Social HousingBack Office Benchmarking Programme

Back Office Benchmarking (BOB)Helping you meet the Value For Money Standard

Social HousingBack Office Benchmarking (BOB)

Helping you deliver value for money savings

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Contents

Introduction ................................................ 3

Why back office and why benchmarking? ....... 4

Our approach .............................................. 5

Benefits to members .................................... 6

How we deliver the service ........................... 7

Bob is unique ............................................. 8

Case study ................................................. 9

In summary ............................................... 10

Contact us ................................................. 11

Gaynor RobinsonOperational Director, One Vision Housing

BOB has allowed One Vision Housing to inform and shape our Value for Money and Procurement Strategies and priorities in the last few years. Membership of the club has also opened up our organisation to an invaluable network of friends and colleagues, who support and assist each other as we strive for continuing improvement.

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Baker Tilly’s Back Office Benchmarking programme (BOB) has been designed to help you assess the VfM of your corporate services.

BOB is committed to helping housing associations run their back offices more cost effectively.

Three quarters of our members estimate to have saved £100,000 in the first year as a direct result of being in the programme, with a significant number expecting to make even larger savings in the future.

BOB is a national database of all back office costs that housing associations incur, supported by a regional network of facilitated discussion groups who identify and share best practice. Since launching seven years ago we now have nearly 50 members, ranging from 3,000 to 50,000 units.

Steve DungworthHead of Management Services, Accent Group

We have had our challenges in dealing with the economic climate and the need to be more efficient. Benchmarking with the help of Baker Tilly’s BOB programme has been at the heart of our approach to value for money.

‘‘ ‘‘Introduction

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Back office functions form a key part of the corporate organisational framework of housing associations, but our work in the BOB programme has revealed that:

• Social housing associations corporate services are often fragmented, with most individual organisations having their own back office operations and IT systems.

• There can be a lack of robust and consistent management information on back office operational spending, making it hard to identify whether functions are delivering VfM.

• Limited mechanisms exist for reviewing operational effectiveness in respect of back office. This means that operational costs and processes get limited independent scrutiny and review.

• As a result of this lack of standardisation, simplification and sharing of back office operations the sector is paying a significant premium in delivering its corporate services.

Whilst performance indicators give a pointer to the level of performance, it is benchmarking that can pinpoint areas of good or poor performance, including comparing your performance to peer organisations and learning from what others have done.

Our benchmarking programme, together with our private sector experience, indicates that the social housing sector should be able to achieve a reduction in annual back office costs of around 20-25% by the end of the three years. We have estimated that the sector could save around £600m from the estimated £3.2b current spend on back office services.

Nick HorneGroup CEO, Arcadia Housing Group

This is the most focussed andvaluable benchmarking exercise

I’ve been involved with.‘‘

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Why back officeand why benchmarking?

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Our Approach

In our experience it is important when benchmarking a function review that key aspects of effectiveness as well as efficiency are reviewed. In addition to an efficiency dimension, we have developed three separate facets of effectiveness that we measured:

1. Impact: in terms of how the output of the function contributes to or influences corporate performance as a whole.

2. Satisfaction of users and senior managers: looking at how the function is regarded by staff who use these services and also by the senior management who commission them.

3. Modernisation: to consider the extent to which a function has adopted management practices regarded as being innovative and forward looking.

Clearly, having been benchmarking corporate services for the past 7 years, we already have a set of key indicators for the major back office functions, ie Finance, HR, ICT, estates, procurement, legal and marketing and communications.

The benefits of using these indicators enable us to:

• provide our clients with a small number of high level indicators capturing those aspects of performance that are vital for the effective management of the service by senior managers;

• identity and focus on better outcomes for corporate service users;

• reflect best practice - thereby aiding innovation and effectiveness;

• use indicators that are simple and easy to measure and predefined;

• the indicators we have developed are not meant to cover all aspects of performance but instead have been chosen for their capacity to motivate changes in behaviour and support improvement;

• complement any existing performance management frameworks and benchmarking initiatives, and also provide the facility to benchmarking with other public/private sector bodies.

Internal UserSatisfaction

Modernisingorganising

and innovation

Ecomomy and efficiency of major

processes

Impact on organisational performance

and outcomes

Extent to which organisation has adopted the best

management practices

Organisational metric heavily influenced by

service

Rating based on the perception of those receiving

the service

Cost and productivityindicators

Effectiveness KPIs

Efficiency KPIs

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As a member you can use the BOB programme to:

Benefits to members

• Analyse the full range of back office services, including finance, HR ICT and 6 other functions

• Understand how your organisation performs year-on-year

• Make accurate comparisons with peers

• Help you Board identify how cost effective your back office is

• Assess whether your back office delivers true value for money

• Prove to Regulators that you are taking the new VfM standard seriously

• Discover opportunities for back office monies to be redistributed to more tenant facing activities

• Join one of the regional facilitated BOB Performance Improvement Groups (held a minimum five times a year in each region), giving you the opportunity to network with like-minded peers and discuss the results generated by participating organisations.

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How we deliver the service

Membership is open to all social housing organisations via an annual subscription. This fee covers documentation, online database access, data collection, telephone helpline, reports and a place at regular regional group meetings.

