Organisational sustainability and compliance

The role of academy trust CEO remains a very new one, and trust boards and leaders across the system are still finding their feet. The transition from executive headship essentially means that the lead professional must now make the leap to corporate leader, and it can sometimes be a bumpy ride!

At Forum Strategy we work with academy trust boards and CEOs nationwide through our four regional CEO networks, and our consultancy and coaching work; supporting them to grow and develop in their roles. In this series, we identify six key responsibilities that all academy trust CEOs should be delivering against, including:

Delivering upon the vision and leading strategy

The relationship between the CEO and the board

People and Culture

Improvement and organisational performance

Organisational sustainability and compliance

Building key external and internal relationships

For all academy trust CEOs, organisational sustainability is currently high on their agendas. The current funding challenges mean that CEOs must be highly engaged in ensuring not only medium and long-term viability, but also the careful yet timely growth necessary to achieve viability. This is a delicate balancing act – not least as to achieve growth, the trust must be confident it has sufficient resources and capacity to take on more schools. If not, the risks of expansion are too great. It’s still a catch 22 for the majority of trusts!

For the CEO of a small and growing trust, this means prioritisation in terms of building central resource, and the general consensus is that something akin to the role of finance director must come first (see DfE academy trust growth guidance 2016). Some trust CEOs have taken this to the letter, at the detriment of ensuring the organisation (and their own role) becomes genuinely sustainable across the board. In most cases, what is actually needed is a second-in command who can provide sufficient financial oversight, but also complement the CEO in terms of securing strong operational leadership across the board in areas beyond school improvement (assuming the CEO is of a school improvement background).

This second-in-command role is an important appointment for any CEO, and the temptation is to appoint (which usually means promote) someone internally – often from a finance background. It’s tempting because it’s usually cheaper that way and the relationship is well-established. In some cases this works, but, in many cases, it is a key strategic mistake that doesn’t factor in the organisation’s ongoing and future development. Not long into growth, MAT CEOs undoubtedly need someone befitting the role of Chief Operating Officer – ensuring that finances, resourcing, technology, risk management and operating processes neatly dovetail together to help deliver upon the organisational vision. Far from being simply about finance, “the role defies a one-size fits all description… It is a job whose responsibilities are defined closely in tandem with the individual needs and goals of the chief executive officer.” Furthermore, the COO is “a breed of executive who combines deep operational knowledge with broad strategic insight.” (EY, The DNA of the COO, 2012). Balancing the books is essential work in this climate – but, as a standalone skill set, it does get anywhere near to what a CEO of a growing or a large trust needs in terms of operational leadership.

So, it is our view that the CEO must always appoint someone who can support and challenge their thinking on a strategic level and translate it into action, helping them to maximise all resources across the organisation in order to deliver the vision. The finance director or COO who cannot do that will be a liability for a CEO – particularly in today’s climate. This is because, as Joe Trammel puts it, too many organisations – and finance directors are the main culprits – fall into the trap that too “often management action is driven by budgets and the budgeting process.” They become obsessed with balancing the books and delivering savings at any source, at the expense of ensuring that resources are maximised strategically and invested intelligently. Here (usually) a finance director, without adequate strategic insight or oversight, can become the blocker and the wider vision fails to translate into decision making at all levels of the organisation. The budget itself becomes king. In these circumstances a culture a bean counting mindset trumps an investor and entrepreneurial mindset. Many MATs are already falling into that trap as the budgets get tighter.

In appointing a Chief Operating Officer, experienced COO and CEO Caroline Maley (now Chair of a healthcare trust) says CEOs and boards must have reference to the fact that: “ a core skill of the COO/CFO is their ability to bring out the best in people. They must also have a good understanding of how businesses work, the ability to work across a wide range of areas and to manage teams of skilled people. MATs are multi-million pound businesses so having access to a really good COO is vital.” This is supported by a thinkpiece by EY (The DNA of the COO), which states: “COO responsibilities differ, but one theme remains constant. To perform the role well, 87% of COOs say that highly developed leadership qualities and interpersonal skills are the most crucial attributes.”

“COOs must also have a good understanding of how businesses work, the ability to work across a wide range of areas and to manage teams of skilled people. MATs are multi-million pound businesses so having access to a really good COO is vital.”

Indeed, the CEO needs someone who can help them deliver the vision in challenging circumstances, whilst also being ready to challenge and bringing to bear expertise around what is possible and what is not. This is why the relationship matters so much and that the skills sets and experiences of the CEO and COO complement each other well. It is a relationship based on trust, honesty, frankness, mutual professional respect, and a ‘can do’ mindset. The outcome of this is an  ongoing dialogue that ensures the use of resources is prioritised and maximised, whilst also sometimes – in these challenging times – finding creative (and, of course, legitimate) ways to make crucial things happen without the cash or internal people to do it (for example through fundraising, corporate social responsibility schemes, or engaging volunteers). A COO with experience of fundraising and generating social capital through volunteerism is a huge asset to multi-academy trusts in the current context.

