Governance succession planning and diversity

Diversity and inclusion in governance succession planning is just one of the important facets facing us all, and one that we should all neglect at our peril. That’s why the ‘G8’ Group* collectively decided to commission a piece of work. The key aim of the work was to consider ways of engaging a more demographically and socially diverse range of people in the decision-making processes of RSL governing bodies into the future. The focus has been on traditionally ‘hard to reach’ groups, such as young people, people of a black and minority ethnic background and people with disabilities, but it has also considered all the ‘protected characteristics’ identified in the Equalities Act 2010. In order to achieve this aim, the project considered:

• good practice examples from other housing and ‘third sector’ organisations
• potential partnerships, or other working arrangements, with organisations and groups that engage with ‘hard to reach’ groups
• practice and approaches which aim to ensure a gender balance on governing bodies, particularly those to encourage participation by women
• alternative and non-traditional routes for decision making, (i.e. not through a formal board & committee meeting process)
• use of digital communication, including social media.
• whether or not there is any evidence that paying governing body members is likely to have a positive effect on attracting and retaining new people.

The approach taken by the G8 Group included a review of national and local policies, frameworks and guidance; a review of academic literature; and in depth interviews exploring board member experiences, motivations, challenges and good practice case studies.

The operating environment for us all in the housing world has become increasingly challenging over the last 10 years. This has increased the complexity of the decisions required and the associated risks faced by governing bodies. This increasing complexity has been reflected in increasing attention to the quality of governance, including the skills and competencies of governing bodies, by the Scottish Housing Regulator.

These factors mean that all RSLs face a challenge of succession planning and ensuring that their governing bodies are renewed with individuals with the requisite skills and competence, and their decisions are appropriately informed by people with a diverse range of backgrounds and experience. The piece of work came to a number of conclusions, including

1. Diversity on any board is extremely important. Not only does it result in a more accurate representation of the general population, and the tenants within a local area, but it also offers a number of other key benefits, including reputation, (it becomes more credible and can build a stronger reputation), all voices being heard, (when a board is made up of members from the same background, gender, ethnicity or profession, it becomes difficult to see things from alternative points of view), increased skills and expertise, (members who are recruited, for example, from different professional backgrounds, can bring new skillsets and expertise to the board) and organisational benefits, (evidence of internal organisational benefits are also clear as studies have found that diverse groups within an organisation, such as management teams, perform better in comparison to more homogenous groups).
    
2. The current composition of a typical board. A number of studies have sought to describe what a typical board looks like, and, across the studies, the findings are remarkable similar. A typical housing board is chaired by a white British male aged between 50 and 59 years of age. The proportion of board chairs from black minority ethnic backgrounds is only 11%, compared to a proportion of the UK population being around 20%. On average, boards across the sector consists of nine non-executive directors with one executive director and three committees.
    
3. Board member motivations. Potential board members are attracted to join through a good organisational fit. The study interviewed current board members and found that they had originally been attracted to the role because:
    
   • it provided an opportunity shape the strategy of the organisation and have more input on the course it takes
      
   • they felt that being on the governing body of a particular organisation would make a real impact and difference to their community
      
   • skills and experience gained through governing body membership would enhance personal and career development
      
4. The main challenges in maintaining the role of a board member related to difficulties in time and energy commitment. Managing the workload and time commitment was challenging, especially for those involved in other projects and in full-time employment.
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5. Financial and non-financial benefits. The research established that, across the UK, offering financial incentives to become a board member does pay off. Of those surveyed in this study, 60% of respondents experienced a positive impact as a result of the introduction of payment. Positive impacts included the better quality of candidates, better skills, commitment, attendance and professionalism. There are, however, negative as well as positive impacts which should also be considered and the position in Scotland in relation to charitable associations only being able to pay a portion of the board could also create further tensions, although increasing numbers of Scottish RSLs are now adopting this policy. Non-financial benefits in the form of training, mentoring, networking opportunities and social events were often cited as being useful tools to attract a greater range of people to join and retain membership.

There are still places for Day Two of the SFHA Governance Conference at Glasgow’s Radisson Blu, on 7 September.

*Interested in the work of G8? Just drop a quick e-mail to any of the chief executives as the key representative of that organisation. Cairn participated in this project but have recently decided to leave the G8 group.