have now resigned due to an escalating workload in the absence of payment for their services.

When the positions were created, the commitment was estimated at eight to 10 meetings per year, but the appointees said they attended up to 70 meetings a year.

More on pay, incentives and motivation: donating unpaid overtime in the for-profit and not-for-profit sectors

There is an interesting article in the Spring issue of Research in Public Policy from Bristol University’s Centre for Market and Public Organisation.

The article summarises some CMPO research In search of the public service ethos. While people talk of a public service ethos, do they actually demonstrate it in behaviour through donating labour in the form of unpaid overtime. It crunched raw data that showed 46% of employees in education, health and social care in the non-profit sector do some unpaid overtime compared with 29% of their counterparts in the for-profit sector.

After adjusting for demographic variables and for the possibility that unpaid overtime may be motivated by the prospect of promotion or bonuses, it concluded that people working in welfare services in the non-profit sector are 12% more likely to do unpaid overtime than those in the for-profit sector.

The authors point out that:

[The] estimate of the premium suggests that an additional 120 million hours are donated in the public sector compared with similar people working in similar jobs in the private sector. This is equivalent to an extra 60,000 people.

But before we get to the unlikely scenario of advocates of keeping the NHS (and other public services) public using the argument that the private sector is bad because it fails to extract unpaid labour from its employees, its worth noting that the researchers did not find that people changed behaviour when they moved between the for-profit and non-profit sectors.

Where does that leave us? Perhaps the research strengthens the case for a mixed economy in public services. The existence of non-profits and for-profits may allow better matching of people to the sector and the motivational structure that works for them. Of course, non-profits cover a range of models and the research did not explore the interesting question of how public sector or third sector employees may work differently.

Thoughts on pay: declining pay rises

Pay is in the news a lot. If its not local government workers striking over pay rises below inflation, its Carol Vorderman saying that a 90% pay cut doesn’t add up for her.

On her FT.com podcast, the management columnist Lucy Kellaway condemned Mervin King for not taking part of his remuneration package as Governor of the Bank of England. She suggested that if a chief executive declines a pay rise, he (or she) should be dismissed for presiding over a dysfunctional pay system. She advocated sacking remuneration committees as a solution to excessive pay.

Before public and third sector organisations sack anyone, they should check that their remuneration committees demonstrate best practice in terms of rigorous scrutiny of pay and performance.

Ujima governance and regulation: lessons for everyone

After something of a wait, the Housing Corporation website today carries the report of the independent Inquiry into the circumstances surrounding the collapse of Ujima Housing Association (pdf available). My first impressions are favourable. It appears to advocate better regulation rather than more recognition.

The report notes:

Ujima’s fate has starkly highlighted issues of governance and regulation that should be salutary for the Board of every registered social landlord, and for the Corporation and its successor bodies, and also contains important issues for the sector’s lenders and for government to consider.

It goes on:

It is not the objective of the Inquiry to seek to attribute blame. But, in our opinion, Ujima’s collapse was the result of bad management and an ineffective Board.

As so often in reports studying the entrails of failed and collapsed organisations (both in the social housing sector and elsewhere such as the NHS and charities), governance problems were found to include board members providing insufficient challenge to management and failing to insist on the provision of proper information sufficient to fulfil their responsibilities. For example, the report notes the limited and “poor quality” financial reports and the lack of risk management information.

These are things that board members at housing associations as well as other organisations need to consider carefully while the Housing Corporation (and its successors) implement the recommendations relating to better communication and earlier, more effective regulatory action.

In need of treatment: some research on boards at poorly performing hospitals

I recently came across some American research on hospital board dynamics published by Trustee magazine. Too often auditors and consultants focus on governance processes when the best processes in the world will fail if the governance dynamics and behaviours are weak.

The American study compared between high (financially) performing organisations and low performers. It certainly found differences in board dynamics indicating that effective governance improves organisational – as suggested by some British research that I outlined here.

In its conclusion, the report noted the importance of:

1) The roles played by management and the board
2) The inclusiveness of all board members, not just a small subset, in the decision-making processes
3) The usefulness and transparency of educational guidance and information
4) The level of respectful disagreement among trustees
5) The board chair’s role and his or her dedication to performing it.
6) If the answers to these questions suggest that your board’s dynamics need improvement, it might be time to talk with the chair or to form a coalition of board members who will seek outside, independent help—such as a governance consultant.

It is worth also hearing some of the observations and comments from board members at poorly performing organisations. These may have a degree of familiarity for many board members who do not think their organisations have governance “issues”:

"Some members were encouraged by the CEO to intervene in operating decisions rather than strategic ones, while others failed to ask the CEO tough questions. "

"Board meetings ran anywhere from three to four hours; every operational detail was discussed. It went on and on with lots of socializing and stories among the 25 or so people in attendance. Governance was a social event. "

"There were a lot of people who were not serious about showing up and participating and being informed."

"The [strategic planning] process begins with management deciding what is needed. Usually, by the time management brings something to the board, [they] feel very strongly about what should be done … In my view, as a board member, either you trust management or you don’t."

[The] board members of low-performing hospitals described their information packets as unorganized. One board member called the pre-meeting packet “just a bunch of stuff not linked together.” Another described it as “thick, but containing only six or seven pages of useful information.” Some even described part of the information they received as incorrect. Board members at low-performing hospitals consistently expressed concern about the totality and timeliness of the information they received. Others complained of receiving important supplemental information without sufficient time to consider it—for example, receiving information at a board meeting and being asked to vote on a related decision at the same meeting.

Risk management - developing a sense of adventure

Last week I went to a joint meeting of the West Midlands Charity Finance Directors Group and the ICAEW Charity & Voluntary Sector Group. One of the speakers outlined the tax definition of “trading”. One characteristic of “trading” was “adventure”. It struck me that this was a synonym for risk. (I expect a tax specialist to correct me!)

Adventure sounds so much more positive than risk. So often risk management is interpreted as risk minimisation. I had a colleague who loved to include in his training sessions on risk management a slide showing a man smoking and handling flammable materials. While risk management is sometimes about stopping stupid and dangerous behaviour, more often it is considering and taking, when appropriate, informed risks.

Without risk – or adventure – there is no reward. Innovation and transformation may be over-used clichés, but change is vital for public services and it comes with risks that need to be taken and managed.

Anyone for adventure management?

Mission (statement) impossible?

When bored, one way of passing time can be to compare and contrast mission statements in social housing. Here are a random selection from some local housing associations:

1) Working with residents to excel at creating and sustaining communities where people want to live.

2) We will provide our future and present customers with well maintained and affordable homes, in safe and attractive neighbourhoods.

3) Our vision is to build successful communities. Our communities will be famous for good quality homes, excellent services and a cleaner, greener environment. People will feel safe and have pride in their homes and neighbourhoods.

Some adopt a slightly different tack:

We are a social business providing:
- Support and services to individuals and communities through good business practice;
- Quality accommodation in an economically viable manner.

It’s not easy to have a distinctive mission statement that works. Yet such statements do convey something of the organisation’s brand – its value and culture.

As an accountant by profession, I’m not going to give lessons on inspiring mission statements. However, I would recommend a perusal of the 2008 Getting Attention Nonprofit Tagline Awards. The blog might be from the other side of the Atlantic but it has some useful advice on effective taglines (specific, positive, brief, clear, accessible) that are relevant to mission statements too.

