It was really sad to see the collapse of Kids Company recently: an organisation that undoubtedly did a lot of good for the people it was set up to serve. What was disappointing was the apparent refusal from those who ran the organisation to accept any responsibility for what had happened. It’s not always other people’s fault.
There is a real risk that those who have been in an organisation in one capacity or another, after a certain length of time, forget they are running a business; that their primary role is to act in the best interests of that business and ensure it can achieve its objectives in the long-term. Risks emerge around ‘group think mentality’, an inability to see the wood for the trees, or a view that the work being carried out is so unique and important that failure could never happen. Those who provide the charismatic lead can lose focus; those who should provide the challenge and strategic overview can become part of the furniture and stop providing effective challenge.
There has been a bit of noise recently in the housing world regarding mergers. Is there an agenda for mergers? How many mega mergers will we be seeing? Are smaller housing associations doomed to be swallowed up? As I said, it’s all noise. What is absolutely true is that with a call for housing associations to demonstrate greater efficiency, the boards of those organisations should as part of their fiduciary duty be considering ways to achieve efficiency, one of their essential functions as defined in section C1 of the National Housing Federation’s 2015 Code of Governance.
They should be looking strategically at ways of achieving real long term efficiencies. This could include looking at the structure of the organisation to see if there are ways of rationalising the sheer admin of running the existing structure. They could consider whether there are any opportunities to form alliances with other organisations to achieve long-term cost savings and efficiencies. They could consider whether the mission of the organisation is best served by seeking merger partners.
It is for the board, along with the executive, to have these discussions and it’s for the board, as the strategic body at the helm of the organisation, to give consent to the executive to look at the options in more detail and come back with proposals for the board to agree or not. To do this and to monitor the process, the board have to be skilled in certain areas, for example:
- up-to-date finance
- change management
It needs to look at the future of the organisation and decide what skills it needs in order to achieve its aims and objectives. I look forward to expanding on these themes when I talk at the Northern Housing Consortium’s Governance and Assurance conference on 7 October.
Meanwhile, I’d be interested in your thoughts – tweet me @StephenMBull.