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The human resources test
How do providers ensure they have the workforce to cope with rent cuts, welfare reform and Brexit? We spoke to human resources professionals and carried out our first HR survey to find out. Simon Brandon reports
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Planning for the future is hard enough without having to cope with the present day’s slings and arrows, too.
When former chancellor George Osborne announced the yearly 1% cut to social housing rents back in July 2015, “it came out of the blue”, says Nikki Forward, head of human resources at 4,000-home Cornwall-based Ocean Housing Group.
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Ms Forward and her colleagues in the sector are charged not just with sustaining the quality and depth of their organisations’ workforces in the face of bombshells like the rent cut; they also have to plan strategically with a view to how the housing landscape might look in years to come.
“We’re trying to take a longer-term view – staying ahead of the curve so we protect ourselves,” as Ria Bailes, human resources director at 15,000-home One Housing Group, puts it.
It’s a difficult balancing act – but a crucial one to pull off. Earlier this year, Inside Housing sent our first human resources (HR) sector survey to housing professionals across the country (see box: Methodology) to try and gauge the state of workforce planning throughout the sector.
What does the future hold? And how are organisations maintaining and improving their staffing practices in the face of potential obstacles such as budget cuts and Brexit?
In the immediate future, the biggest issues are – perhaps unsurprisingly – budgetary. Two-thirds of respondents cited welfare reform as having an impact on their workforce over the next year, while more than half ticked the boxes next to rent cuts and the apprenticeship levy. These are three different issues, but three hits to housing providers’ bottom lines.
“[These cuts are] sharpening us all up,” says Ms Forward. “As a sector we could have been a bit complacent before. It is making people in the sector think more strategically and more commercially, and look for those efficiencies.”
Should HR be part of this efficiency saving, or should it be a beneficiary? Ms Bailes warns that to maintain an organisation’s resilience, adaptability and levels of service, HR has to be a priority.
“If you scrimp and save on the quality of the candidates you employ, and therefore on the quality of your workforce, you are in big trouble,” she says. “You can end up on a slippery slope.”
Laura Jones, head of HR at 9,200-home Nottingham Community Housing Association, says her organisation is responding in part by tightening up its bottom line: “We need to switch the workforce to say we need more focus on arrears and collection. It is much more about debt advice and digital inclusion, which we already do plenty of.”
Should HR be part of this efficiency saving, or should it be a beneficiary? Ms Bailes warns that to maintain an organisation’s resilience, adaptability and levels of service, HR has to be a priority.
“If you scrimp and save on the quality of the candidates you employ, and therefore on the quality of your workforce, you are in big trouble,” she says. “You can end up on a slippery slope.”
“If you scrimp and save on the quality of the candidates you employ, you are in big trouble.”
Ria Bailes, HR director, One Housing Group
Laura Jones, head of HR at 9,200-home Nottingham Community Housing Association, says her organisation is responding in part by tightening up its bottom line: “We need to switch the workforce to say we need more focus on arrears and collection. It is much more about debt advice and digital inclusion, which we already do plenty of.”
Change is afoot
Fifty-five per cent of respondents said restructuring would have an impact on their workforces in the future. “One of our strategic objectives is to be more efficient,” says Susan Coulson, director of human resources and development at 55,000-home Home Group. “So how can we mitigate against rent cuts? How can we change our processes?”
A large majority – around three-quarters – of respondents said their organisations were implementing major change programmes over the next 12 months. These changes include restructuring, mergers, cultural change programmes and investment in new IT systems.
At One Housing Group, an ongoing programme to revamp the business’ IT system is a significant part of its aspirations towards more efficient and customer-focused ways of working, says Ms Bailes.
“Instead of being an enabler, our IT system feels at the moment like a bit of a hurdle – another bureaucratic system to log into,” she says. “We have a big [IT] investment programme that will lead to structural changes, new ways of working – a complete shift in culture and mindset. That is really exciting, and it feeds into our value for money strategy.”
Technology isn’t the only new introduction: just over 40% of our respondents said they would be looking to recruit for new skill areas over the next year. “Lots of housing associations are diversifying and we do need to attract different skills from different sectors,” says Ms Coulson.
Nearly one-third, meanwhile, said they planned to recruit more staff over the next year. Asked which kinds of role are most difficult to recruit for, two answers stood out: development and asset management.
Development positions, says Sue Manning, director at consultancy Forest HR, have become harder to fill as a result of increased competition among housing associations to recruit from a pool of talent that has dwindled after the financial crisis.
“As more housing associations become developers and want to do more commercial things, so the need [for development staff] increases but not necessarily the supply,” she explains. “When we had the last recession a lot of people were put out of work when building stopped. There is not an endless supply of people thinking it’s a great place [sector] to work.”
The trend towards a more commercial approach has extended to asset management, too. “We are fine-tuning our asset management because we need to exploit our assets as best we can,” says Ms Forward. “That’s an area we haven’t focused on as much in the past.”
“We are fine-tuning our asset management because we need to exploit our assets.”
Nikki Forward, head of HR, Ocean Housing Group
Ocean Housing Group is based in Cornwall, which poses a unique challenge: there is only a small pool of talent within the county from which to recruit, but only one direction – north-east – in which to look further afield. “It’s like being an island,” adds Ms Forward.