Payment by results: rewarding teachers in Washington DC

It was interesting to read in last week’s Economist of plans in Washington DC to improve failing schools by rewarding teachers better and flexibly:

Starting salaries would leap from about $40,000 to $78,000, and wages for the best performers would double to about $130,000 a year. In return, teachers would lose tenure and be paid according to merit, measured in part by their students’ results. Current teachers would have a choice: they could join the new system or stay in the old one. New hires would have to join the new system.

I wonder if it could happen here?

Good governance improves performance even if effective board members don't save lives

It is always reassuring to see evidence of how effective boards result in better performance. Board trainers like myself like something to prove the need for good governance with more than horror stories of where governance went off the rails. Therefore, I was pleased to read about Stuart Emslie's study Exploring the Association Between Board and Organisational Performance in NHS Foundation Trusts (pdf available on the Healthcare Governance Review blog).

Stuart Emslie found "strong and highly significant correlations" between board performance, as measured using a self-assessment tool with "measures of financial performance, and measures of staff satisfaction derived from the annual national staff survey". However, he did not find any correlation with better patient mortality. Perhaps that will change as better financial management generates surpluses for re-investment and as improved staff morale benefits service quality.

Hallmarks of success: charities in a more bracing financial climate

The Charity Commission has issued a revised version of their governance guidance, Hallmarks of an Effective Charity.

The new Hallmarks are not radically different. The Commission says that:

As well as updating the Introduction, the Hallmarks themselves have been redefined in order to clarify the overarching principles that an effective charity will want to adhere to. For example, we have drawn together good financial practice points to create a new Hallmark ‘Financially sound and prudent’.

There are some interesting changes to the financial elements to the Hallmarks including new references to monitoring cash flow, structuring in a tax efficient way and minimising the risks of trading activities. Its reasonable to suggest that these revisions reflect recognition of the challenges that charities (and other not-for-profits) face in a more bracing financial climate with the credit crunch and public finance squeeze.

Time to go: Bill Gates, Founders’ syndrome and good governance

As Bill Gates logs off from the hands-on management of Microsoft, perhaps his example will be followed by others, including one or two pioneers in the third sector, handing over to others. He is moving on, although not far, to the non-executive role of chair.

The founders’ syndrome is a recognised sickness in the third sector. There are few things sadder than a good (or even great) organisation going wrong (or even bad) due to an often-inspirational founder losing their way. Charismatic personalities who can provide the energy, direction and leadership that start-ups need in any sector are often not those best suited to letting go when they should.

Treating founders’ syndrome is inherently difficult. Founders are unlikely to self-medicate and hand over to new leaders. The need for an effective board is obviously essential – yet, dominant personalities are unlikely to have developed such a counter-weight. While I believe strongly in the autonomy of the third sector, funders and regulators should be require the good governance that enables organisations to deal with their own problems.

Some thoughts on 200 blog entries: the FE sector, social housing and the third sector

As I’ve posted 200 entries on this blog, I thought it was time cast a look over my shoulder.

Back in late 2006 when I was setting up I thought that a blog might be interesting as an opportunity to share ideas and information as well as occasionally pontificate. Everyone seemed to have a blog. Many blogs were interesting – either informative or a little weird such as the President of the Islamic Republic of Iran. Perhaps not everyone had a blog – there seemed to be a lack of blogs on housing and further education – two sectors where I have done a far bit of work over the years.

Since 2006 we’ve acquired a new prime minister – and a fair few commentators speculate that we may have another one before long whether before or after the next general election. Public sector reform is still on the agenda. The language has shifted a bit – away from competition and choice towards contestability and personalisation. Some of the agenda has been adopted by the Conservatives - and taken further as in the case of Michael Gove’s proposals on schools choice. Even the Liberal Democrats are advocating empowering the user of public services. One major change that we have seen in the policy environment is a significant tightening of public finances although the implications of the Comprehensive Spending Review were well-heralded and analysed by the experts at the Institute for Fiscal Studies.

In social housing we’ve seen a review or two leading to end of the Housing Corporation as we know it – with a de-merger seeing English Partnerships absorbing investment (aka funding of new affordable housing) and a Tenant Services Authority (briefly known as Oftenant) taking over regulation. The TSA might even have a sector-wide remit including all social housing if the government listens. The nature of regulation is a bit of an unknown. Housing inspection will live on at the Audit Commission for the moment anyway – with new short, sharp, shock notice inspections coming in after some years of talk. We’ll probably see some new council houses at long last – although not many. Indeed there is a bit of uncertainty over all house-building after the credit crunch – who worried about sub-prime in 2006? (Arguably not enough people.)

In further education we’ve seen the announcement of the death of the Learning and Skills Council. Its role will be parcelled out – perhaps neatly, perhaps not - among a Young People Learning Agency, Skills Funding Agency, a National Apprenticeships Agency and dozens of local authorities and “sub-regional clusters”. We’ll see how joined-up that is. As a result of the changes we’ll probably see LSC staffers finding new homes – hopefully not too many will compete against me as freelance consultants. Another key development will be sixth form colleges “rejoining the local government family” – a good or bad thing depending where you are. (I won't quote Tolstoy or Larkin.)

Of course, the third sector – particularly social enterprises – are even sexier now than 20 months ago. Politicians are falling over themselves to woo charities and other third sector organisations. The other week it was the Conservatives offering the sector treats including the Office for the Third Sector which NCVO welcomed. Yesterday it was the government promising the third sector a role in service delivery. As always, reality may be less rosy – as seen in the disappointment when the Department for Work and Pensions gave the lions share to the private sector in a major commissioning exercise. Still we have seen actions as well as words – funds for third sector organisations, ambassadors for social enterprise, training for commissioners, new and flexible forms of legal entity for social enterprises.

I am sure that I have missed a few developments. Its seems a lot has been happening even if much of it is skated over in the mainstream media.

I wonder what I’ll be writing about after another 200 blog entries.

Stock transfers delivering on promises: more evidence of improvements

The Housing Corporation just published a thematic review of housing association formed by “stock transfers” from local councils.

The thematic review found stock transfer associations are “making considerable progress towards the delivery of its promises to tenants made at the point of transfer. The one or two cases where associations have been unable to deliver on their promises are generally due to circumstances not directly related to the transfer process.”

While the study was primarily one based on self-assessment by housing associations, it is consistent with other evidence such as the National Audit Office’s finding in 2003 that “RSLs have largely delivered the expected benefits to tenants of better quality social housing, better housing services and opportunities for tenant participation.”

“Poking” civil servants: the public sector on the internet

Today we learned that senior civil servants are to be taught to use social networking sites by junior ranking "digital pioneers". Its sounds like Whitehall is being Beboified.

Maybe before long the civil servants at HM Customs and Revenue will be allowed to use email. On the other hand, perhaps things are not that advanced.

Ujima and the Housing Corporation: why stricter regulation may not be the answer

Along with the news that Oftenant will be given the catchy title of the Tenant Services Authority, last week's Inside Housing carried a feature on the fall of Ujima (pdf available). The article asked "Why didn't anyone step in?" and set out the warning signals in the run-up to the first housing association to go bust.

The magazine highlighted that over the last five years the Housing Corporation's regulation staff shrank by 31% and its investment (i.e. funding) staff reduced by 26%. This apparently reflected the demands of the Gershon "efficiency agenda" – fewer staff were overseeing the expansion of funding in new social housing.

There are some echoes with the Financial Services Authority’s handling of Northern Rock. As the Economist noted when discussing that case in March: “Writing more rules may do more harm than good if the regulator is unable to enforce them”.

