Now is not the end of the sector, it’s about being fit to survive

michael_appleby“It is for you to decide whether and how you will need to reconfigure your business in the light of these changes.”

That quote comes from Julian Ashby’s letter to the sector on 30th July 2015, following the announcements from Government in the Budget. Since then it’s been a dramatic few months in the sector and you get the feeling that organisations are only now beginning to come to terms with what the combined impact of rent reductions and Welfare Reform will have on business models.

Added to that is this weeks’ dramatic announcements from the Conservative conference, albeit not totally out of the blue. That saw the government’s formal acceptance of the NHF’s voluntary Right to Buy proposals tabled last week, as well as an announcement of changes to planning rules which will mean that developers no longer need to fulfil a section 106 obligation to develop property for social rent, allowing discounted housing to buy instead. The devolution of power to Local Authorities to set and retain their own business rates also announced this week will also impact on the sector, likely to generate greater variations in regional housing markets.

The 30th October deadline for resubmission of financial information is also looming, with organisations now also be concerned with what views the Regulator will have of how they are proposing to the meet the challenges they now face.

And don’t forget the spending review in November will be tough too.

We’ve found that the initial response from many organisations focussed on scaling back development programmes, halting training spend and reducing recruitment. But, with the HCA’s dual role of regulation and increasing housing supply in mind and the expectations of government on the housing association role in building more homes, it is unlikely that organisations that simply propose to cut back on development spend will be looked upon favourably. And any other tinkering around the edges is unlikely to deliver the required efficiencies.

It is also interesting to note the use of the word “will” in the quote from Julian’s letter . Clearly there is an expectation that organisations should be pro-actively considering what changes to their business may be required.

Change isn’t anything new to the sector. But few have fully engaged in the kind of transformative change required to address the challenges we now face. Faced with income reductions of 15%- 20%, Welfare Reform and the unknown of the November spending review already mentioned, now is the time to go back to first principles and complete a detailed review of your current operating model, review its fitness for purpose and decide what Target Operating Model (TOM) you need for the future.

This includes, amongst other things, looking at; how your organisation is structured, what resources you have available, the processes you operate, what services you are going to provide, how customers access your services, how you can make best use of technology etc.

For many this may lead to full scale transformation in the way that you operate now to how you need to operate in the future. Becoming more efficient, as well as being more effective.

This isn’t easy, but any challenge comes with an opportunity. Being on the front foot and pro-actively considering what operating model you should have will ensure that you’re best placed to meet the challenges to come.

For more information on how you can adapt and you can develop an effective Operating Model for the future or to attend Altair’s upcoming event on organisational change happening on 11 November, please contact Michael Appleby, Altair’s Head of Organisational Excellence: michael.appleby@nullaltairltd.co.uk or 07545 314 749.