The heart of the matter
Ruth Cooke may have taken on the chief executive’s role at Midland Heart, but, as Gavriel Hollander finds out, she plans to put her employees at the centre of decision making.
The first change Ruth Cooke made at Midland Heart after taking over as chief executive last month was to remove a wall from the front of her office and replace it with a glass window. As a metaphor for Ms Cooke’s attitude to her new role, it couldn’t be more apt.
She may be inexperienced when it comes to holding such high office - 37-year-old Ms Cooke was finance director at the 32,000-home housing association before taking the top job after Tom Murtha retired at the beginning of April - but that does not prevent her from displaying the kind of openness that comes less easily to some of her longer-in-the-tooth peers. Midland Heart’s 1,600 staff will soon feel the full impact of their new chief executive’s taste for transparency after she revealed plans for an organisation-wide staff engagement exercise.
Initially dubbed a ‘mutualisation’, the proposals fall short of making employees stakeholders in the company, but the idea is to show that the solutions to the myriad challenges facing housing associations do not always come from senior management.
Front line staff at the organisation could have a say in how the organisation spends its £16 million-a-year surplus under the plans, which will be finalised this autumn.
‘It is about a culture change,’ asserts Ms Cooke, when Inside Housing meets her in her newly accessible base in Birmingham. ‘I wouldn’t pretend we’re there yet but it’s about saying that at the top of the organisation we don’t have all the answers. We’ve got to trust our staff.’ (See box: Employees’ questions for the chief executive).
The idea of full mutualisation along the lines of the John Lewis co-operative model in which staff own the business - was discussed at executive team level but rejected ‘fairly quickly’. The reason gives a good indication of what is currently first place on most chief executives’ worry list. ‘The minute you talk about [new] ownership models or moving assets around, you start thinking: “What are the funders going to say about that?” I can’t envisage any circumstances where a funder would want to explore that model without a substantial repricing risk.’
Sensitivity to what its financiers might think is particularly relevant to Midland Heart at the moment. A debut bond issue of £150 million is on its way, most likely in September. It will help fund one of the largest development pipelines under the Homes and Communities Agency’s £1.8 billion affordable homes programme. The 1,685 homes - including 1,476 for affordable rent and part-funded by a £39 million HCA grant - represents the most extensive programme of any midlands-based provider.
Other midlands landlords - most notably Bromford Group, which received funding for only around a fifth of the homes it bid for - did not fare as well when the allocations were handed out by the HCA last summer, leading to some suggesting that the midlands has been overlooked.
With capital funding cut as part of the 2010 spending review, landlords will now subsidise building programmes through revenue streams by charging up to 80 per cent of market rent. Despite her organisation’s positive result, Ms Cooke is far from a cheerleader for the new funding regime.
‘There was always a problem with the model in that it only worked in London and the south east because it was only there where the market values were so high. We did relatively well because we put together a programme where we could deliver properties in what look like low-value areas as we’ve got the breadth to deliver in higher-value areas too.
‘Our programme includes parts of Birmingham where values are high but we’re also in Stoke-on-Trent, where they’re not so high.’
Facing the future
The prospect of an even tighter funding system for the 2015 round of the programme brings a fresh set of challenges. ‘I don’t think it will be zero grant, but it’s difficult to argue there will be any more than this time,’ predicts Ms Cooke.
‘As with most large developing associations, we can’t repeat the  programme,’ she warns, before suggesting that a repeat performance may need to be predicated on building more homes for market sale or private rent.
Source: Edward Moss
‘But as a midlands provider I’m not sure we want to have a high proportion of market sale, so do you do less or does it mean you look at other sources of revenue?’
Ms Cooke accepts that her step up to chief executive has been a big one. When asked about the learning curve, she just laughs and raises her arm to show the kind of gradient that would make a Tour De France cyclist wince.
The mother of two also acknowledges that being a young woman with a family and a high-profile job to boot heaps extra pressure on her shoulders. Does she willingly accept her position as a potential role model?
‘I think you have to,’ she shrugs. ‘There are more women chief execs than there used to be in the sector but they’re still a minority and if you’re younger than some of the others then of course you’ve got responsibilities.