Equality and diversity: the Third Sector struggling to match words with actions

The community investment foundation Olmec has just published A Guide to Equality and Diversity in the Third Sector (pdf available). The guide provides a useful set of signposts to more information.

The guide came out of the findings of an Olmec survey of 159 third sector organisations (pdf available). The study found that the third sector had its heart in the right place with 97% of organisations having an equality and diversity policy but problems in putting it into practice.

The study found more work needed to be done in two main areas:

Firstly in ensuring that the commitment to equalities is demonstrated at the
highest level of an organisation. Secondly that this commitment is transmitted across all policy and strategy areas as well as in individual work plans, performance targets, measurements and reporting requirements. In particular organisations current monitoring systems do not lend themselves to reporting on outcomes and the difference their work has had on those who it is set up to serve. Equalities monitoring was largely directed by funders requirements rather than because it was part of an internal drive to achieve better equalities outcomes or part of externally accredited quality standards.

Comparing performance: tenant satisfaction in council housing

The polling and research firm IPSOS-MORI have published an interesting analysis of tenant satisfaction data. The Housing Futures study (pdf available) aimed to offer “a more useful insight into tenant satisfaction levels than is possible from a simple league table approach”.

The study modelled the effect of largely external factors on tenant satisfaction – “the nature of place and the challenges it brings”. The model predicts tenant satisfaction on the basis of four factors:

1) Deprivation - the more deprived an area the lower the level of satisfaction.

2) Ethnic fractionalisation – “a measure not only of the proportion of people from ethnic minority communities, but the extent to which there are a wide range of different ethnic minority communities in an area” – with it being more challenging to meet the needs and expectations of more diverse populations

3) The proportion of elderly social tenants (aged 60+) - older tenants that are more likely to be positive about the services they receive.

4) The proportion of housing stock which is council owned – “As the percentage of total stock owned by the council increases, satisfaction levels decrease”

The study went on to identify where local authorities out- (or under-) performed the tenant satisfaction levels predicted by the model. Carrick, Ealing, Blyth Valley and Welwyn Hatfield were the joint top performers. (Three of the four have Arms Length Management Organisations.)

The fastest improving local authorities were identified as Ealing, Leeds, Redditch, Gloucester, Bury, Hounslow, Stevenage and Islington. (Again with ALMOs well represented.)

The study does usefully disentangle organisational performance from external factors. Perhaps similar studies should be performed and published for other public services. (If they have been, I don’t think they have been publicised enough)

My only criticism is the lack of any analysis of how relative performance maps across to different models – in particular, comparison of housing department performance with that of ALMOs. The study does contrast various types of local authority but ignores the ALMO debate.

Social HomeBuy initiative: three council houses sold

I’ve not read all 111 pages yet but yesterday the Department for Communities and Local Government published an independent evaluation of the Social HomeBuy initiative.

The evaluation is timely. Only three council houses had been sold via Social HomeBuy by the end of 2007. The scheme has been more successful with housing associations but we are not seeing great strides towards an asset-owning society.

In the executive summary, the evaluators note:

An average of 70% of tenants receive benefits and therefore would be ineligible for a mortgage. Of the remaining 30% of tenants, demand remains limited by income, demand to be a home owner and the desirability of their current property.

That has relevance across housing policy more broadly.

Is big beautiful? Futurebuilders' heavyweight board

As the size of boards is one of my stable of hobbyhorses (as evidenced on this blog), I was interested to read Stephen Bubb, chair of the Adventure Capital Fund, suggest on his blog that his 14-strong Futurebuilders board was rather on the large side. He wrote:

I wanted a diverse board which combined talent from investment banking and venture capital and great people from the sector. And we have managed to get sector people from small, medium and large charities and a social enterprise. But to confess. we have done this at the expense of a perhaps too large a Board. But in time people leave so it will work out I guess. A challenge for the Chair. It will keep me on my toes; but that is good . I do not like the supine. Nothing better than intellectual challenge to sharpen decision making.

Managing those meetings with all those high-powered professionals on board will definitely be a challenging task. My concern would be whether such a large board will be able to keep managers on their toes.

I would be a bit uncomfortable relying on people leaving “so it will work out” – although members might walk if they feel that the board is too large to be cohesive and effective (and they struggle to get their voice heard in the crowd).

We’ll have to watch this one.

Putting people into public services: better regulation and inspection

The National Consumer Council has launched a new, short report on Putting people into public services: better regulation and inspection (pdf available).

The report should be required reading for the new Oftenant in social housing. Indeed all regulators and inspectors should be asked to think about the issues raised.

The report warns of the danger that services are modelled on what satisfies regulators rather than the public.

The report’s vision is of a regulatory system that:

1) is organised for the benefit of the people who use services, not for the convenience of regulators and the regulated;

2) inextricably links efficiency, value for money and satisfactory outcomes for the people –specially as new and different providers enter the market;

3) builds on continuous conversation with service users and the public – starting from where people really are, rather than from assumptions of how they might think and behave;

4) makes the most of service users as the experts on what it feels like to receive a service; and

5) builds popular support for difficult regulatory decisions.

I would also add that wherever possible choice and competition should be used to drive improvement – rather than relying exclusively on regulation and inspection regimes. While the regulator and the inspector may ensure recognition of social benefits and costs, promote good practice and protect the vulnerable and poorly-informed, they are not so good at generating innovation, encouraging value-for-money and tailoring services around individual needs.

A social enterprise stocktake

Now – with the sale of ECT Recycling – is a good time to take stock on social enterprise. There is a timely review in this month’s Director magazine.

If anyone thought the situation was simple, the article will disabuse them of that notion. It warns of charitable and corporate entities being re-sprayed as social enterprises – “carpet-bagging”. It also suggests a distinction between the Body Shop as a social business and the Big Issue as a social enterprise. (I'm not sure about that one: it sounds like the government when it suggests that the "business" in the Department for Business, Enterprise and Regulatory Reform is something different from the "enterprise".) The article also points to the challenges – such as “scalability” with capacity issues in expanding to be in a position to deliver big contracts.

I have recently worked with one social enterprise that was thinking about seeking growth through mixing commercial and public funding. That poses a whole set of new challenges – not least for governance and accountability.

I suspect this bandwagon will keep rolling.

Social enterprises, muck and brass

I was surprised to read that the social enterprise ECT Recycling (linked to leading social business Ealing Community Transport) has been bought for £3.4m by private sector company May Gurney.

ECT Recycling is a community interest company required to return only 35 per cent of its profits to shareholders with the rest reinvested in operations.

The CIC regulator has said it will be monitoring developments. It will be important that this deal does not go sour – otherwise there will more cries of “privatisation” when new providers are involved in delivering public services.

HA boards: one-third fits all?

On the Great Governance blog for Welsh housing associations there is the executive summary of a report on governance commissioned by the Community Housing Cymru for the current Welsh Assembly Government review on the subject.

The report rightly recommends that

boards recognise that citizen and community engagement should be a defining feature of the governance of housing associations, constantly seek to innovate in their engagement with citizens and communities, sharing experiences and learning from others, and ensure that the direction and decisions taken by the board are informed by the engagement.

It also recommends that boards of associations which are responsible for providing housing services include one-third of their membership from tenants. Does one size really fit all?

Admiring the colourful housing in Albania

Interesting colour schemes in Tirana.

