Understanding each other is the key to good governance

Good governance is a vital ingredient to the success of any housing association. Sounds simple enough, but the challenge of developing robust governance capable of supporting dynamic and complex organisations is a tricky one. It requires an ongoing investment of time and money. The moment you think you’ve cracked it, it will be time to think again.

As chair of the Regulatory Board for Wales and chair of Knowsley Housing Trust in Merseyside, I can claim a foot squarely planted on each side of the fence – albeit in different countries – as both regulator and regulated. This has given me a great insight into the challenges on both sides.

“Regulation needs to be a springboard and not a safety net for boards.”

Housing association board members in Wales tell me they really value regulation. I welcome this, provided regulation is seen as one part of an overall approach to governance and not as a substitute for it. Regulation needs to be a springboard and not a safety net for boards. Any board which operates a ‘don’t worry, the regulator will spot it’ approach needs to think again about how they go about its role.

In January 2017 the revised Regulatory Framework in Wales included a judgement framework for the first time since its inception. This will give greater clarity to the regulator and all stakeholders about how well an association is performing and its capacity to improve in the future.

This is a positive step forward, making regulatory output much clearer for all to understand. I am hopeful it will add rigour to the approach boards in Wales take as they not only strive to do the right thing for tenants and communities, but also take pride in achieving and maintaining the highest possible rating for the governance and financial viability of their organisation.

I am proud to be chair of a housing association in England rated G1/V1 by the English regulator, but I am acutely aware that this could be lost if we take our eyes off the ball.

Indeed, in my own experience as a board chair, a healthy dose of anxiety almost comes with the territory, as you are asked to be responsible for a business you spend less than one day a week being heavily involved with. This is where boards need to get really smart about how they go about their role. Setting the right agenda, balancing the need for assurance with strategy and direction, and assessing risk and value for money are crucial.

The relationship between the executive and the board, particularly the chair and the chief executive, is hugely important. Robust challenge and openness are key on both sides, but so is trust. This can only be developed by spending time together outside the normal ‘business agenda’.

Investment in board development is vital. I appreciate the financial operating environment is challenging, but boards must not feel that this type of investment is self-indulgent.

‘The buck stops with you’ is a message boards have had hammered into them in recent years. I totally accept this responsibility, but it takes a strong chair and board not to let this translate into getting tied up in operational detail. Smart boards work closely with their executive to set really clear principles and shared values. This enables the executive to get on with the business of running the association.

“Being clear and being prescriptive are two different things.”

Over the past few years much has been made of having the right skills around the board table. This is essential, but so too are personalities. Skills will only take you so far. It’s not always about what you know but how you apply that knowledge to help drive the business forward. Most boards have managed to attract a highly skilled and competent set of members, but need to watch out that the whole remains greater than the sum of its parts. Skills are vital but so are behaviours and ‘fit’.

Good boards will recognise the value in a strong and proactive relationship with their regulator. They will invest in that relationship as they do with other valued stakeholders. We will be watching closely in Wales to see how the dynamic of that relationship may change now associations in England will be paying a fee to be regulated.

Many board members and executives seek clarity about how to ‘do’ regulation. Being clear and being prescriptive are two different things.

Housing associations are independent organisations and we need a regulatory framework that is clear. However, being overly prescriptive could hamstring the sector from delivering transformational services for tenants and communities, over and above the provision of high-quality affordable homes. The impact of social investment in communities, highlighted by many housing associations in their social accounts, is hugely impressive and must not be lost.

So regardless of which side of the border you operate, my message to boards is clear: spend more time together, understand your strengths and weaknesses, and don’t be afraid to invest in your own development.

Helen White, chair, Regulatory Board for Wales, and chair, Knowsley Housing Trust