GOVERNING COUNCIL Meeting date: Paper no: Contact:
CGF Charles Fifield FRICS email@example.com
Open Governance: To consider the way RICS should be accountable to its Membership and what additional information it should make available to the Membership to encourage this.
Governing Council is invited to consider which of the strategic options set out in this paper it wishes to pursue
All areas of corporate strategy could potentially be affected, depending on which option is chosen.
The outcome of discussions may affect recruitment policy (due to confidentiality of salaries). As set out below: commercial, reputational and legal risks may arise, depending on which option is chosen
Risk: Financial implications:
A range of financial implications, depending on which option is chosen
An Open Governance strategy for RICS: strategic options for consideration 1
To consider the way RICS is accountable to its Membership and what additional information should be available to the Membership. 2
RICS was established in 1867, over the past decade there have been significant changes to its corporate structure, due to Agenda for Change, The Brooke Review and Governance changes following the changes to Rules and Bye-Laws in 2008.
Whilst RICS has become a more professionally run body it has created a sense of alienation and concerns over the way RICS is run within some parts of the Membership which needs addressing. There is a less obvious chain of command and responsibility within RICS and Boards are less well connected between each other. The specific aims of “Give groupings of members at local, regional and national levels a stronger identity and better support to promote their services” in Agenda for Change and “better arrangements for considering members’ opinions and complaints” within The Brooke Review do not seem to have been implemented, indeed RICS could be seen to have gone backwards. The Brooke Review has a section titled Transparency & Accountability and recommendations 213, 117 and 219 do not seem to have been attended to (see Appendices). 3 Alignment with strategic objectives: Governing Council should consider an Open Governance strategy for RICS to help re-engage with the Members. RICS needs its Members to act as Ambassadors of the Profession and to help meet the Strategic Aims it has set. Without Members willing to assist with activities on a voluntary basis they will either not take place or RICS will have to pay for Staff to do it, which increases costs. 3.1 Existing position: RICS produces Financial Statements for the Institution as a whole but does not break down its expenditure or itemize larger items in such a way as to allow Members or their representatives to properly scrutinise it. This goes against recent Government Initiatives on Transparency, Open Data and could have issues with Freedom of Information, as well as the moral issue of Members having a right to know what their money is being spent on. RICS has adopted a system of selecting rather than electing representatives at almost all levels, whilst this may “ensure the right mix”, it has the potential for making it look like such Boards are simply focus groups chosen by RICS to provide the answers it wants. The former hierarchy that existed within RICS has somewhat been disjointed meaning many Boards do not directly connect with others or have a more rounded view of what it going on at other levels. 3.2 Issues to consider: RICS has already started to bring in Regulations and Schemes based on the Public Interest and adopting Government Initiatives, we also need to be flexible and create a menu of possibilities based on:
Cost. Clearly any initiatives to Open up the decision making process would have cost implications however with IT systems in place it surely could not be too difficult.
We should be alive to accusations of hypocracy. We increasingly ask our Members to submit to Regulations and Schemes on the principle of Public Interest, Government Initiatives and being open and transparent, what does it say to our Members if we are not prepared to do the same.
We need to manage expectations. There is no point in paying for and publishing Open Governance if it doesn’t actually change anything or connect with Members.
There are risks in Open Governance, in relation to confidentiality and sensitivity.
RICS relies on Active Volunteer Members (AVM)– who volunteer their services at all levels of RICS from Governing Council, through World, National and Regional Boards, working for Professional Groups, Local Associations, RICS matrics – they give their and their employers time for free. RICS relies on AVM’s as Ambassadors for the Profession and in return the AVM’s especially need to feel part of RICS, that their concerns and worries are listened to.
Publication of Information and Freedom of Information Act: Does this affect RICS, the Law Society has a policy on this but should RICS consider publishing information as a proactive measure. http://www.lawsociety.org.uk/publicationscheme.law
This is the Members money RICS is spending.