Temporary interrupton in service

Over the next couple of weeks, there may not be any postings. I'll be back on June 4th.

Are colleges open for business?

I have spent much of today trying to speak to colleges about them providing construction training for a client. While some FE colleges are enthusiastic and accessible, others offer unreturned emails, labyrinthine websites and ringing-out phones. I am lucky to escape the loop of one college’s telephone system.

It will be a challenge when they are assessed on their responsiveness to customers under the LSC’s Framework for Excellence.

Maybe choice and competition will sharpen up their act.

The NHS, Polyclincs and progress

As the NHS awaits the July report from Lord Darzi with its likely promotion of polyclinics (where several GPs’ surgeries are brought together linked to other services), I thought this quote was worth pondering:

We tend to meet any new situation by reorganising [to create] the illusion of progress, while producing confusion, inefficiency and demoralisation.

Usually attributed to Roman Consul Petronius but possibly dating from a British Army officer after the second world war.

Better integration of primary services makes sense. The fact that the medical profession does not like polyclinics could be seen as positive as the BMA has always opposed change including the foundation of the NHS.

On the other hand there is a risk that polyclinics will make primary care more distant from the individual – at least geographically. Nevertheless, we should all be conscious of the investment of time and resources (including the reserves now being accumulated in parts of the NHS) - will it be value-for-money?

School governors: less is more

I was pleased to read in Public Finance that a major review has started aimed at smaller and better-trained school governing bodies.

While school governors make a valuable contribution, having more of them does not mean more value.

Data, community cohesion, equality and diversity

Last week’s Public Finance has an interesting article by Professor Ted Cantle of the Institute of Community Cohesion (iCoCo for short).

On this blog I have expressed a certain wariness of some of the thinking behind the community cohesion agenda. In particular, I am uncomfortable with the hostility to multi-culturalism and the shift towards an emphasis on inter-cultural ignorance rather than inequality and discrimination. (I would add that I also believe that the public and third sectors need to treat this agenda seriously and connecting it in a progressive way to work on equality and diversity.)

After that caveat and caveat to my caveat, I would recommend Ted Cantle’s article. While talking primarily about the variety in the Muslim community (or communities), he notes more widely:

There is a real need to refine the crude total population data from sources such as the census to reflect the turnover of population and to map the complexities within communities. This would allow a move beyond a uniform approach to engagement and service delivery.

Too often organisations adopt a simplistic approach to using data in these areas – sometimes narrowly focusing on “targets” for “BME” (black and minority ethnic) access to services rather than thinking about what level of use would be expected and by which communities.

Double whammy for social housebuilding targets

The impact on social housing of the credit crunch and property market is at last getting some attention in the mainstream media. On Monday's Radio 4 PM programme, the chief executive of Southern Housing Group warned that the reticence of lenders was making it hard for housing associations to plan new developments. Combined with a likely decline in homes earmearked as affordable coming through Section 106 planning agreements, this adds up to a double whammy.

Can and will the government increase grant rates from the Housing Corporation to provide more socially rented and other affordable homes?

One Plus governance issues equals organisational failure

The Office of the Scottish Charity Regulator (pronounced Oscar for those of us south of the border) has issued a report into the collapse of the Scottish charity One Plus: One Parent Familes (no relation of One Parent Families/Gingerbread or its sister charity One Parent Families Scotland). One Plus went down with an overdraft of £2m plus – as well as other debts. OCSR’s case study report found “important lessons”.

The section on governance issues reads like a visit to a chamber of horrors. This is even sadder as the board were interested and enthusiastic.

1) “The Board did not appear to contain adequate skills and independence of thinking to reflect the needs of a multi-million-pound business” - including poor arrangements for recruitment and development, a finance committee that had difficulty meeting, the Board did "not seem capable and willing to hold the previous Chief Executive and Senior Management Team (SMT) to account".

2) “The lack of timely or full financial information being presented to the Board” - including tabled papers, out-of-date and insufficient information.

3) “The scale, skills and leadership of the finance department seems not to have been adequate for the size of charity”.

4) “The apparent lack of independent third party advice sought by the Board” - "The charity and the directors tended not to seek advice nor engage with the external auditors between audits", no internal auditors and no audit committee.

5) "Both the Board and the SMT appear not to have taken responsibility for making decisions to resolve difficulties when they were identified".

The other sections of the report, including those dealing with broader funding issues, are worth a read too.

Its worth noting that the same themes recur in so many organisational failures in the public and third sectors. The sooner those lessons are learnt, the better.

Codes of conduct and the bad behaviour of board members

The Charity Trustees Network is drafting a model Code of Conduct for charities. This recognises the difficulties that can arise from problem board members.

Its worth remembering that having a code is one thing; having the ability and willingness to apply it is another. I know of at least one college that had a code of conduct but did not know how it was going to use it when a governor was accused of breaching confidentiality.

The CTN would like to hear about:

1) the kinds of trustee behaviours that have caused concern and difficulties

2) experience of putting in place and using a code of conduct

Blue Avocado on governance: abolishing board committees

There is a new blog and website for not-for-profits, Blue Avocado. It comes from across the Atlantic but a lot of the issues are the same.

Blue Avocado has just posed the question: Abolish Board Committees?

It goes on:

Too many boards are bogged down by committees that are inactive or maybe even semi-fictitious. And board members can feel compelled to be on three or four committees each!

It suggests time-limited, task-orientated taskforces or working groups. I do not have too much of a problem with that (especially for small community and voluntary groups) although I have seen working groups end up blurring the management-governance dividing line.

It is also noteworthy that Blue Avocado answers its own question by saying:

One permanent (standing) committee you'll probably need is the Finance Committee, which must oversee financial performance on a continuous basis.

I would also urge any organisations with internal audit (or some too small to have it) that an audit committee is fairly essential in good governance.

A leaner public sector?

Today’s Global Business on BBC World Service was about applying the Toyota-style lean production methodology to service industries. (The podcast is avilable but only for a week or so.) Its worth noting that lean is particularly relevant to making public services more effective and customer-centred.

Lean production includes a range of tools including a focus on dealing with the seven wastes:

Defects in products
Overproduction ie the costs associated with the production or acquisition of items before they are required
Transportation of products
Waiting
Inventory ie the capital costs of raw materials, Work-In-Progress (WIP) and Finished Goods
Motion of staff and equipment
Over-processing ie using a more expensive resource than is needed

The ideas of lean are already being applied in some public services such as the NHS and social housing. But much of the potential is being left untapped.

The third sector and terrorism

The Institute of Chartered Accountants’ seminar on charities on Thursday included a thought-provoking session on charities, terrorism and fraud.

I must confess a degree of doubt over whether the WRVS would be targeted by Osama Bin Laden. Moreover, I think that the banks’ money-laundering regulations get in the way of civil society much more than criminals and terrorists who would merrily steal identities to circumvent the bureaucracy. Nevertheless, terrorism should be borne in mind when addressing fraud and other criminal threats as good risk management.

The Charity Commission’s operational guidance on Charities and Terrorism is useful and relevant in the public and third sectors beyond charities.

Lies, damned lies and performance management

Last week’s Public Finance magazine carried an interesting article about performance management – yes, really. It included a disturbing statistic: over 70% of recipients in a recent survey admitted to fabricating performance data. (How many of the others didn’t like to admit it?)

We know about perverse incentives, erroneous errors and even issues with performance data to regulators and clients, but this is organisations telling themselves lies.

