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Recruiting outside the social housing sector can bring in more talent

28 June 2016 Candidate Blogs

And keep the wage bill down

Executive pay has come under criticism in social housing. In the largest 100 housing associations, pay in the top job has risen by 5.5 percent. It stands out because this is not matched in the lesser ranks and also because Government legislation is sucking out the surplus for many.

The ‘pro’ view for increasingly higher pay has been around the lack of skills and expertise within the sector; that salaries are benchmarked, that this is the going rate, and that ‘their’ particular organisation has twice the housing stock and consequently demands a premium rate - the latter metric having a curious and anomalistic alignment with worth.

The senior appointments team at Morgan Hunt has been placing top execs in the public and not for profit sectors for the past decade and there is some growing concern around the concept of ‘closed shop’ creeping under the boundaries of housing top level jobs; that a precondition of employment for the Chief Executive role is experience within the sector.

“It’s true, that the learning curve at the start of a job might be steeper if the person who is hired is not sector experienced, but there is no evidence to suggest that someone from outside the sector cannot do the job as effectively” says Frazer Thouard, Director, Senior Appointments Division, Morgan Hunt.

Economists always view long run investment curves with a dip to start with and then with increasing returns later on. An example of outside sector recruitment is Carolyn McCall, appointed Chief Executive of Easy Jet in 2010 after 25 years in the newspaper business. Aviation, media? Not a lot in common apart from both being high fixed cost businesses, but it has not mattered judging from her performance.

Are boards too close; do they lack objectivity when it comes to making decisions on pay and candidate selection, should there be more independence, more vision, a wider scope?

Both recruitment and Ftse 100 companies have been lambasted for being too narrow in their search and selection of candidates, including the appointment of non-executive directors.

We should not condone top pay for top skills. Skills of this kind often command three times higher in commerce and industry. Also there is an increasingly larger enterprise remit entering into social housing; and, given their social purpose, the shifting balance will be a higher and more challenging wire to walk for any CEO.

Yet talent in social housing does not solely exist within a homogenous housing group and the laws of economics will drive up price where supply is restricted. “Looking beyond the immediate social housing community can bring in much needed new talent and innovative thinking.” says Thouard. “If social housing is to evolve, it should look outside for fresh ideas. If the sector is doing all right then it’s ok to recruit from within, but it isn’t, and swapping around directors is not the best solution. This would be a mind-set change for the industry”.

This viewpoint is clearly not held by all. And there are issues in attracting good quality candidates from outside the sector due to its image, yet there is still enough within the remuneration package for recruiters to market with confidence.

For example the vast majority of Chief Executives (80%) are on defined contribution pension schemes; this is rare in commerce and industry. With employer contributions of up to 30 percent, recruiters need to wise up on the lure of these increasingly scarce additions.

For more information on Morgan Hunt Senior Appointments email us.


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