4.1 Legal risk. We can minimise the Legal Risk by updating the RICS contract of employment or Service provision to ensure that the issues of publishing such information can be resolved. RICS could retain the ability to keep certain information confidential but there would need to be strong safeguards and a clear audit trail in relation to accountability. 4.2 Brand risk. The Press Office and Regional Teams would need to be briefed as to how to keep on top of inevitable mischief making stories whenever financial information is released. 5
Policy of other organisations
Some simple desk research of other organisations has revealed some interesting trends in this area: 5.1
All civil servants paid more than the Prime Minister have their salaries published. All items of expenditure over £25,000 are published. Any Petition with over 100,000 signatures will be debated in the House of Commons. http://petitions.number10.gov.uk/
http://www.cabinetoffice.gov.uk/transparency http://www.cabinetoffice.gov.uk/resource-library/senior-civil-servants-high-earners-salaries Cabinet Office Statement: “Openness and transparency has the potential to transform government. It can strengthen people's trust in government and encourage greater public participation in decision-making. Transparency is also a key part of this Government's efficiency and reform agenda. By being open and accountable we will:
enable the public to hold politicians and public bodies to account deliver better value for money in public spending realise significant economic benefits by enabling businesses and non-profit organisations to build innovative applications and websites using public data
5.2 Local Councils e.g. Cheshire West & Chester The author was recently elected to this Council and All items of expenditure over £500 are published: http://www.cheshirewestandchester.gov.uk/democracy_and_elections/open_data.aspx Council Statement “Open data is about increased transparency and about sharing the information we hold with the wider community in order to allow them to use the information as they see fit. To achieve this aim, the data must be in open, machine readable formats that can be easily reused. We've created an Open Data area on our website to help:
Make date we hold available online (unless private or sensitive)
Encourage residents, businesses and other interested parties to interrogate the data and develop applications, hacks and widgets
Increase transparency and accountability
Other Professional Bodies
The Law Society: Policy on Publication and Freedom of Information requests: http://www.lawsociety.org.uk/publicationscheme.law
Against the background of RICS’ global ambitions, Members in the UK are getting increasingly alienated, especially those who have been active volunteer Members in the past and have previously been our biggest Ambassadors but are increasingly refusing to get involved. The author has identified a number of options for Governing Council to consider: 6.0
RICS has had approval from Governing Council for the way it is run, Governing Council is elected by and responsible to its Members. This would have obvious cost benefits. It would, however, produce risks to our prospects:
Continued alienation of Members Accusations of hypocracy from Members dealing with ever greater pressures from Regulation and to be open and transparent Difficulties in recruiting and retaining active volunteer Members, who are required to act in the public domain as Ambassadors for RICS Freedom of Information Act.
If we adopt this option, we will need to analyse the full impact in our relationship with Members. 6.1
Proposal 1: RICS should publish all items of Expenditure over £25,000
Under this option we would incur some additional costs in relation to administration of such a scheme however it should be remembered that the theoretical maximum number of transactions to be reported annually could not exceed 2,233 (2010 expenditure = £55.83m / £25k) in reality the actual number of such transactions will be considerably less. In comparison Local Councils in the UK now have to produce figures showing all expenditure over £500, such a policy for the RICS would create the potential for up to 111,669 transactions and clearly therefore sticking with the £25,000 expenditure level is more realistic. Members have a right to know what their money is being spent on and if they are getting value for money, the only way this can be established is to see what is being spent and where.
Proposal 2: RICS should publish the salaries of Staff paid more than the President
UK Government has a policy of publishing all Civil Servants paid more than the Prime Minister, for RICS our elected head is the President and is Honorarium (including use of the President’s Flat) is currently £82,000 pa. RICS has already adopted the Hutton Report recommendations as the Chief Executive’s pay is on a 20:1 ratio to the lowest pay bracket. We would need to take legal advice in relation to employment law and there is a risk that we could lose senior level Staff and create a level of animosity between staff members. A potential solution may well be publish pay grades of those paid in excess of the President. Clearly this could be embarrassing for RICS, depending on the salaries involved, however Members have a right to know what their money is being spent on and that RICS is getting value for money. 6.3 Proposal 3: RICS should confirm on all Policy Announcements, Initiatives and Schemes (a) Where the Policy etc originated (b) Who was consulted (c) Who authorised it RICS often does (b) Faculty Boards, prominent Members, specialist firms and (c) Governing Council, Management Board but (a) is often rather unclear, with reference made to RICS being pro-active in light of Government or EU Policies. If (a) is Leadership Team or Executive Team, then why not say so. RICS through Regulations & Schemes is increasingly going to find proposals which are unpopular or controversial and it must therefore be in a better position to justify what it is proposing, simply saying that Governing Council has approved something is not acceptable, Governing Council rightly acts on advice and recommendations. Members have a right to know where that advice and recommendations come from and where a Policy originates. 6.4