(Before I go on, I should stress that I am a sceptic when it comes to “targets” as reform and performance information as a panacea. But performance information is integral to good governance.)

What can be done? A mature attitude to performance information would be a start – seeing it as a means to an end rather than an end in itself; measuring what matters rather than what is easily measurable.

There is also value in assurance. Boards and managers should ensure that key information systems are reliable. How can they do their job if they are driving with a faulty dashboard?

Larger housing associations have to get certain operational performance information systems verified periodically. Other organisations could get internal auditors to check out performance information systems. Yet in most of the public sector and third sector performance information is just accepted at face value.

What’s the point of complaining: learning from mistakes

This month the Heathcare Commission has published its second report on NHS complaints systems. It suggested that the NHS should use complaints to learn from mistakes and promote improvement.

It’s not a new or radical idea. As Bill Gates commented: “Your most unhappy customers are your greatest source of learning."

Yet reporting on complaints is often seen as chore of governance rather than an opportunity for learning. Reports labour over who complains, what about and what happened (in terms of whether complaints “upheld” and remedial action) – with hardly a mention (probably no mention) of what lessons were drawn from upheld complaints (and, of course, even rejected complaints might indicate scope for improvement).

If public and third sector want to improve their complaints processes, there is help out there. The Housing Ombudsman published a guide some year ago which sets out key principles and best practice (pdf available).

Productivity and diversity of perspectives

This week’s Global Business on BBC World Service was about developing effective teams. (The podcast will only be available for a week or so.) Professor Lynda Gratton of the London Business School talked about the key ingredients – which don’t include mandatory team building!

Like James Surowiecki in his excellent book The Wisdom of Crowds, Professor Gratton argues that diversity of perspectives results in creative tension and from that great ideas. She suggested that productivity in the UK would improve if corporate boards had a better gender balance.

That logic applies to the public and third sectors – and other perspectives: culture, belief, disability ethnicity.

Audit committees - some (late) new year's resolutions

I am not having a week of plugging the Audit Committee Institute (sponsored by KPMG). But I would recommend the ACI’s latest quarterly. It carries an article on Ten To-Do’s for Audit Committees in 2008.

A couple of the To-Dos are, in my opinion, less priorities for the audit committees of the public and third sectors. The rest are:

- Be a catalyst for improving risk management and oversight.

- Make sure the CFO (chief financial officer) and the finance team have what they need to succeed.

- Ensure there’s a shared vision for internal audit.

- Encourage (expect) frequent, informal communications with the audit engagement partner.

- Be prepared for a crisis.

- Make sure the full board is aware of the audit committee’s activities and needs.

- Assess the tone at the top and throughout the organisation.

- Take a hard look at the audit committee’s performance.

The article has some suggestions on all of these too.

As I’ve signposted before, there is plenty of useful guidance out there for audit committee members in all sectors.

How well will housing associations be able to digest the credit crunch?

Yesterday I went to an excellent seminar for housing association audit committee members run by KPMG’s Audit Committee Institute. One of sessions was delivered by the Housing Corporation’s head of financial regulation. He spoke about the financial health of housing associations. It was somewhat depressing hearing his summary of the sector's Global Accounts. He noted the pressure on association’s operating margins and their heavy reliance on profits on property sales.

It is rumoured that there are only two lenders in the housing finance market. (And, of course, the margins are higher and expressed over the inter-bank rate LIBOR.) This week Inside Housing is reporting the lenders' loss of appetite. This will hopefully change once the credit crunch passes - eventually. If housing associations struggle to sell shared ownership (and outright sale) new build, they may also lose interest development.

Housing associations (including their boards) need to watch this very closely although there scope for action is fairly limited.

Housing repairs PIs, inspectors and targets

This week’s Inside Housing has a challenging article by John Seddon (the management guru who has popularised “lean thinking” in the UK). He writes on performance improvement in housing - and how, he suggests, targets and the Audit Commission inspection regime hinders it.

Sadly there is no copy of the article on Inside Housing website. However, there is an article making a similar case on John Seddon’s website, Systems Thinking. I have some sympathy with the case being made.

Inspectors (and politicians) often assume that everything can be fixed by targets (or higher targets if performance is not good enough). Sometimes “targets and terror” can work – but I would argue that such an approach cannot deliver sustainable improvement.

Housing associations and ALMOs should not give up all hope. They can do something. For a start, they should remember that the Housing Corporation has shifted the focus on repairs performance indicators from response times to resident satisfaction. It appears to be that few housing associations have re-thought their own repairs PIs and introduced a more holistic and sophisticated framework for repairs performance.

Boardroom furniture – the role of the chair

The recent kerfuffle about Stuart Rose being an executive chairman at Marks and Spencer (ie combining the roles of chairman and chief executive) should be a useful reminder of the importance of the chair in acting as a balance to executive management.

A degree of tension between a chair and a chief executive can be creative. That is more difficult if the roles are combined. In the public and third sectors, we don’t get the roles combined although weakness in either party can result in a similar type of imbalance.

Perhaps relationships between chairs and chief executives are a bit like marriage. The National Council of Voluntary Organisations’ website has suggested prenuptial agreements as a way of avoiding relationship breakdowns.

There is a lot of truth in the old cliché: the chief executive manages the organisation, the chair manages the board. Unfortunately useful advice in applying that can be harder to find. I would signpost new (and not-so-new) chairs to the Governance Hub if they are looking for some guidance.

Beyond decent homes - rooftop swimming pools for social housing?

We are fast approaching 2010 when the decent homes programme is meant to be (kind of) complete. It will have achieved a significant improvement in the long-neglected council housing sector as well as being used to promote reform and modernisation - not least with the successes of the Arms Length Management Organisation model of managing council homes. But what then?

Vienna's alt-erlaa social housing complex includes rooftop swimming pools. I don't think that will be on the agenda here. (I did not post this on April 1st!)

But local authorities, housing ALMOs and housing associations need to do some thinking about strategy - and some talking to residents. It should be remembered that decent homes is a narrow set of yardsticks and - as the name suggested - pretty limited to the basics of "decency". In the twenty first century I would suggest that having a shower fitted something that residents should be entitled to expect (and arguably it is an environmental prerequisite in water-hungry times).

Windfalls for departing bosses – robust arrangements for remuneration and performance management

There has been a lot of debate about the pay-off received by the Northern Rock chief executive, Adam Applegarth. These issues are relevant to the public sector too. Earlier this year we had the £75,000 payment to the chief executive of the “superbug scandal” Maidstone and Tunbridge Wells NHS Trust. Now the Yorkshire Post reports that Principal of Doncaster College has been given a compensation package of £163,000 after seven months doing the job and eight months being suspended.

Boards in the public and third sector must remember that hiring and firing chief executives is central to their role – so they need to have robust arrangements for remuneration and performance management.

Some thoughts on audit, governance and regulation in colleges

I have some doubts over the government’s plans to redistribute the role of the Learning and Skills Council among a Young People’s Funding Agency, adult Skills Funding Council, a National Apprenticeships Service and over a hundred local authorities – oops, I almost forgot the sub-regional clusters. What an article in the Guardian dubbed a "quango tango". Camparisons with the fragmentation of British Rail aren't exactly cheery. But let us put to one side issues of joined-up government and managing the transition, what about the implications for the regulation and governance of colleges who deliver so much education and training?

