HOUSING ASSOCIATIONS ARE NOT UNIQUE

We’ve recently heard that large housing association partnership talks have failed due to differences in vision. I’m confused, I thought we were all broadly here to deliver the same thing in a similar way? My mistake.

The Harvard Business Review highlighted that 70 – 90% of mergers fail to deliver synergies within 5 years. In the commercial world this is measured by summing the market capitalisation of the individual companies and comparing it with that of the of the combined company (share price multiplied by number of shares). However, in the housing sector, we tend to think of a successful partnership delivering additional “capacity”. Capacity its self can be defined as an ability to deliver more new homes or improve the service offering to the community.

The stark failure statistics issued by Harvard are enough to create sector wide apprehension and conservatism. However, hidden in the detail are sub reasons that hint at hurdles that housing associations should find easier to overcome than most other companies. On further dissection of Harvard’s work, some of the largest barriers are evident:

  • A joined strategic plan. It’s easy to say, but in a commercial world where a bank can buy a technology company, it’s often hard to create a joined up strategy. A technology company may wish to invest in research, where a bank may demand more immediate returns [Arm & Softbank].

 

By definition, two housing associations in partnership talks have a strategy of increasing capacity by spreading reduced overheads over a greater number of units, so you’d hope strategies are already partly aligned from day one.

 

  • Stakeholder engagement. Again, if EADS (part of the airbus group) were to merge with BAE Systems in the UK, you can see how there will be significant problems in ensuring all senior management from a predominantly French based European engineering company will efficiently and proactively interact with one based in the UK.

But…This need not be a huge problem for housing associations. In deciding where the HQ will reside it is often a difficult but necessary move to relocate or rehire key posts in that locality.

 

  • Companywide engagement. There are counter cultures that exist in all large companies. These are often led by employees with significant influence over their peers. Within the commercial world it’s common place to see expert mediators brought in to establish committees. This enhances trust and dissimulates information across the business in a controlled joined up manner.

Communication at this level is possibly the hardest hurdle to overcome. Engagement at this level can make an executive decision to follow through with a merger easier / more difficult.

I do appreciate that the above is easy to type and hard to implement, however to me there is one obvious point. All housing associations are here to do at least one of 2 things.

  1. Build more houses to help alleviate the housing crisis.
  2. Serve existing tenants and their communities more efficiently.

In short; housing associations really aren’t as different or unique as I often here board members retort. We build or we serve and there is a power to remembering that simplicity.

Below is an extract from the vision of Chisel Housing Association [250 properties]

“…deliver sustainable homes, services and communities that make us all proud.”

And let’s compare that with the vision of L&Q Housing Association [70,000 properties].

“…creating places where people want to live…we also provide services.”

Not a million miles apart, I’m sure you’ll agree! In truth I could have chosen vision statements from any housing association. Creating a joined up strategic plan for such a homogeneous group of companies should be much easier within our (the social housing) sector. Far easier than in the corporate world. We urge boards to think twice before issuing statements suggesting talks have broken down due to a miss-alignment of vision. There really shouldn’t be such insurmountable differences in the first place.

 


 

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