Richard Blakey, Executive Director of Finance and Resources
For place-based housing associations such as settle, our role in supporting all our communities has never been more important. Despite the pressures of the pandemic, we remain committed to providing the services our residents need and value. At present, we have 9,500 homes across Hertfordshire and Bedfordshire, and our new corporate plan commits us to building 1,500 more homes by 2024 – 90% of which will be affordable.
Although this is ambitious, a successful planning process driven by our board means we are on track to deliver for our communities, now and into the future. So, what have been our key learning points?
Business planning – more than a regulatory requirement
At settle, we present our business plan together with the results of stress-testing to our board on a six-monthly basis. This provides the board with assurance around our financial strength to deliver on our ambitions. It ensures board members understand the events that could ‘break our business’ and that they have engaged in identifying a menu of recovery options that could be taken in response.
Reaching this point has been the result of extensive collaboration between board members and colleagues across the business. We ensure we present the findings of our business planning in a way that is comprehensive yet easy to digest. This enables it to be a tool for driving the business and not simply an annual regulatory requirement. How have we done this?
1. Early board input
We create a space with the board to discuss the underlying assumptions for both the budget and the business plan, as well as seeking feedback for what stresses we should be testing.
We produce and stress-test two versions of our business plan. One that reflects our current commitments and one that reflects the full aspirations of our 2024 strategy. This largely reflects the assumed impacts of our development and regeneration pipeline that is not yet formally committed.
For our board, having a tested aspirational business plan provides assurance around the capacity to deliver our ambitions, and underpins conversations about whether we are being ambitious enough. Are we being too conservative, and could we use our balance sheet strength to deliver more for our communities?
3. Accessible to all board members
By their very nature, business planning documents can be lengthy, detailed papers. Business planning is too important to be left to just a sub-section of the board. It is important to us that all board members can understand and shape what our business plan is saying.
We strike a balance by maximising the use of graphics to ensure we can tell our story as succinctly as possible. We continually seek feedback from board members – both those with financial expertise and those who aren’t finance specialists – to make sure that we are producing an end product they can engage with.
4. Link with overall risk management
Our stress-testing is linked to our corporate risk register, meaning that we are testing the impact of what is pertinent to settle. Whilst we have agreed mitigation options should the business ‘break’, we can also demonstrate the early warning signs we monitor and the actions we would take if necessary.
This provides further assurance to board members that we are proactively managing our key risks and that we wouldn’t wait for the worst to happen before we took mitigating steps.
5. Mitigation strategies developed with the whole business
This ensures that there is a collaborative thought process behind what actions could be taken and that we better reflect on the impact these will have on our customers, colleagues and stakeholders. It also means that the business plan comes alive and is not seen solely as something that is ‘done’ by the finance team!
6. The role of golden rules
We have begun to align our golden rules as a representation of our financial risk appetite. All decision papers that go to our board now include commentary on the extent to which a proposal would impact upon our golden rules.
A final crucial point is that we never assume that our approach to business planning is perfect! We are always looking to find ways to gain feedback, whether that be through our local finance networks or through the use of independent consultants, such as Campbell Tickell. This not only provides additional assurance to our board, but has also helped us identify how we can continue to improve our approach.
This article was first published in CT Brief 52