Letter From The Front...

Beverley Taylor,Head of Corporate Services, South Essex Holmes talks about developing Governance in a new organisation

"South Essex Homes Ltd (SEH) was set up as an Arm’s-Length Management Organisation (ALMO) in October 2005, following a housing stock options appraisal by Southend-on-Sea Borough Council. The ALMO manages just under 6,200 tenanted and 500 leasehold properties, hostel and garage properties on behalf of the Council - which is the shareholder of SEH. Levels of disadvantage experienced by residents are much higher than for the borough as a whole, with 56% of tenants having an illness or disability and 68% receiving housing benefit. 97% of residents are white British.

As reflected in our mission statement, at the heart of our business are residents, who are involved in every stage of our service delivery. This includes from grass roots level to more strategic areas. Integral to this relationship is the Board Membership which is made up of 5 residents, 5 local Council nominees (nominated on an annual basis) and 5 independent people, often recruited through advertisements. With a range of diverse and different skills, the task of developing a Board in a new organisation proved to be a challenging yet exciting one for us. First the formalities needed to be established: Corporate governance is the system used to direct, manage and monitor the organisation and enable it to relate to its external environment. Therefore strong corporate governance is key to ensuring arrangements are in place to conduct our core business in accordance with Company Law and proper standards; and to ensure that public money is safeguarded and properly accounted for, by being used economically, efficiently and effectively

Guidance for ALMO Board arrangements are based on the National Housing Federation’s guidance for the housing association sector. However there are three key differences. Firstly, ALMOs are limited companies and their Directors are bound by Companies Act legislation. Secondly, they have just one shareholder (their sponsoring Council) and thirdly members come to the Board from a range of sources as previously stated, including residents (who are usually elected from the wider body of residents). SEH has successfully recruited a wide range of independent members, although it has not always been easy to do this. Advertising and formal interviews have been carried out. Local authority nominees have a good mix of skills and experience to offer - perhaps most importantly they are very committed to the ALMO and want to give the time and input which will deliver the desired improvements. The Board members bring a range of skills and expertise to the organisation which include leadership flair, strategic direction, effective risk assessment and control. Guidance also suggests the Board should demonstrate: high ethical standards, have an accountability and openness to residents and other stakeholders and a clear commitment to equality and diversity.

As a young organisation, who were not only establishing themselves in the local community but also had to ensure that the governance foundations were well maintained and set in place, a key corporate role had to be to ensure a regular review of the Boards performance and clarity over their roles and responsibilities was outlined. Over time we developed a strong working relationship with the Board and ensured they were provided with the tools necessary to fulfil their role. This included introducing a specialised development programme, including induction for new Board members, a ‘buddying’ and mentoring scheme to address and identify weaknesses and a 360 degree appraisal process which captures and links Board performance to the Company’s strategic plans There is an efficient and effective support network that ensures Board Members are able to carry out their roles and responsibilities in accordance with the Code of Governance and Code of Conduct. This includes a Board Support Officer, whose job is to support members in practical ways (for example arranging meetings, refreshments, taxis, etc). Strong relationships have allowed members to feel able to contact relevant staff on issues outside of meetings. Members welcome this and find staff approachable. The start times/dates, location and arrangements for meetings seem to work well. Members of the public may attend Board meetings and are actively encouraged to do so. All new Board members are provided with an induction pack, which includes useful information. It sets out the company and committee structure and contact details for the Board and the senior management team. A comprehensive code of governance prepared by legal advisors is also included, and some development opportunities are contained. The programme which takes place over a three month time frame includes meeting with the Executive Managers, the Chair of the Board and other staff members. In addition a tour of offices and the housing stock is arranged to encourage new Board members to “get up to speed” on the Company’s management role.

Over time, we found crucial to the Board’s ability to adhere to best practice principles is the relationship between senior staff and the Board and in particular that of the Chair and Chief Executive. The Chair has to set the tone for how business is conducted, and ensure that Board members know what is expected of them. The Chief Executive has to support the Board in achieving these high standards and the Board cannot achieve success if they are isolated from the senior team. The key to a successful Board is not only ensuring that internal relationships are developed but also that Board members have a strong understanding and appreciation for the bigger picture. In a time of change, with John Healey recently replacing Margaret Beckett as Housing Minister, is change always as good as a rest ? Only time will tell, but one thing for sure is that the Tenant Services Authority (TSA) have come in and ruffled a few feathers. The TSA were tasked with the enormous job of finding out how satisfied residents are with their housing services on a national level and, in time, to set standards for all housing providers.

The TSA have recently released the conclusion of the first phase of their National Conversation with residents and other Stakeholders. This places ALMO’s in a some what ambiguous position, waiting to see what the next steps will be. The early indications show that black and ethnic minority tenants are the least satisfied with their landlords, and that tenants often perceive services offered by their landlord as being better if they have a good relationship with its staff.An early signal from the TSA sets out their view about the sector moving to a co-regulatory system, where the TSA sets overarching national standards but gives landlords freedom to draw up a list of local priorities. The Tenant Services Authority will be holding further consultation exercises with Arms Length Management Organisations in coming weeks and it is understood that the national standards will be grouped under six broad themes, according to proposals currently being discussed in the run-up to the consultation.

While the longer term future for Arms Length Management Organisations and their priorities is a little unclear at present, one lesson we can certainly share in terms of developing successful governance structures in a new organisation is to ensure you have the support in place to offer a structural operating framework to Board members and the necessary polices and procedures in place to make the journey a smooth one.