Opinion Piece: The importance of strong governance

Environmental Social Governance (ESG) has probably become one of the most talked-about business issues over the past year or two and it's not just talk.

ESG-related assets have also become among the most sought after investments and are on track to exceed $53 trillion by 2025, according to Bloomberg Intelligence.

As nations and businesses worldwide commit to decarbonisation, we quite rightly hear so much more news about the Environmental element of ESG.

We also hear a lot about the social aspect as more and more businesses follow the lead of housing associations and endeavour to inject more social value into the communities in which they operate and advance social issues such as diversity, human rights and poverty reduction.

We hear a lot less about the importance of Governance in ESG, but ESG cannot happen without good governance. Indeed, having a good Chair - and an effective Board - can be the difference between the success or failure of an organisation.

We recently recruited a new Chair of the Board at Irvine Housing Association. It got me thinking about how vastly different and hugely important the role of Chair now is, compared to when I started in the industry.

I'm sure we all recognise that governance and the role of housing association Boards has been getting steadily more complex for a long time.

External factors as far back as the financial crash, and more recently the safety concerns raised by the Grenfell tragedy, have demonstrated how Boards must truly understand the risks faced by their tenants and their businesses and take full responsibility for governing their associations.

The Scottish Housing Regulator's requirement for Assurance Statements and its Engagement Plans are further evidence of this.

Boards must be proactive and use effective decision making to tackle ongoing challenges as well as plan for the future-proofing of the organisation, taking into account the likely and potential risk factors.

I've seen over many years in the industry that a great Board can often go unnoticed, but a weak Board is always at the root of a serious organisational failure.

Key to the success of a Board as its Chair. It's vital that the Chair can motivate their team, get the best out of them and keep them focused.

Therefore finding and choosing the right Chair is one of the most important decisions an organisation can make.

It's as important as having a great Chief Executive or team of Directors. The Chair sets the tone of expected behaviours from the Board. It includes challenging and supporting the executive team, building an effective and productive relationship with the chief officer, and understanding the separation of the role from the organisation's day-to-day running.

Our Chair at Irvine HA, Duncan McEachran, will step down after giving the maximum of five years of great service at our Annual General Meeting in September.

Given our thoughts about the significance of the role and building on lessons from our parent organisation, Riverside, we decided to approach the appointment of a new Chair in the same way we would a new member of the Executive Team.

We appointed a recruitment specialist, McGregor Bond, to manage the process. This was to bring their expertise and support and ensure an element of external scrutiny and challenge to the process.

We produced a detailed recruitment pack outlining a clear role profile and person specification for the role of Chair and detailing the expectations of the role and the competencies required.

The recruitment process was as thorough as for any senior position. It included two interviews, a written submission, a presentation and psychometric testing.

While it was important to me that we used a process that would help us find the right person, the recruitment for our Chair was led by the Board, who appointed a panel of four to carry out the interviews and recommend the successful candidate.

As Managing Director, I assisted the process. I interviewed the shortlisted candidates, but I was not part of the final decision-making process.

I believe this separation of roles is vital to strong governance.

As we previously announced, Jim Strang will become our Chair after this year's AGM. As a former President of the Chartered Institute of Housing, Jim brings over 40 years of experience in the housing sector to Irvine. However, it is the skills and competencies in Governance that made Jim the successful candidate.

In my view, the role of Chair is more important today than ever. Modern-day Chairpersons have to help drive the organisation's direction and be visible among stakeholders and partners if and when required.

Getting the right people on a Board and the right person for the role of Chair can be a challenge, but it's a challenge that housing associations and indeed all organisations must get right.

Strong governance delivers strong organisations, strong business performance. It enables businesses to make a stronger contribution to the people and communities which we serve.