Presumably the “provider assurance” function of the LSC will be split two or more ways. This will be sad as this will be disruptive and risk a fall-out of auditors who do know colleges - even if they can be frustrating at times. Any loss of experience and expertise may result in a nit-picking defensive mentality or a soft-touch approach (as opposed to an effective light-touch). Possibly colleges will get both.

The re-arrangement of agencies might, on a brighter note, lead to a re-think of audit for colleges. (But I doubt it.) I would query whether the smallest colleges – particularly the smaller sixth form colleges – need their own internal audit service. These colleges often have a total income of a few million and limited non-core activities. They are quite different from Newcastle College with its £150 million income.

The smaller colleges are little different from the schools that they compete with for staff and students. They are arguably less exposed to risk than small housing associations who are not obliged to have their own internal audit.

As always there is a need for a cost-benefit analysis.

I am not downplaying the importance of internal control. I certainly think that all colleges should have their own audit committee – which should assess and report to governing bodies how assured they can be that internal control is robust. Whether they get this assurance from internal audit, external audit, healthchecks by consultants, or whatever, should be a matter for them.

Auditors as unsung heroes and the role of audit committees

No one likes auditors – or so it seemed until I read in yesterday’s Guardian that Auditors are unsung heroes.

To be precise, Duncan Campbell-Smith was only really talking about the Audit Commission who audit local government and the NHS (and inspect social landlords). But I’ll claim some credit as I temped in the mid-90s for District Audit!

It is nice for auditors and accountants to get some good press. Their image problems are such that there are even calls for jihad against the profession.

On a serious note, I do think that when – in the aftermath of organisational failure in the private, public or even third sector - the cry goes up of “where were the auditors”, we should also ask about the audit committee who should have been thinking about risk and internal control. Auditors need audit committees to keep them on their toes. In order to do that effectively, audit committees have to know what their own purpose is. Too often they don’t.

The end for Carter & Carter - FE college comes to the rescue

Last week brought the good and perhaps surprising news that the training giant Carter & Carter was to be taken over by England’s largest FE college. The acquisition by Newcastle College will save 1500 jobs. (The reach of the college was already far-reaching – at least geographically.)

As I’ve discussed here before, Carter & Carter started off with big ambitions – it promised to overtake Cambridge University in size. Instead it was plagued by at least bad luck.

This isn’t the first take over of a private training provider by a college but it is in a league of its own. (Not all such acquisitions have been very businesslike – I know of one which ended in tears after the college involved did not undertake due diligence.)

The take-over is not so good news for promoting contestability in the FE sector. Carter & Carter could have been in the market for rescuing and turning-around failing FE colleges – its a strange twist of fate that it was the other way round.

LSC RIP - Chronicle of a death foretold

Today the government announced that the Learning and Skills Council will be axed in 2010. It will be replaced by a Young People's Learning Agency, charged with helping local councils work together in providing for 14-19 learners, and a Skills Funding Agency (SFA) to administer funding to colleges and training providers.

When it was set-up in 2000, the LSC was built very much on the basis of the local Training and Enterprise Councils. If it had been built around a regionalised and reformed Further Education Funding Council (its predecessor), its early years may have been happier.

While the writing was on the wall for some time, now colleges will now be preparing again for the unknown. Let’s hope the government manages these changes effectively without destabilising and fragmenting the learning and skills landscape.

Policies all round – the Daily Telegraph on the “regulatory thicket”

The Daily Telegraph website carries an anguished article by Charles Moore about the regulatory burden of “policies” on civil society.

Moore writes:

A "policy", you must understand, is not a simple thing any more. It is not just a statement like: "We aim to provide residential care for the elderly" or "We try to cure children with spinal injuries" (or whatever). Nor is it just a statement of specific rules such as "No alcohol may be consumed on the premises" or "Pupils need not wear school uniform in the sixth form".

No, a policy has to be a lengthy document on anything that the Government thinks important. It must set out aims, procedures, targets, monitoring, assessment, evaluation and so on. Depending slightly on what sort of organisation you are, you must have policies on health and safety, access, disability, recruitment, transparency, energy efficiency, environmental health, etc, etc.

I share some of this frustration. (I’ve blogged on “over-policying” before.) However, I do not share Moore’s ideological diagnosis:

The "speech community" of the post-1960s Left has gained almost complete power and influence over the administration of government. Its concepts, its way of putting things, now have the force of law. It is producing the slow death of free institutions in this country.

Neverthless, the proliferation of policies like a triffid in public services is a threat. Public and third sector organisations need to adopt a sensible approach – streamlining things where possible by combining some policies and relegating some to “procedures” outside the remit of board governance. Sometimes they need to have confidence and stand up to regulators when the so-called “good practice” of having a particular policy will get in the way of effectiveness. Above all there is a need to focus on improving outcomes rather than being in thrall to process. (Too many action plans can be just as much a distraction as too many policies.)

I would also suggest that organisations look at the Policy Governance model of the American organisation guru John Carver which focuses on policies as central to the role of boards in governing organisations. In this model:

Policies are written statements that are designed to provide that framework of values and perspectives and thus guide further decisions. They set up rules, defining what is to be accomplished and what should not occur. The policies are embodiments of the values and perspectives of the greater authority that the board stands in to represent. If policies direct all further decisions, then the best place for leadership is in the development of policy.

It sounds like common sense but many organisations struggle with this and end up micro-managing (often encouraged and/or coerced by the regulatory pressures discussed by Moore).

Personalisation and Co-operation - mutual solutions in social care

Today I went to a co-operative movement conference on Personalisation and Co-operation. The speakers were Neal Lawson from Compass, Helga Pile from UNISON and Mick Taylor from Mutual Advantage.

I am sure that I will blog some more later on some of the broader issues but I found Mick Taylor’s contribution particularly interesting and inspiring. He has been working with a new co-operative society, Caring Support, set-up to pool individual budgets of a group of social care users. This gave them collective and individual control over the services that they received as well as providing for better terms and conditions for the staff.

I do hope that the co-operative movement will promote and incumbent such mutual solutions to the challenges of an ageing society and the needs of the most vulnerable users of public services. The government appears interested in this area with the recent announcement of more money for the Social Enterprise Investment Fund.

Getting the goat - Conservative plans on homelessness

The budget may not have been very exciting but the opposition is really getting serious about the housing crisis. The Financial Times reports that Conservative MPs and conference delegates are being urged by Caroline Spelman, their party chairman (sic), to help build a shelter for a rare breed of Bagot goats at a working farm near Gateshead.

Surveying UK civil society

As a corporate affiliate of the National Council for Voluntary Organisations, today I received my copy of the new UK Civil Society Almanac 2008 (pdf of the executive summary available). It is a pretty comprehensive review of where the third sector is at. Significantly it takes over from the previous NCVO almanacs of the voluntary sector with their narrower coverage.

The Almanac's executive summary notes that civil society organisations account for £109 billion of income in 2005/6. That’s a lot of activity. (I would query the inclusion of “independent schools” as part of civil society but the omission of Further Education Colleges which give so many young and not-so-young people a second chance as well as opportunities to develop skills for citizenship and employability.)

The Almanac addresses many important issues for the third sector which I will no doubt blog about as I read my way through the book.

Looking forward to a period of financial uncertainty the Almanac comments: “It remains to be seen how this will affect civil society, but the difficulties at Northern Rock plc highlight the dangers.”

Audit committees with added value - the NAO's "top tips"

The National Audit Office has launched a new edition of its Audit Committee Handbook. While it is primarily intended for audit committees of government organisations, other audit committee members may find it useful.