Proposal 4: RICS should ensure there are proper links between Boards
Either (a) Bottom to Top: Local on Regional, Regional on National, National on World Regional, World Regional on Governing Council or (b) Top to Bottom: World Regional Member of GC should sit on their World Regional Board, National Members of WRB should sit on National Board, Regional Members of National Boards should sit on their Regional Board, Local Members of a Regional Board should sit on the Local Board. This happens intermittently but should it be automatic to help would improve communication to create a more obvious chain of command and responsibility, which at present is lacking. 6.5
Proposal 5: RICS should adopt the UK Government Policy on Petitions
Any Petition receiving a certain level of signatures will be debated by Parliament, such debate would not be a binding vote but it would allow for concerns to be raised. For the UK this is 100,000 signatures or 0.21% of the electorate, adopting this for RICS would mean 250 Member signatures for a Petition to be debated by Governing Council. This would be rather more responsive and cheaper than 3% of members calling an EGM. In 2009 a petition with over 450 signatures was presented to Governing Council but this was only at the kind permission of the President at that time. Such Petitions should be allowed as a point of principle and should not have to rely on the individual preferences of the President. Governing Council would be under no obligation to implement the proposal in a Petition but it would have to debate it, a very useful safety valve for future concerns and controversial policies. 7
Whichever of these options we choose, our plan of action, working with world regional teams, must cover how such policies, if any, are implemented. 8
We can build our Accountability capability for the longer term by: Specifying a commitment to transparency and accountability when recruiting staff and appointing members to official roles Offering courses and refreshers for staff at HQ and in world regional markets Ensuring that our new digital platform is enabled for dissemination of information. 9
To ensure that the chosen option is fully understood, we will set out our Accountability policy and strategy for members and staff teams in our world regions, ensuring that the roll out of any policies is managed from a risk and cost perspective at country level.
Governing Council is invited to consider which of the above strategic options it wishes to pursue. Depending on which option is favoured, we will carry out more work on legal risks and costs so that firm decisions can be made on timescales and priorities. Charles Fifield FRICS June 2011
RICS Service includes: Governing Council Member 2006-8, Shadow Management Board 2008, RICS matrics National Chairman 2007-8, LionHeart Trustee 2006-7, Council of England 2005-6, RICS matrics / JO National Hon Secretary 2002-5
Appendices: “RICS, whilst remaining a members’ organisation, should be run more like a business”.
Appendix 1: Agenda for Change 1999 3 principle objectives of Agenda for Change in 1999 were: • Underpin and promote the profession as a world class force • Promote specialist areas more effectively • Give groupings of members at local, regional and national levels a stronger identity and better support to promote their services.’ Appendix 2: The Brooke Review 2003 The 2003 Brooke Review had the following 3 objectives:
Improvements in two-way communication between the RICS and its members How to encourage more awareness of, and involvement in, RICS affairs Better arrangements for considering members’ opinions and complaints
Specific Proposals on Transparency and Accountability were as follows: 213) With very few exceptions, for example, commercial confidentiality and respect for the privacy of individuals, outputs from Committees, Boards, etc. should be made available for all members to access via the RICS website. September 2004 214) While RICS rules and regulations must continue to exist in their formal version (Charter, Bye-Laws and Regulations), a user friendly overview should be created for use by members and staff alike. December 2004 215) Procedures for the nomination and election of senior members (the Leadership Team) should be published. December 2004
216) The roles of senior staff should be available to all members via the website. September 2004 217) Concerns have been expressed about undue secrecy in decision making by RICS Councils, Committees, Boards etc. The Committee takes the view that greater transparency is desirable and would help members generally to understand the reasons for policies. 218) The Committee also recognises the dangers of becoming bogged down in bureaucracy, and believes that, for example, minutes should be brief and concentrate on decisions and action points, rather than attempting to capture every nuance of individual contributions to discussions (although minority views should be acknowledged). 219) There should be a presumption of publication – agendas, minutes and papers considered by RICS decision making groups should be generally available unless there are compelling reasons why not, for example: legal constraints; commercial confidentiality; or respect for the privacy of individuals. Appendix 3: Governance 2008 The Governance changes in 2008 were proposed to create an “enabling constitution”. Appendix 4: 2009 Petition “I believe the Royal Institution of Chartered Surveyors should remain a Members Institution, the wholesale introduction of Quangos to Member Boards could seriously undermine democratic accountability within RICS and no decisions should be made by RICS until it has been properly debated by Governing Council.”