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Housing Associations - To Pay or Not To Pay

Housing Associations

Housing Associations across Scotland are clearly still resisting the growing UK trend to remunerate their board members, but the question is, at what cost?

Mike Bruce, Chief Executive at Weslo Housing Management, and long-term proponent of paid board position commented that as little as 5% of housing association boards north of the border are considering offering any kind of remuneration. By stark contrast, a study of their compatriots in England revealed that 87% pay their board.

There are competing arguments for both sides not least the integrity of the people sitting on the board. However, we spend a lot of time advising and dealing with boards of business across the country and one of the key issues that has arisen is around diversity and whether the leadership of an organisation truly represents the people it means to serve.

Traditional board construction

There is no doubt, recruiting people to give up their time in the philanthropic pursuit of the greater good is getting more challenging. Boards across the third sector are finding it increasingly difficult to attract those who can add value and are committed to guiding their organisation.

This, unfortunately, results in a situation where the board becomes dominated by demographically similar types of people. This isn’t a good scenario for any organisation, commercial or charitable.

Traditionally housing associations in Scotland were formed as community-based organisations, established to help deal with local issues. However, many of these housing associations have grown into multi-million-pound businesses with extensive property portfolios, employing numerous staff.

So, the board members have to possess the capacity to contemplate significant financial and employment-related issues amongst many others, that could challenge the most experienced professional deal. Given the diverse nature of our communities, they also require the deftness to deal with social issues they may never have encountered before.

Diversifying your board

So how do you go about recruiting the board the will help you deal with complex and varied issues?

As aforementioned, there is the option to pay board members. Housing associations, given they are regulated by a different body, the Scottish Housing Regulator, are in the unique position amongst charitable organisations, of being able to offer payment to attract these members.

Many believe this is a more robust way of attracting and recruiting the diversity of board members needed. Emma Burrows, writing in the Third Sector, believes;

Housing associations that pay their board members tend to receive more applications in terms of quality, diversity and number

She also believes that this approach which focuses on a skills-based recruitment process helps to reduce the average age of the board and improves the gender balance while reducing turnover.

Alternatives to paying

There is, and has been for some time, a reticence to pay housing association board members in Scotland. A report by Auditors RSM revealed there is a feeling that paying board members will reduce the overall spend available for tenants’ services and the belief is that they are still capable of attracting board members without it.

Giving in to the growing trend of remuneration it’s felt will also reduce the ability to attract community-based, non-paid members. This would reduce the community link and could lead to alienation, where the balance of decisions moves more toward commercial success and as opposed to social benefit.

So an alternative approach might be one highlighted by Hattie Llewelyn-Davis, chair of PA Housing. The question she always starts with is:

Would you have a board made up of individuals from the same commercial background?

To which the answer is obviously no.

Having a more diverse group leads to better thought-out decisions according to Hattie.

The PA housing association constitutes 23,000 homes and has a significant proportion of BME residents. When she took over as Chair, she made it a priority to attract a more representative board.

Her approach is to recruit trainee board members. While they don’t have voting rights their input is invaluable, and they can be trained up into full board members in time. This broadens the reach and ensures that, if you do decide to pay your members, you can be safe in the knowledge they are going to add real value to your group.

Are paid board positions inevitable?

It does seem that, while there is a desire in Scotland to retain the voluntary status of housing association boards, the tide may be turning. When the legitimacy of the decision-making process and diversity of thought can come under question it seems inevitable that something has to change.