Members of the programme have defined the benchmarking criteria with the main costs being grouped initially into staff cost and operational costs and then into 12 areas including legal costs, IT costs, insurance, training and utilities and rates. Your data is inputted via our bespoke secure website accessible only to members. After being validated both online and by one of our specialist Baker Tilly consultants, it is added to the overall database. Members are then able to use the online reporting tool to compare their performance.

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1.0

0.9

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Normalised back office cost

Staff CostOperational Cost

£/U

nit

40%

35%

30%

25%

20%

15%

10%

5%

0%

0–4999 5000–9999 10000–19999 20000+

% By Units

40%

35%

30%

25%

20%

15%

10%

5%

0%

0-£19m £20m-£49m £50m-£99m £100m+

% By Turnover

BOB is unique

Our service is different than other Benchmarking service providers in this sector because it:

• Has an internet database that allows easy input and access - 24/7

• Is real time and so up to date

• Data input is phased over an agreed period

• Has an online reporting tool giving ready access to information

• Has facilitated meetings where members can interrogate the results and discuss them with their peers supported by Baker Tilly efficiency specialists

In relation to data input because we have a set of fixed definitions and the data input is online most of the effort required be members is to ensure they have the correct financial and practice data within their own organisations. Most of our members tell us that their current management reports provide them with the majority of the data required, but some information needs to be collated outside of the finance dept who normally take the lead role.

Group members agree to respect the confidentiality of information and all members agree to the principal of complete transparency of information amongst the whole of the membership.

Feedback from a recent survey of our members showed that:

• 72% of housing associations join BOB in order to compare their practices with peer organisations

• 61% use BOB to network with other housing associations

• Facilitated joint discussions with competitors were with what members liked most about BOB

Current profile of members The current profile of member based on units and turnover is as follows

Gary MoretonPartner and Chairman, Baker Tilly Social Housing Group

When discussing performance levels without a fact-based benchmark, you are just having a debate of ideas. Baker Tilly’s information provides the insight needed to identify

your biggest opportunities and move with speed and alignment to solve them.

‘‘ ‘‘As you can see we have a healthy spread of members across the spectrum of both units and turnover and our membership mirrors the complexity, type and spread of business interests across the sector.

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One of our clients - a 12,000 unit traditional housing association - joined our BOB programme in 2006 after identifying that:

• Their own benchmarking indicated lower than average financial performance

• There was a perception that central and back office services seemed resource intensive and relatively expensive

• Other benchmarking was focussed on operational costs and structures

• It required a more detailed look at back office structures and processes, rather than simply costs

As a result of joining BOB, the organisation derived the following benefits:

• They used the BOB data and established a 5 point action plan which enabled them to deliver back office savings of £1.2m over 4 years

• Savings have facilitated improvements to tenant satisfaction through the creation of dedicated Nuisance Prevention, Leasehold Management, Sheltered Housing,

• Pre-BOB, the organisation aspired to make changes. Using BOB, they set challenging but achievable targets, and have an insight into the changes to processes and systems needed to really deliver change.

Peter LunioAssociate Director

Baker Tilly Social Housing Group

A large proportion of organisations cutting costs may not wish to contemplate structural cost cutting strategies.

Although restructuring and outsourcing can cause disruption to an organisation it can make a company

more flexible and responsive to sector change.

‘‘ ‘‘Case study -how to save £1m

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In summary

Launched in 2005, Baker Tilly’s Back Office Benchmarking Programme (BOB) offers a unique service currently delivered to over 45 Social Housing organisations. We continue to have high levels of customer satisfaction and high re-join rates. The strengths that make Baker Tilly’s BOB groups so successful are:

• A large and proactive membership

• A strong focus on improvement

• Consistency through common and robust definitions

• Careful validation of data supplied by members

• Dedicated website and database

• Phased data input

• Confidential comparisons with a wide range of similar organisations as well as with comparators chosen by the member

• Detailed analysis showing not just how members compare in terms of headline cost benchmarks, but also some of the reasons why their performance differs from others

• Exchanges of experience between members e.g. IT systems

• The opportunity to learn from other organisations successes and failures

• Learning from ‘good practice’

• Savings in time and cost, as the effort of defining and collecting benchmarks is spread over all club members

• A dedicated team of Benchmarking professionals ensures a successful outcome is delivered for every member.

We look forward to you joining.

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If you are interested in joining the BOB programme please contact:

Peter LunioPeter heads our Social Housing Consultancy Practice and has worked extensively in the sector for the past four years delivering VfM projects for his clients. Peter also leads Baker Tilly’s BOB programme.

T: 0117 945 2000 E: peter.lunio@bakertilly.co.uk

Contact us

Darren MeeDarren is a Senior Consultant and the operational head of BOB. He has a vast range of experience in management reporting and lean systems thinking.

T: 0121 214 3100E: darren.mee@bakertilly.co.uk

Gary MoretonGary is an Audit partner with extensive experience in the social housing sector. He also heads Baker Tilly’s Social Housing Group and co runs the BOB groups both nationally and in the Midlands.

T: 0121 214 3100E: gary.moreton@bakertilly.co.uk

Keith WardKeith is an Audit Director and has been involved in the social housing sector for over 20 years, with significant experience in the public sector.Keith co runs the Northern BOB group.

T: 0161 830 4000E: keith.ward@bakertilly.co.uk

www.bakertilly.co.uk/bob

www.bakertilly.co.uk

© 2012 Baker Tilly UK Group LLP, all rights reserved. 03.12

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