Jacqui Stoggall, director of consultancy at Sovereign Business Integration Group, outlines the importance of workplace transformation programmes to deliver the new strategic vision and mitigate risk in a challenging business environment.
From the introduction of universal credit to the decline in government funding, unreliable income streams are fast becoming one of the most critical issues within the housing sector. Yet this is not an issue that can be addressed in isolation. Housing providers need to manage this emerging financial model within a context of delivering social value, improving the service to tenants and facilitating changing models of housing provision.
While the social housing sector is currently enjoying record levels of surplus, the longer term financial
picture is less rosy. The combination of a reduction in local and central government funding with the expected rise in arrears following welfare reform – including both the ‘bedroom tax’ and universal credit – will not just dent income. Moving from a guaranteed income stream to one that is subject to far more variables fundamentally changes the nature of the business. And while some would argue that regulatory demands have reduced, organisations still need to demonstrate social value from investment and, critically, ensure the surplus is reinvested successfully to meet new and evolving demands.
Most notably, housing providers will be increasingly investing their own money in new housing stock, raising new demands and expectations for value. In addition, there is an on-going emphasis on the adoption of new tenure types, including the push towards more flexible ownership options and market rents.
This is arguably the most radical shake up of the sector for a generation, and for many housing providers, merely tinkering at the edges will not be enough. Even the smaller organisations now need to take a much more strategic approach to the new operating model.
Strategic vs. tactical
One of the greatest challenges, especially for smaller housing providers with limited internal resources, is prioritising initiatives. From the financial: how is the business going to manage the new financial challenges; gain visibility of the income trends; or raise finance for investment when some in the sector have lost the prized Triple-A status? To customer focus: how can housing providers also evolve services, to embrace channel shifting for example, via on-line customer portals; what involvement should they have in community led initiatives, such as apprenticeships and partnerships with local business to improve access to jobs; and how should they measure whether social value is demonstrated?
It is now essential to adopt a long-term perspective and to create a business vision that reflects an organisation’s strategic priorities. However, to deliver tangible, measurable outcomes, from increasing long-term financial performance to improving customer service, there needs to be a radical change in approach. Rather than implementing individual, typically disparate, tactical projects with specific output expectations, organisations must take a more strategic view. Joining up a number of inter-related projects into a single, outcome-led programme will be key to realising the new objectives.
Business improvement programmes
What does this mean in practice? Rather than focus on a single output, such as initiatives to move tenants over to direct debits before the introduction of universal credit, a business improvement programme will encompass a range of projects, including direct debit migration, with the overall aim of improving cash flow, financial performance and control. In tandem with the direct debit project, the cross-organisational programme may include information gathering to determine the extent of the escalating rent arrears risk, as well as perhaps improving customer service training to deal with increasing tenant concerns regarding changes to their benefits and how they will manage their financial commitments.
By joining up such related projects under the umbrella of a single programme, an organisation addresses every aspect of the specific business issue or change in tandem. For example, flagging up the number of customers likely to be affected by universal credits and those without bank accounts delivers a better understanding of risk while actively moving towards imposing better control through the use of direct debits, and putting in place proactive service delivery to help tenants struggling to cope post-welfare reform helps to mitigate the risk.
It is this combination of projects under a single joined-up banner that can deliver the eventual outcome of improving the management of cash flow and rental income when universal credit is fully rolled out.
So how can housing providers evolve from a project-led to a programme-led approach? Transformation in this way demands a strict methodology, such as the Managing Successful Programmes (MSP) guidelines which provide the discipline and rigid processes required to coordinate the management of related projects into a single, outcome-based model.
The programme needs to be tightly linked to the business plan and strategic objectives, as well as comply with governance; and it must have a clear vision describing how the future will look and this vision will need to be tied into a benefits-realisation model based on pre-determined measures of success.
The challenge for smaller organisations is to find the resource and expertise internally to manage a transformational programme that is likely to touch every department at some time but will, by its very nature, experience peaks and troughs in resource requirements.
Turning to an experienced third-party organisation not only overcomes the resourcing problems by delivering flexible access to a raft of skills but, critically, provides access to a depth of experience in managing similar issues with other housing providers. From helping to develop the strategic long-term vision to providing a helicopter view and peer reviews, external expertise can be key in determining and prioritising objectives and effectively managing a programme to deliver the required outcomes.
The challenges and opportunities facing housing providers over the next three years are compelling. From an escalating local focus to the expansion of services and the exploitation of digital technologies to improve both efficiency and the quality of the customer experience, housing providers have a vast array of opportunities to make fundamental operational changes. But none of these changes can be addressed in isolation, especially given the as-yet untested implications of welfare reform.
There must be a golden thread that links all of these individual objectives. Without a strategic focus and the ability to map a long-term vision with rigid programme management to ensure objectives are realised, how can any housing providers achieve both long-term financial security and improve the quality of the customer experience?
Jacqui Stoggall is director of consultancy at Sovereign Business Integration Group.