The Soul of Liberty

 

HA boards may be shrinking, but they're not getting any more diverse. How do we address board equality? (Art Credit: Jackie Fleming - @JacksterFleming)

HA boards may be shrinking, but they’re not getting any more diverse. How do we address board equality? (Art Credit: Jackie Fleming – @JacksterFleming)

The Story

“While our workforce is diverse, this is not reflected in our leadership which remains too white, too old and too male. Just look at me.” – CIH President Steve Stride, Housing 2014

It seems that CIH President Steve Stride’s recent warning about the lack of diversity in housing leadership was particularly prescient, as a new study by Inside Housing reveals that while the housing sector is undergoing sweeping changes, the make-up of housing association boards remains broadly unchanged; there is not the diversity at higher levels of leadership that one would expect from a sector whose employees – and customers – are so diverse.

Not too long ago, it was reported that the proportion of new social lets to white people had risen while the proportion rented to black and ethnic minority families had dropped noticeably. In the background of these findings, having boards that properly represent their organisations and customers is paramount to ensure not just financial success but also robust ethical practice.

So, what is the make-up of housing association boards…and how do we improve it?

Too White, Too Old & Too Male

Inside Housing’s study examined the make-up of 40 boards between 2010/11 and now. While boards have shrunk by 10% in that period (from 360 members in 2010/11 to 324 in 2014), the proportion of women on boards has barely changed from 2010/11, where it was 33%, now standing at just 33.9%. Further, only nine of the 40 associations are chaired by women.

And it is not just a lack of women that we should be concerned about. A separate survey conducted by the Board Development Agency into 80 UK associations found that just 11% of the board members were from black and minority ethnic (BME) backgrounds – in fact, 46% of boards had no BME members at all.

Tenant representation on boards is also under threat, with tenants or leaseholders accounting for just 10% of overall membership the 40 boards analysed, compared with 12.5% in 2010/11.

A Moving Target

All of this is not to say that progress isn’t happening. In the wider world of business, a report from Cranfield School of Management shows the percentage of women on boards in the UK’s 100 top companies has increased to 20.7%. This figure still falls short of the target set by Lord Davies in 2011 for 25% of board positions in FTSE100 companies to be occupied by women, but the fact that there is a target at all and that those companies are aggressively pursuing it (female representation on FTSE100 company boards was 12.5% in 2011 and 17.3% in April 2013) would seem to indicate that not only is change possible, it can come about as a result of target setting, something that the CIH’s Presidential Commission into Equality & Diversity is considering.

The danger with target setting, though, is that actions are taken simply to hit targets rather than to create better boards or create improvements in management. One ‘solution’, for example, might be for companies with reasonably small boards to look at increasing the number of board members, ensuring the additional seats are filled by female candidates. But a bigger board is not necessarily a better board, even if those new additions are female. How should a new member feel if they learned that they gained their position simply because in doing so the board would oblige the requirements of an arbitrary target? What of BME members, or disabled members, or the LGBTQ community – do we want to bloat the size of boards just to appear equal? The problem isn’t that boards aren’t big enough to accommodate diversity – it’s that they’re not diverse, period. Why can’t the board represent the organisation and its customers at its current size?

Target-setting might form part of a solution, but it cannot be the sole solution – if it is, there is the danger that boards will focus on hitting those targets just because they’re targets. This may resolve the inequality of boards on the surface, but will not address the fundamental inequality of workplace culture.

For boards to truly become more equal – more representative of their organisations and customers – there must be a more radical overhaul of board culture.

BSP – The Corporate Solution

“Boards are almost exactly as they were a hundred years ago: a collection of grey eminences who meet for a few days a year to offer their wisdom. […] Boards are thus showcases for capitalism’s most serious problems: they are run by insiders at a time when capitalism needs to be more inclusive and are dominated by part-timers at a time when it needs to be more vigilant about avoiding future crises.” – The Economist

Despite the radical changes facing housing associations, the composition of boards is remarkably conservative. A radical resolution (or should that be revolution?) proposed in the May edition of Stanford Law Review by Messrs Bainbridge and Henderson, suggests corporate boards replace individual directors with professional-services firms – BSPs or Board Service Providers, which would supply a company with a full complement of board members and ensure, as part of the arrangement, that the boards met demographic targets and proportional representation of the organisation / client base. In other words, you hire a company to provide “board services” in a similar way that consultants might be hired.

Could housing associations benefit from this corporate approach? If representative targets had been set, BSPs could address them as part of the arrangement, and utilise specialist knowledge, links, and economies of scale to ensure that not only were boards representative of the communities and organisations they represented, but also had the full gamut of skills and experience necessary to function effectively. (For example, BSPs could ensure that board leaders have proven chairing skills, which as Yvonne Atkinson, a director at the Board Development Agency notes in an interview with Inside Housing, are not always mutually-inclusive with business or financial experience.) It might also ensure a robust approach to financial risk-management, mitigate internal corporate nepotism, and ensure that boards were focussed on their job – after all, the authors argue, a company wouldn’t take legal or financial guidance from part-timers who only meet every few months; why should governance be any different?

There are risks with this approach: does this approach remove the ability for organisations to be represented locally, from people within the community? Who’s to say that a more corporate approach would yield more equality (how many of these BSPs would, for example, have a female CEO?) Arguably there could be a conflict of interest if two competing companies employed the same BSP, but could this lead to greater synergy in the housing sector if two or more housing associations did the same? What of specialist housing stock/construction knowledge or established local community experience? (Perhaps BSP’s could counter this by filling the majority of board positions while keeping a few open for representatives from other sources?)

Another solution is for boards to adopt an open recruitment procedure for board member positions, similar to how the organisation would recruit any other member of staff, rather than membership being based on nomination and election (which for an established white male-dominated board can result in the board remaining white male-dominated). Many boards already adopt this approach, and while it doesn’t guarantee equality on boards any more than open recruitment on the job market has ensured equality in the wider workplace, it does ensure that a broader range of people have the chance to apply and gain experience – after all, boards must not only consider their immediate role, but should look to creating capable and experienced board members for the future.

Conclusion

“What society needs is the whole human being, where gender matters only if you are trying to put together a baby and is irrelevant if you are trying to put together an effective organisation.” – Nancy Kline, Time To Think

In just a week (1st September 2014), the CIH’s Presidential Commission on Equality and Diversity will meet for the first time to begin discussing how to improve diversity in the housing sector’s leadership. Whether their recommendations include target setting, changes in recruitment strategy or a more radical approach, it is a good that the CIH have recognised the lack of diversity in the sector and how important it is to change that; if the housing sector is to be fit-for-purpose, its leadership must reflect the diversity of that sector and those it serves.

As for my personal experience regarding the make-up of boards, I am new to the world of governance but am nonetheless optimistic. In July this year I became a board member of the CIH West Midlands Regional Board. At the 2014 AGM, my position – earned through an open recruitment process, rather than internal election – was one of three new board member appointments to be ratified; the other two new members to join the board are both female.

To quote American musician and actor Meat Loaf, two out of three ain’t bad.

References

  • Kline, Nancy (1999), Time To Think, Cassell Illustrated

Post-Script

The title of this article references a quote by 19th Century Scottish writer Frances ‘Fanny’ Wright: “Equality is the soul of liberty; there is, in fact, no liberty without it.”

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4 comments

    1. Thanks for the comment, Dyfrig!

      Norma makes a good point about the importance of attracting younger trustees & board members – it’s something I tried to touch upon (ableit very briefly!) in this blog re: opportunities for people to gain board experience. And yes, I’m looking forward to gaining experience as a board member as much as I’m looking forward to making a difference as one!

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