Alongside the Audit Committee Handbook there is a self-assessment checklist and a guide to “adding value”. The latter includes some practices that many audit committees would consider to be fairly routine or standard. However, it does suggest some practices that are less common but would certainly add value such as:

- calling appropriate business heads to meetings to explain how they are delivering on their agreed actions or on risks for which they are responsible; and

- improving communication between audit committee chairs and auditors with meetings outside of the formal committee meetings.

Supporting student governors - learning lessons from Scotland?

This week I discovered the sparqs website. It is a free service which is funded by the Scottish Funding Council to assist and support Scottish students in improving promoting quality improvement. I am not aware of anything similar in England – we could perhaps learn from our devolved cousins.

On the sparqs website there is a useful Supporting College Student Governors Handbook. (We’ll have to forgive whoever forgot to proof read the web page about it. The odd typo creeps onto this blog so I won’t cast the first stone.)

The Supporting College Student Governors Handbook sets out key information for student governors including how they can engage with their fellow students.

In the Handbook I did find some confusing wording on the difficult issue of to represent or not to represent. It notes: “Governors do not represent particular groups or interests, and as such they cannot be mandated.” Yet elsewhere: “Although you gain your position on the board as a student representative, remember that all of your decisions as a board and as an individual member will impact on other stakeholders too.” I would suggest that student governors are not student representatives but are there to give a student perspective – not least in a providing a reality check in what can be an isolated governance bubble. (I would suggest that the same issues arise for resident members on housing association and ALMO boards – or indeed any board members who are customers.)

I would also query the relevance of the examples of conflicts of interest in the Handbook. They are not likely to encounter the examples given. How many student governors are likely to also be a company director in the construction industry? Examples relating to, say, grants to student unions may have been more instructive when student governors may also be active on student union executives.

Despite my misgivings over some elements of the Handbook, I would like to see something in England for student governors. It would be timely given the profile now given to Learner Voice.

E-openness: New Freedom of Information website from mySociety

There is new website from mySociety (the people who brought you They Work For You and Directionlessgov). The What Do They Know site focuses on Freedom of Information. It helps you to easily and simply file request and share information on these requests and their results. The site is still in development but it is working. Have a look and maybe use it!

Commitment to reduce public sector bureaucracy

Sadly the aim “to reduce the enormous quantity of meetings, co-ordinations, permissions, conciliations, dispositions, regulations, circulars, etc, etc.” is in Cuba rather than in the UK public sector.

It will be interesting to see if Raul Castro can deliver on his commitment and breathe new life into Cuba’s centrally planned economy. Closer to home the jury is still out on Gordon Brown’s own commitment to regulatory reform. There does appear to be continuing threat to the independence of foundation hospitals.

Governance matters – at last proof that doing things right means better results

It was good to read in The Guardian this week that well governed companies do perform better than badly governed ones. This proves that it is worthwhile for organisations in all sectors to listen to the advocates of better governance.

In the past doubters could always stall and ask for the proof. As one of the many reports on governance in he 1990s reported a little feebly: “Business prosperity cannot be commanded. It is important to recognise that there is no hard evidence to link success to good governance, although we believe good governance enhances the prospect.”

But no more! The researchers at the Association of British Insurers analysed 241 companies with the best and worse corporate governance records. They found that governance drives performance rather than the other way round, and found lags of two to three years in the relationship between poor governance and inferior performance. For each year a company was in the worst category for governance, its return on assets fell by about one percentage point a year.

While the study was looking at the private sector, I think it’s reasonable to apply its lessons to the public and third sectors where practice can be found to be a lot better and a lot worse than the private sector.

The vulnerability of chief executives in FE and housing

In the FE and social housing sectors where I spend a lot of my time working, I’ve noticed that the industry press have been talking about the vulnerability and turnover of chief executives.

Inside Housing reported that arm's-length management organisations (ALMOs) have experienced massive upheaval over the last year with a quarter replacing their chief executives. It talked about pressure to meet the decent homes deadline, interference from parent local authorities and the desire of some chief executives to take on a new challenge

The FE pages of the Guardian reported that college principals are now like football managers - they don't last long if they don't get results. It also reported that research suggested had found that “excessive audit cultures, inconsistent funding and multiple community engagements” resulted in a growing disinclination for qualified candidates to apply for vacancies.

Should we worry? I am suspicious of the cult of the CEO – chief executives are not superheroes. (Nor in fact are football managers – see King Kevin at Newcastle United.) As one author has pointed out “Past success is no guarantee of future success”. Sometimes chief executives are just lucky – chief executives (and boards too) are at the helm of successful organisations (or what are perceived to be successful at the timel – look at Enron or Northern Rock).

Nevertheless, I have seen how a lack of leadership can be debilitating. Organisations in public services will be losing direction if they do increasingly lose their chief executives.

The creative industries in UK plc: the third sector, education and training

It is good to read that the government is providing for 5,000 new apprenticeships in film, fashion, music and design as part of a new strategy for the creative industries.

I’ve been doing some work with third sector organisations recently – many of which are well placed to assist this push on education and training for the creative industries. I have learned a lot about how creative industries are a key element in the British economy.

Research by the think tank Demos has found that the creative industries employ 1.8 million people in the UK. The creative industries are definitely not a passenger in UK plc – they are a driver. Sadly this is not widely understood. (I once had to explain how the creative industries were as much "wealth generating" as manufacturing industry to a documentary maker who asked me how this could be!)

The property market and the implications for housing policy and housing associations

The property website Rightmove reports that the asking price for houses moved up last month. Rightmove's latest survey for the month to February 9 shows that asking prices rose 3.2 per cent to £237,856. The rise, averaging £7,428, pushed the annual rate of growth up to 5.8 per cent, from 3.4 per cent in January.

Don’t get over-excited. This is asking prices – the prices are much higher than the final sales prices recorded by the Land Registry. Rightmove also point out that there is often such a pick-up in February.

Perhaps the real picture is better shown by the falling prices – some pretty spectacular – on Property Snake.

No doubt there are some recession-proof areas, particularly in London – but the property market correction is surely here.

What does this mean for housing policy and housing providers? Some housing associations will be struggling to sell the shared ownership properties that they have built or got through section 106s. Where business plans rely upon shared ownership and even outright market sales there could be problems. Those problems could have an impact for the policy-makers (and those suffering the effects of the housing shortage) where difficulties prevent the delivery of ambitious affordable house-building plans (plans that already seem to be a bit of bother).

The Healthcare Commission learning from investigations – mergers, targets, governance and other common themes in public services

The Healthcare Commission watchdog has published an interesting analysis of lessons from 14 investigations into patient safety failures. Such analyses of failing organisations are always to be welcomed. In social housing there are the Learning from Problem Cases series of reviews into "supervision" cases (see the Housing Corporation website here and here). Sadly in other sectors, such as further education colleges, there are ad hoc reactions to failures rather than systematic reviews and efforts to promote learning.

The Learning from investigations report (pdf available) found common themes:

1) Leadership and management: Poor leadership was a problem in nearly all of the investigations carried out by the Commission.

2) Some boards had been focused on mergers or targets at the expense of their broader activities.

3) Lack of continuity in leadership was a problem in some trusts, where frequent changes in management were a factor in poor care. Bullying and harassment by managers was a factor in two cases investigated. The Commission found there was a fine line between promoting change vigorously and bullying.

4) Investigations often uncovered a breakdown in leadership and management, with a lack of clarity on responsibilities from board to ward. Poor teamwork, either between management and clinicians or between clinicians themselves was another common factor in failings.