Cornwall might be geographically unique, but the problem of recruiting from a small talent pool – and competing against other sectors as well as fellow housing providers while doing so – is replicated nationwide.
Management and director level roles have also proved hard to fill, with around one-third of respondents citing either category when asked which levels of seniority were most difficult to recruit.
“It’s becoming more of a candidates’ market,” says Ms Coulson. “It seems much more buoyant in terms of the roles that are available.”
Brexit
One looming tsunami of uncertainty hasn’t fazed most heads of HR – at least, not yet.
More than 70% said Brexit would make no difference to their ability to recruit staff over the next year. Beyond that, however, respondents are less certain.
“[Brexit] may have an impact, and if it does it won’t be positive, but it’s not foremost on our minds,” says Tony Hart, director of human resources at Family Mosaic.
Could its impact on other sectors be felt by housing’s HR departments? Ria Bailes, human resources director at One Housing Group, thinks this is a possibility: “We don’t have that many EU employees in our workforce, but there are quite a lot working in the care sector. What are they going to do in a couple of years? What’s their strategy?” That dearth in the care sector, she believes, “could drag some of our staff away to fill those gaps – that’s a bit of a worry”.
And, of course, good management skills are in demand in most sectors. Attracting the brightest talents has long been a challenge for housing’s HR departments, not least because of the sector’s relatively low profile.
“As a sector we are struggling to pull in fresh blood,” says Ms Bailes. “People who are graduating from university very rarely say they want to work in social housing. As a brand, we haven’t cracked that.”
Her organisation is responding by establishing relationships with local colleges and schools to try and offer an alternative career path to bright school leavers who might not be able to afford university.
At a more senior level, Ms Coulson acknowledges a similar visibility issue. “Some of our managers who we recruit from other sectors say they didn’t realise the diversity of what we do and our social purpose,” she says. “So we focus on those messages: empowerment and career development.”
“People are now more used to change – it’s a very resilient sector.”
Sue Manning, director, Forest HR
Most respondents said they anticipated no change in their ability to recruit or retain staff compared to this time last year. While there might be challenges to come, at least one respondent is more confident about his capacity to recruit in the future thanks to his organisation’s impending merger.
“We will have a bigger and better-known brand,” says Tony Hart, director of HR at 26,000-home Family Mosaic (Family Mosaic is to merge with 29,000-home Peabody). “We will be a better-known company and I think we will be able to recruit people more easily.”
The survey results show how the various challenges and pressures on workforce planning are being felt by the sector, but they also demonstrate how organisations are looking forward and building these issues into their plans for the future.
“People are now more used to change – it’s a very resilient sector,” says Ms Manning. “People just get on with it now. If you look at the way people adjust their business plans quickly and anticipate future change – the resilience and diversification – the skills to do that have grown.”
Methodology
The respondents to our survey include people in leadership roles who are involved in workforce planning at more than 70 housing associations, local authorities and consultancies from across the UK. The housing providers polled manage almost half a million properties between them.
Expert view
Ian Robertson
Retaining and attracting new staff are crucial issues within the sector
Last month the prime minister triggered Article 50, signalling the United Kingdom’s intention to leave the EU. Meanwhile, welfare reforms and government policy changes continue and the Office for National Statistics registered the joint-highest employment rate since records began in 1971.
Commentators agree that the next 12 months are difficult to predict, especially in relation to the UK workforce as it seems inevitable that Brexit will cause a fall in the supply of EU migrants.
However, there are some certainties:
- The 1% rent reduction will continue to have an impact on budgets, with implications for staff and service delivery;
- Welfare changes will continue to significantly affect social housing providers;
- The National Living Wage has been set at £7.50 per hour for over-25s;
- Inflation is rising, with indications that wage inflation is starting to have an impact on housing;
- Pay rises remain around 2% in the private sector, although public sector workers have received half that figure.
At EMA, we have been collecting information regarding annual pay awards across the housing sector for more than a decade. For 2017/18, average pay awards are expected to be between 1% and 1.5%, with settlements ranging from 0% to 2%.
In the prevailing economy, there is a risk that organisations will become complacent about salaries, assuming staff are unwilling to look elsewhere. But we are witnessing recruitment and retention issues, particularly in relation to development, finance, legal and governance, and commercial roles. Key members of staff in these positions are being attracted to comparable posts in the private sector at higher salaries.
If your organisation has found it difficult to fill a key role in the past 12 months, you are not alone. Associations are finding it harder to recruit, not only in terms of functional expertise but also at senior leadership levels. Nurturing your own is part of the solution, and organisations have generally begun by adopting apprenticeship schemes.
To secure our future leadership pipeline, the answer may be graduate traineeships and more active succession planning with fast-track development programmes for high-performing managers.
However, despite all these challenges, the sector has managed to withstand significant change in recent times.
Many associations achieve more with the same or reduced resources by being adaptable, having the right pay, remuneration policies and strategies to attract and retain staff, and ensuring robust governance through a range of mechanisms, including understanding the expectations of regulation and the impact of failing to meet growing expectations, and establishing effective risk management frameworks.
Ian Robertson, executive director, EMA Business and Management Consultancy
