The National Housing Federation’s much publicised code; ‘Mergers, Group Structures and Partnerships: A voluntary code for housing associations’, finally arrived last month. The document sets out good practice methodology covering a range of partnership working from cost sharing through to full amalgamation.
The code makes it clear that a decision on whether or not to move forward with a merger proposal should be made in light of the best long term interests of the organisation; taking into account organisational values and objectives.
Although the code is voluntary, housing associations will be expected to adopt it unless they have very good reasons not to. In our sector, mergers, or at least being in a position to consider them, is very much on the agenda.
So, is your organisation ready?
At Altair we take a holistic approach to any request for help when considering the merger question. We appreciate there is a need to fully understand the organisation first.
What do board members and key staff think are the priorities for the organisation? Where are the strengths and weaknesses? Are the views backed up by strategic documents and financial statements?
And as mergers are very much linked to value for money strategies, are the costs much higher than other housing associations providing similar services in the area? If they are, can they really be justified?
These are some of the issues that we work through when considering the merger question with a housing association. It may be that further work needs to be carried out internally before the organisation is in a position to seriously consider any form of partnership arrangement.
This approach allows us to take into account areas that an organisation will want to protect and this may relate to particular services or may be focussed around culture and values.
Delving into the organisation also allows us to establish the criteria where a merger could be considered viable as well as identifying potential deal breakers in any merger considerations. An ‘offer’ can effectively be packaged for a potential merger partner.
A merger, sharing services or some degree of partnership working, is likely to have wide ranging implications for the organisation. Part of any merger process should look in detail at measures that will need to be put in place to ensure that day-to-day operations can continue smoothly and that changes have minimal adverse effects on all concerned parties.
For board members governance issues will also need to be considered. It will be essential that the board has the knowledge and skills available to thoroughly assess and evaluate any merger options, or be willing to seek independent advice.
After all, the board’s responsibility is to ensure that the organisation’s mission is safeguarded, and so it should take a dispassionate view of merger options. We know this is not easy but is an essential part of good governance. This also doesn’t mean that every association has to merge. It does though ask the fundamental question; is our mission best served by being independent or being in a merged and therefore bigger association?
Considering a merger takes up time, energy and resources, but it is a task that some organisations will have to undertake shortly, or in the not so distant future if they are to be seen to be best serving their tenants, delivering effective services and providing further good quality housing.