‘If you’ve got a family then you have people asking about work-life balance; it’s one of the first questions most people ask. But I don’t think I’ve ever had the question that’s posed in a way that suggested you didn’t get the job because you’re good enough. As long as people recognise that you’ve got the job on merit then it’s not a big deal.’
Her experience among the bean-counting tribe also means that she does not need her hand held when it comes to razor sharp analysis of housing policy. Nor is she reluctant to offer a critique of government initiatives.
She calls the reinvigorated right to buy initiative ‘a massive challenge for the sector’. While the prospect of increased discounts for tenants who want to buy their former council homes will not greatly affect Midland Heart, she is concerned about the overall impact.
‘If you have a property that has a reasonably low value and you have a very significant increase in the level of discount we are never going to replace one for one; to think that we might is daft.’
On the Welfare Reform Act, Ms Cooke insists that direct payment of housing benefit to tenants as part of the universal credit should not be continued if tenants fall more than four weeks behind with their rent. Current proposals from the Department for Work and Pensions would allow eight weeks of arrears to build up before payments revert to landlords.
‘We understand the argument with DWP [about direct payments] is lost,’ she explains. ‘Now it’s about at what point payment to landlords should restart. Either you identify vulnerable tenants right at the start of their tenancy and consider direct payment [to landlords] or you have a process that says maybe at four weeks, if we’ve had no money, then they should be re-instated.’
But despite her willingness to pick holes in policy, Midland Heart’s new boss knows that the housing sector cannot afford just to be a gadfly on government. ‘I think the sector has always been quite good at not just taking the view that everything’s awful and it’ll never work,’ she elaborates.
‘If you look at what the sector has had to cope with, it has coped with it all and continued to deliver.’
She is loath to pinpoint any differences between herself and Mr Murtha, who was chief executive at Midland Heart and its legacy organisations since 1996. But she acknowledges that her predecessor was able to direct more poisoned arrows at the powers that be in his final few months in the job, such as his attack on housing minister Grant Shapps in January, after Mr Shapps criticised the sector’s ‘lazy consensus’ - its resistance to reform to tenancies and benefits.
‘Tom was passionate about the values of the sector and about not forgetting what we are here to do,’ says Ms Cooke, noticeably careful in her choice of words. ‘I’m absolutely with him, but my approach is more about how we can work with the environment we’ve got now and still deliver.’
Mr Murtha agrees there is a difference in style. ‘I think our views are the same but maybe she’s more subtle.
I tend to be seen as a bludgeon, she has a more “rapier and stiletto approach”.’ Having moved into the sector only nine years ago, after training as an accountant at Pricewaterhouse Coopers, Ms Cooke has developed a passion for housing. But although her office door may be open to Midland Heart employees, once she gets back to her husband - a former builder - and her children in their ex-council house home in the Cotswold village where she grew up, she tries to leave work behind her.
‘We don’t talk shop,’ she laughs. ‘It would be ever so dull, wouldn’t it?’
Employees’ questions for the chief executive
How would you describe your leadership style?
Ruth Cooke: ‘Clear about what we need to achieve as an organisation and expecting high standards - and making no apology for those expectations. I hope I also manage to be open and supportive.’
What advice would you give to others who aspire to progress within the housing sector?
RC: ‘Always remember why we do what we do, and why it is so important. And always aim to be even better than the best you think you can be.’
Will your decisions be shaped by your expertise in finance?
RC: ‘Anyone who says that you can make leadership decisions without having an understanding of finance is kidding themselves.
However, if it was all about maximum financial return, Midland Heart wouldn’t be the kind of organisation it is. What drives me is our focus on working with those in the greatest need and delivering that mission in the most effective and efficient way possible.’
Looking back at your career so far, what do you feel is your biggest challenge to date?
RC: ‘Helping to steer Midland Heart through the economic crisis and its aftermath.’
Why did you come to work for Midland Heart?
RC: ‘Because we work with the people that other organisations walk away from.’
Questions submitted anonymously by Midland Heart staff members