Profit for purpose, social business, business head social heart, value driven, social enterprise. I am sure you will recognise these terms. They are all used to describe housing associations in the new era. They are intended to show that even though housing associations are diversifying, entering new markets and becoming more commercial they are doing it to continue to deliver social values.
When I speak or write about the risks of diversification I am often told that there is nothing to worry about as the sector is still committed to strong social values and that its leaders will ensure that this continues to be the case. I have argued elsewhere that history shows that organisations who have gone down this route, even though they begin by making this claim, often end up by being driven by their financial imperatives and not their values. The reply to this is that I have no need to be concerned as the sector is in good hands.My question to those who say this is quite simple. How do you know that you are maintaining and protecting your values as well as you are protecting your financial and commercial activities?
Identifying and maintaining values is one of a board’s main responsibilities. I have sat on many boards and I have rarely seen them monitoring performance against values in the same way as they monitor the delivery of other business objectives. How many boards regularly measure that they are maintaining their values at all? If we continue to claim that we are social businesses who is ensuring that the social is monitored as much as the business?
Recent reports have highlighted that housing associations appear to be moving away from what used to be regarded as core values. Most have always had a value of helping poor people in need. In fact this is the reason many housing associations were established and have charitable status. Yet the move to so-called affordable housing means that our ability to do this is at risk. Social housing has traditionally provided a home for those in need but the number of social homes is reducing because of government policies and those pursued by housing associations. In addition research has shown that as rents have increased and with the prospect of further cuts in benefits housing associations are now using financial criteria to exclude poor people from their homes. If we are no longer building social homes and if we are beginning to exclude people because of their financial circumstances, are we still maintaining one of the main values of those who established housing associations? How many boards are actually measuring the cumulative effect of welfare reforms and the impact of building new homes at rents that many can’t afford on their letting policies? Are they aware that they might be in the process of abandoning poor people in the pursuit of growth and financial viability? Of course If the purpose is no longer to house poor people then many could state correctly that they are creating profits to deliver that purpose.
Another area where housing associations have a proud track record is around values relating to diversity. Recent research shows that this is no longer true. Apart from the continuing absence of women and black and asian people in leadership roles there is evidence that the number of BAME people being housed by housing associations is dropping. Is this another effect of welfare reform and the issues mentioned above or is it because diversity is no longer a high priority for senior teams and boards? If diversity is still a priority, what measures are being used to show that this important value is being delivered?
Housing associations have always valued their work in neighbourhoods and communities. In fact some of us remember the strap line “in business for neighbourhoods”. We talk a lot about the amount of money we invest in our local communities but do we know its real social value and do we measure it? Research has shown that until recently we knew very little about the value of this work and we were not measuring it. There is also evidence that some associations are moving away from this area of work as they pursue more commercial activities. Are boards measuring and protecting what was once a core value and activity for many housing associations?
I am not questioning the integrity of current leaders or the importance of measuring business performance. I am suggesting that unless we monitor and remain vigilant values will be slowly eroded as HAs strive to become more profitable in the current difficult climate. I would be less concerned about the future direction of housing associations if I believed that we were giving the same importance to measuring our performance on values as we do to measuring performance on our other business objectives. Of course we can continue to claim that there is nothing to worry about and that our values are in safe hands. But I am sure that is what those involved in Northern Rock and The Cooperative Bank said. And look what happened to them. As someone tweeted to me recently. Are some housing associations being dazzled by “being commercial” to the detriment of their social ethos. If this is the case who will save us?