Is your organisation delivering Value for Money?
If your answer to the above question is “Yes, of course”, how do you know and do you have evidence to back this up?
The TSA consultation paper on the revised Regulatory Framework from April 2012 includes a new approach to Value for Money (VfM) aligned to the revised Governance Standard. The proposed framework will be co-regulatory rather than specifying the approach or methodology.
Boards must take responsibility for VfM, adopting an approach that is transparent to stakeholders and setting objectives to ensure delivery of VfM across the business in a strategic and meaningful way. The VfM strategy must be published and progress reported as part of annual Financial Statements.
In formulating a strategy boards will need to understand:
- What assets do we hold?
- How are they used?
- What return do they generate (financial and social)?
- How does this help the organisation deliver its objectives?
The Regulator is clear that this is not a procurement exercise but a whole business approach to extract more value from the business in an open and accountable manner.
Boards will be held to account, and will need to evidence that they are seriously engaged with VfM. The Regulator will challenge Registered Providers to do better, without telling them how to run their organisations. Ultimately, where the Regulator is not satisfied, this may be material to the regulatory judgement on governance.
The new approach will be challenging for boards, who will need to determine a practical approach to VfM. They will need to demonstrate and evidence this. The Regulator will need a broader skill set to understand and evaluate the widening diversity of VfM activities.
Some questions to consider
- How will we approach VfM as a board?
- What do our tenants consider to be the measures of VfM?
- What are the views of employees at different levels on VfM measures?
- How do we measure both financial and social returns?
- What benchmarking information is available, and who do we compare with?
- How does VfM link with our wider financial, governance and risk strategies?
- How do we ensure buy-in to the VfM strategy at all levels within our organisation?
Jim Lashmar is an Altair Director
Altair can support organisations to develop a tailored, strategic approach to the VfM standard and provide external challenge. For further information please contact Jim Lashmar, firstname.lastname@example.org, tel 07968 616550 or Fiona Underwood, email@example.com, tel 07788 643092