Housing organisations – Value, differently
The social housing sector is in a state of flux. Although demand is high and likely to continue increasing, capital funding is scarce and lending restricted. The potential effects of welfare reform are widely feared, if unclear. Government policy is confused and sometimes contradictory, with pressure to build, cut subsidy and reduce benefits, while regulation in the countries of the UK is diverging.
Under these circumstances it would be understandable if the sector took a defensive stance, withdrew to its core business and minimised its risk until conditions improved. To some extent this is happening. However, when we asked housing association chief executives “what does value for money mean to you?” for our recent publication with the National Housing Federation, “Social Hearts, Business Heads,” (http://bit.ly/SocialHearts) we received a very different answer. While this was partly motivated by the development of VFM regulation in England, its contant applies in the Welsh context as well.
Common to most of the responses we received was a perception that housing organisations are about more than just financial value. Whereas a private company’s primary objective is generally considered to be maximising shareholder value – taking decisions which will produce the most financial benefit for shareholders – these chief executives were more concerned with maximising the social value they generated. Keith Exford from Affinity Sutton commented that “as a business for social purpose, it is vital that we operate as efficiently as we can…to support our mission of ‘helping people put down roots.’”
This motivation towards social value, and running effective businesses to achieve it, is what sets social enterprises apart from other businesses, and housing organisations with their substantial asset bases and fairly predictable income streams are well placed to generate a lot of it.
So how to assess your social value – and whether you are maximising it? Three key lessons emerge from the publication. Firstly, like Heinz, social value has many varieties. There is social value in most things landlords do – but the value of providing someone with a secure home is different from the value of employing local contractors and different again from the value of resolving an ASB case. There will not be a consistent basis for appraising or comparing these different types of value; an ASB case resolved is not more or less valuable than an apprenticeship. Consequently, attempting to describe all social value in money terms will not be successful.
Following from this, the second lesson is, as Joe Chambers from Soho pointed out, “value is subjective to the organisation, but that does not mean it cannot be measured.”
What is needed is a framework for assessing what type of value the organisation is seeking to create: “it is not possible to determine whether money has been put to good use unless you know what outcome you are hoping for.” Housing organisations “need to be clear about their social objectives and do the right things to ensure those objectives are achieved,” said Jon Lord from Bolton at Home, Measures – not always financial ones – can be attached to the objectives and considered both in appraisal and decision making.
Thirdly, narrative supported by data is an effective way of presenting the generation of social value. Starting from the objectives, an account can be given of the decisions which were made in attempting to meet the objectives, the trade-offs which were made, and the outcomes achieved. This narrative approach can be applied at the whole business level, the detailed level, or anywhere in between. For example, say £500k is available for investment – perhaps from the sale of underperforming property:
There is no right or wrong answer here – but the objectives provide a framework, within the financial constraints of the organisation, for deciding and describing how the decision to maximise social value was taken.
Social housing organisations will take decisions which appear in accounts only as expenditure, but which are actually investments in the generation of social value – brave investments in straitened times, whose value is not always financial. Value, differently.
Will Perry is HouseMark’s Business Development Director and a contributor to Social Hearts, Business Heads. He is currently seeking volunteers to pilot HouseMark’s PlanForm service, which will allow landlords to analyse, enhance and report on their business plans through peer comparison.