5) Use of information: The Commission found that most of the trusts investigated did not have adequate systems in place to routinely inform the board of trends or potential problems.

6) Mergers and restructures: Seven of the trusts investigated had recently undergone mergers or significant organisational change.

7) Safeguarding vulnerable adults: Poor understanding of adult protection procedures and responsibilities was a serious problem in the two investigations into learning disability services and also a number of interventions in trusts.

8) Poor care on general wards: When its investigations looked at acute hospital care, the Commission noted that care on general wards fell well below the care provided on specialist wards. Older patients were most at risk as they were often most dependent on good nursing care.

It is note-worthy that the first five of these themes are found widely across public services.

Northern Rock and mutualism

As the government nationalises the Northern Rock its worth taking this opportunity to remember that the bank used to be that most solid of institutions, a building society owned mutually by its customers.

If Northern Rock had not succumb to de-mutualisation in 1997, it is unlikely that it would have experimented with such a risky business model based on lending long and borrowing short with wholesale funds.

Its official: efficiency gains claimed by housing associations "do not reflect the whole picture"

Readers of this blog will know that I am a long time skeptic about the huge efficiency gains being claimed by housing associations through the annual efficiency statements to the Housing Corporation. All sorts were being claimed without much concern for definitions or common sense. (The efficiency gains reported reminded me of reading Soviet Weekly on grain targets.) I was heartened to read that the Audit Commission has one or two doubts too.

In the Commission’s new report on procurement (Better Buys - pdf available) they note that reported efficiency gains represent 3.5 per cent of aggregate turnover and 4 per cent of total expenditure of the sector in 2005/06. Yet they observe that “these global cost savings do not reflect the whole picture” and remark on the reliability of these figures.

It is particularly interesting that in an attempt at verifying of a sample of annual efficiency statements, but it was not possible to track the efficiency savings reported in the statements into associations’ management accounts.

Thank goodness the Housing Corporation has abolished this requirement. It is a lesson in how efficiency gains cannot be brought forward at regulatory behest.

Corporate fundraising: the cautionary tale of the Northern Rock Foundation

Northern Rock gives us a cautionary tale on corporate fundraising for charities. For a decade the Northern Rock Foundation has made an poured millions of pounds into voluntary and community organisations in the north east and Cumbria. But the future of the Foundation and for its beneficiaries is uncertain.

The Financial Times reports that the Foundation ploughed 5 per cent of the Northern Rock’s pre-tax profits each year into charitable works. In 2008, it looked set to receive in excess of £35m from the bank, its largest injection of funds ever.

Believing future funding was assured, the Foundation spent most of its money, rather than tying it up in endowments. Of the £190m it had received, it spent £171m to date. In response to the bank’s difficulties, 2007 foundation spending was trimmed to £23m and 2008’s cut to £7m. Future grants are expected to be much reduced especially for some sector such as culture and heritage.

Third sector salaries in 2007

The Workforce Hub has just published the main findings from the 19th Annual Voluntary Sector Salary Survey. Its makes interesting reading which will be of particular interest to those responsible for human resources and financial management (including business planning and financial forecasting).

The Salary Survey found that average salaries and earnings in the voluntary sector each increased by 3.7%, a higher rate than the Average Earnings Index of 3.0%, but below the Retail Price Index of 4.3%. The increases are slightly lower than twelve months ago when both increased by 4.9%.

The Salary Survey found that 62% of organisations had experienced problems with staff recruitment in 2007: an increase of almost 10 percentage points from last year. The main reasons behind these difficulties were a lack of suitably trained applicants and the salary levels available. Likewise problems with staff retention were more widely reported as was an increase in staff turnover.

2008 may be the year when the squeeze on public finances impacts more radically on salaries in the third sector as well as the public sector.

Eco-office - an example for all

I’ve had a busy weekend. As well as the NHF Board Members’ Conference, on Friday I attended the official opening Christ Church Memorial Hall eco-office – a part of a £2.3m eco neighbourhood project led by Family Housing Association (Birmingham).

While I must declare an interest as a board member of FHA (Birmingham) board, the eco-office is an excellent exemplar of good practice for private, public and third sectors. Moreover the opening was well-timed as last week was European Sustainable Energy Week.

There is more on the eco-office and the associated projects on the FHA (Birmingham) website.

Social housing reform - priorities for housing associations

I spent the weekend at the National Housing Federation’s conference for housing association board members. One of the more interesting sessions was speech by Terrie Alafat, Director of Housing Strategy and Support

In an update on the government’s agenda of social housing reform, the main policy priorities with a bearing on housing associations were identified (according to my scrawled handwritten notes) as:

- Preventing homelessness.

- Addressing worklessness.

- Specialist services for the socially excluded.

- Tackling overcrowding.

- Improving choice and mobility for tenants eg choice based lettings, common housing registers.

And, of course, there is the challenge of ramping up house-building to about 70,000 affordable homes a year by 2010/11.

It was good to hear a range of policy concerns being talked about – without disproportionate emphasis on shared ownership.

Better Buys – housing association procurement and repairs

On Friday the Audit Commission published an enlightening and challenging study on housing association procurement. The Better Buys report (pdf available) includes the diagram above which presents the “low hanging fruit” and the less easy wins available diagrammatically.

The study found that a third of efficiency savings by housing associations in 2006/7 came from procurement. But significantly shows that further annual savings of about £100 per home could be made through the better procurement of housing maintenance services.

The report’s main recommendations for housing associations (but with relevance to other social landlords) are:

• identify gaps in procurement skills and take steps to fill those gaps, either by building in-house capacity or seeking external expertise;

• identify and collect information on the market before considering procurement options and ensure that performance monitoring and benchmarking is undertaken as part of the procurement cycle;

• consider and evaluate all models of collaboration for achieving greater efficiency, including shared services in groups and consortia;

• explore and evaluate a greater role for e-procurement tools; and

• ensure that residents are involved in, and have appropriate opportunities to influence, relevant procurement processes.

Charitable giving: international league tables and support for the arts in the UK

It was depressing to read USA Today report how badly European countries – including the UK – compare with record levels of charitable giving in the USA.

Last year Americans gave nearly $300 billion to charitable causes - a record exceeding the 2005 total that had been boosted by a surge in aid following Katrina and the Asian tsunami.

A Charities Aid Foundation study in 2006 found that philanthropic giving as a percentage of gross domestic product, put the US first at 1.7% with the UK second on 0.73%. (That compared well with France’s 0.14%!).

There was good news yesterday from Arts & Business who have found that the private sector is putting more money into the arts than ever before. The total amount of private support for the arts has grown by 11% to £599 million.

I do wonder how the interest in corporate social responsibility will weather increasingly uncertain and stringent economic times. However Arts & Business are highlighting the tax incentives to give.

Time to repeal some laws of unintended consequences?

A lot of those who moan about red tape (including clumsy and heavy over-regulation in public services) talk about the compliance costs (eg the former Better Regulation Commission’s first aim was in relation to “unnecessary regulatory and administrative burdens). There is less discussion of the nasty effects in the form of unintended consequences.

Stephen J. Dubner And Steven D. Levitt, the authors of the economics best-seller Freakonomics, have written a well-argued article about how the most powerful law is the law of unintended consequences.

Too often policy makers are far more aware of market-failure than they are of regulation-failure. Hopefully they will read the article by Dubner and Levitt.