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The WHQ debate 2009: to pay or not to pay?

The Welsh Housing Quarterly debate, held on 20th January 2009 at Cardiff University, looked at whether housing associations in Wales should be able to choose to pay their board members – an issue on which many people hold very passionate views.

Debate chair, Lucy Ferman from Tribal Consulting, noted that she had a sense of déjà vu about the issue – having been involved in many debates on board member payment around five years ago in England. She emphasised that the matter for debate was the ability of associations to pay their board members, not it being mandatory for associations to do so. She also clarified that the WHQ debate was being held as a separate exercise from a future formal Assembly consultation on the issue following a recommendation in the Essex Review:

\’That the Assembly Government carries out a separate consultation on whether individual HAs should have the freedom to make a payment for the time commitment of Board members, set with clear parameters.’

In favour of the option to pay board members

Speaking in favour of associations having the option of paying their board members were Peter Hughes from the Principality Building Society and Keith Edwards who was participating in a personal capacity.

Peter welcomed the reconsideration of the issue in Wales and did not think that paying board members would change the not-for-profit nature of housing associations in Wales. He noted that the demands on board members are going to increase and that this was the heart of his support for payment. The Essex Review itself called for a greater profile for associations and their boards which will generate additional time commitments, particularly for chairs. The increasing number of stock transfer associations which are complex organisations is also a factor. Recruitment and retention of board members was therefore likely to become more difficult in the coming years. He also raised a point of principle – whether achieving good governance or having unpaid trustees is more important. Payment of board members, Peter felt, is another tool in the box to ensure good governance.

Keith Edwards started his contribution to the debate by asking why on earth we should be prohibiting board member payment, particularly in an economic environment which poses huge challenges. He noted that the Essex Review anticipates major changes for the association sector and that we need to deal with tomorrow’s problems, not today’s. If associations are going to step in where the public and private sectors have failed to deliver, people are needed to take up the board member role. Keith felt that there is a compelling moral argument for paying board members – to recompense them for their time. And as to the benefits issue – Keith called on associations to encourage tenants who are employed to become board members and support tenants who are on benefits to enter employment. If boards are to be diverse and all board members treated equally, Keith’s view was that there is no option but to make payment allowable.

In opposition to the option to pay board members

Speaking in opposition to associations having the option of paying their board members were Chris O’Meara from Cadwyn Housing Association and John Bader, Chair of Somer Community Housing Trust.

Chris started by asking what the question is that board member payment is the answer to. The question she wanted to start with is how we ensure the future success of the voluntary housing sector. In doing this, we need to look to past successes. Key, she felt, is the gathering of political, community and stakeholder support. The association sector has spent a lot of time and energy in recent years to develop understanding that it is a social enterprise sector with significant service user involvement, including within governance. Payment of board members, Chris felt, makes associations look like the private sector and opponents of associations can, and would, take advantage of this. Board member payment also potentially undermines relationships with tenants, communities and stakeholder organisations. If payment is about valuing input, how do we then value the input of tenant board members who are on benefits? She also questioned how effective payment is and what difference it has made in those English associations that do pay. She had looked at the evidence from the annual survey of board payment in England and found that improved corporate performance was the least cited beneficial impact from paying board members. Chris finished by noting that, if some parts of the association sector do things that undermine the sector as a whole, this is unhealthy for associations themselves, tenants and communities. So it follows that individual associations should not have the option of paying their board members.

John structured his contribution around four questions:

  • is there a general problem in relation to board member recruitment?
  • is there a lack of skills on boards?
  • would payment retain association culture?
  • would all tenant board members be able to remain without financial disadvantage?

Unless the answer to all four questions is yes, John’s strongly held view was that we should not be considering board member payment as an option for any association.

There is a lack of evidence, John felt, that payment improves recruitment of board members or governance more broadly. He made the point that you don’t have to pay people involved in governance to have a business-like approach. If the issue is one of recruitment, how much would you need to pay to attract the ‘right’ people and would this be good value for money? What would tenants think about payment? The benefit rules mean that paying would disenfranchise a significant proportion of tenant board members which would mean in-built inequality around the board table. Tenants have a crucial role in governance, he felt, and we need to retain equality for all tenant board members.

Issues from the floor

A wide range of issues were raised by members of the audience:

  • would the perception of associations really change if board members were paid?
  • do we have to wait for a problem to emerge with recruitment and retention before we give associations the choice to pay their board members? Let’s have the choice and then go about achieving the changes needed in relation to the benefits system
  • is giving associations the option to pay board members compatible with Assembly policy on tenant engagement and participation which requires tenant engagement at all levels including in governance structures?
  • it would be a public relations nightmare, particularly when tenant participation budgets were compared to board member payment budgets – there are better ways to spend money to support effective governance
  • there is an issue of principle (recompensing people for their time) and an issue of administration (benefit rules) at play – surely we should be able to overcome the issue of administration?
  • the banking system has nearly disintegrated because of money motivation
  • what do we expect to get from paying people? More commitment? The only point in paying is to get people on boards who otherwise would not be involved. If the issue is about time commitment, why are boards spending so much time, are they doing the right things? We need to find different ways of using boards
  • in principle, people who are going to lose out by being involved on an association board should be compensated for the loss. Payment would bring in younger people
  • is there evidence that payment of board members undermines relationships with tenants and stakeholders?
  • is there a correlation between paying board members and the performance of associations?

Summing up:

  • those in opposition:
    • questioned whether we have a problem in relation to recruitment and retention of association board members
    • noted that payment undermines the position carved out by the sector over the last three years
    • queried whether payment actually works
    • flagged up the dangers in comparing associations to public sector organisations
    • noted that if some tenants are disenfranchised by payment, how can associations demonstrate that they are adhering to Assembly policy on tenant involvement?
  • those in favour noted that:
    • those associations that do pay in England have taken stakeholder engagement seriously
    • it’s easy to hide behind a difficult issue (the benefit rules)
    • if someone is paid, it doesn’t lessen their commitment to the organisation
    • it is important to separate out practicalities from matters of principle
    • we need to be inventive and assist people to move off benefits
    • board member payment is not getting into dirty territory – people are entitled to be compensated for their time

Keith Edwards laid down a challenge to the audience saying that anyone who had ‘reasonable doubt’ about whether board members should be paid or not, had no choice but to vote in favour of keeping open the option of payment to board members.

The result

The opinion of the audience was tested before and after the debate – the result was that, of those who voted, slightly more people were in favour of associations being able to choose to pay their board members after hearing the issues than was the case at the start of the event.

The evidence from England

There is evidence emerging from England where around a third of associations now pay at least some of their board members. The future Assembly consultation on the issue will be able to draw on a forthcoming National Housing Federation publication that examines the English experience. Debate chair, Lucy Ferman, has been involved in this work and after the second vote, provided some headline findings:

  • there is a correlation between the size of English associations and how likely they are to pay their board members. However, some of the largest associations, such as Peabody, don’t pay
  • the median level of board member payment in England is around £8,500 for chairs and £3,500 for board members
  • many of the two-thirds of associations that don’t pay have had a debate about the issue and have decided not to pay
  • there is some evidence linking association performance and board member payment
  • associations are required to consult with tenants as part of the process of making a decision to pay board members and surprisingly few objections were raised by tenants of many associations that do pay
  • the most difficult area for associations that do pay remains the benefits issue

WHQ will be holding further debates on topical issues. We welcome your views on potential topics – please contact [email protected] with your ideas – we look forward to hearing from you.

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