In the foreword to “Regulating the Standards”, the Regulator of Social Housing’s Chief Executive Fiona MacGregor writes, “Board members… are responsible for ensuring that [housing] providers are being managed effectively and meeting regulatory requirements.”
Helpfully, “Regulating the Standards” provides a list of what it requires from RPs. It talks about having a strategic conversation about the quality of their governance and their financial strength, underpinned by the three economic standards: Governance and Financial Viability, Value for Money and Rent.
Beyond this, the Standards are vague about what “managing effectively” means in practice? However they emphasise the “effectiveness” rather than “performance” of the board. Measuring the board’s performance is all about outcomes: decisions taken, data reported and compliance steps ticked; important indicators for RSH, but not the primary measures of effectiveness.
Measuring effectiveness isn’t solely about what the board does. It is also about who the board is and what the board stands for, which is why regulators including RSH pay attention to board values and diversity when considering the quality of the organisation’s governance. Who the board is and what it stands for are, if anything, more important to the Regulator than what the board does.
So how can we measure the effectiveness of a board?
A useful starting point is to consider the board’s accountability – what is the board accountable for and to whom is it accountable. Examining cases where the board appears to have failed the accountability tests helps to learn lessons about measuring the effectiveness of boards.
A recent high-profile example helps to illustrate the accountability point. The dismissal of the Confederation of British Industry’s Director-General (CEO), Tony Danker, ignited a fuse which within days brought a once powerful lobby body to its knees. Already rocked by scandals, the Chair of CBI sought to dissemble the circumstances surrounding the CEO’s dismissal and hastily replaced him with a former CBI executive, when wiser counsel suggested that what was needed at CBI was a completely clean slate.
This case highlights a number of governance actions or inactions, notably:
- Failure to challenge actions of the CEO which in his words were known inside the organisation
- Failure to provide a safe space for employees to come forward and speak up about incidents that concerned them
- Failure to address long-standing, deep-rooted cultural and behavioural problems inside the CBI
As the CBI NEDs digested the news on the weekend of 22nd/23rd April that some 60 corporate members, including household names such as John Lewis Partnership, Virgin Media O2, BMW and Aviva, had resigned or suspended their membership, they would have been well advised to hold up their personal governance mirrors and ask themselves the following questions:
- Did I uphold CBI’s values in the boardroom?
- Did I properly challenge unethical behaviours that impaired the values?
- Did I speak up when I should have, to influence my board colleagues?
- Have I fulfilled my role as ambassador for CBI, outside the boardroom?
These questions are among the principles of good governance addressed by “Ten Steps to Become a High Performing Board©”, in my Exploring Governance series which will commence in the next edition of Housing Executive magazine in May.
Finally the board members might ask themselves and their colleagues, have we held ourselves accountable to our stakeholders and have we been collectively effective as a board? This is a question to which all boards and board members must frequently return. It goes to the heart of what it means to measure board effectiveness, a subject which I will cover in future articles.
David Levenson is a housing non-executive director, boardroom coach and advisor, and governance trainer.
David has devised a system for measuring a board’s collective effectiveness which he will be talking about on “Measuring the effectiveness of boards”, a forthcoming webinar for the NED Network of Housing Association Charitable Trust (HACT) on Monday 22nd May at 4.00 pm.
Apply to join this event: here
Click this link to become a member of: NED Network