On the role of COO: “Essentially, it is a job whose responsibilities are defined closely in tandem with the individual needs and goals of the chief executive officer (CEO).” The DNA of the COO, EY.

So where should CEOs and their COOs not be compromising? Ensuring the most enriching and engaging educational experience for all pupils is the fundamental purpose of a MAT. CEOs should therefore begin with their vision for the curriculum and vision for learning and ask, what resources do we need to make it happen? This should be considered looking forward over a number of years – with a view to developing talent internally, building school improvement expertise, and accessing resources and contributions from beyond the MAT through strategic partnerships. The finance director or COO’s job is then to ensure – in partnership with senior leaders and teachers – that the resources are delivered, but also to develop the strategic partnerships between schools and with other organisations to maximise resource and talent. Who from within and beyond the organisation can contribute to delivery of the highest standards, and how can we ensure it represents value? In my view, there should be no compromise on this front.

The second area where little compromise should be taken is on recruitment and retention of the very best staff. The quality of teachers and support staff is the area of greater influence on the MAT’s core business – giving children and young people the best start and ensuring they achieve strong outcomes. Indeed, investing in becoming an ‘employer of choice’ can reap dividends. The amounts some trusts spend on recruitment advertising and supply – even in this climate – are eye watering. If trusts can invest in areas that employees are increasingly prioritising – such as the professional development, wellbeing, mentoring and coaching, and strategies to mitigate the workload of staff, they will reap the long-term rewards of retaining the best and having a reputation as an employer that goes before it. A CEO that invests in people will save a fortune in the long run. A number of MATs are now also investing strategically in their own supply banks, ensuring that supply teachers are quality assured and trained, without paying excessive fees both for supply and to convert supply teachers into full time employees. It should also not be forgotten that investing in the training and development of trustees and governors, as well as leaders, is crucial – not least for the purposes of compliance. So many examples of fundamental MAT failure are down to a lack of training for people in these roles.

“first time CEOs rarely have much experience with weighing the balance toward a long-term future…. Typically they’ve been accountable for results only a few months ahead…Their instincts for investing for long-term have not been honed. Those instincts often arise from on-the-job training.” A. Lafley, CEO of Procter and Gamble, HBR

So that leaves the rest, areas to save money and cut costs or areas to work strategically? Of course, across so many elements of a trust’s work, there is the opportunity to procure at scale and therefore to achieve economies of scale. But this has limitations and depends on significant growth (with geographical proximity between schools) before substantial savings are realised. In some cases CEOs should invest time developing relationships with their top suppliers so that suppliers are invested in the partnership and are ready to provide a responsive service and ‘go the extra mile’.

Indeed, MATs must look to how they use their internal resources wisely. We are strongly encouraging MATs to think about how they can collaborate on some back office services rather than reinvent the wheel across multiple trusts. There are some CEOs that are already looking at this – considering strategic partnerships with other MATs on areas such as professional development, educational psychology services, supply banks and more. This is an important avenue to pursue (with strong reference to the board); but it requires a genuine commitment to building deep collaborative partnerships with other trusts and an entrepreneurial mindset from both the CEO and the COO.

Another important priority for CEOs must be due-diligence and as a recent report stated, this should be “a comprehensive process including not only financial and teaching, but also estate management, human resources and procurement.” A CEO that is so focused on growth can easily fall into a trap, as decisions are made without sufficient consideration of the impact that a new school will have on the organisation’s finances or capacity. A good COO will understand the lie of the land here, and be able to bring to bear a deep understanding of those areas that do not reflect the CEO’s experience and expertise. That is why it is so important that the CEO and COOs skills’ sets complement one another. Too many trusts have failed because the quest for growth (and a confidence about delivering one particular area – school improvement) trumped the need to ensure overall sustainability and viability.

Which leaves us with compliance. Compliance begins with governance, and this continues to prove to be a major stumbling block for the academy trust sector. Too many trustees have struggled to make the transition from governors to trustees and to fully grasp their responsibilities in company law, charity law, and to one another. This is a big risk. The CEO and members need a trust board that is ready and well placed to hold the organisation to account, fully appraised of the duties that need to be discharged and the statutory framework within which their organisations work. As with the employer of choice agenda, it cannot be over emphasised how important it is for the trustees to be well inducted and training (with access to ongoing training and resources as legislation and regulations change). We still come across few trusts that have a compliance register, detailing all the organisation’s responsibilities and duties, who is responsible for them, and their status in terms of whether and how they have been discharged. This is not a risk register, it is more encompassing.

A CEO needs to have confidence in their board and in the processes, and, whilst they shouldn’t be managing their board or involving themselves in the boards’ development, the CEO (in partnership with the COO and Chair) can make a big contribution toward ensuring the board is developing the capacity and processes for ensuring compliance. This is one of the reasons that I believe the CEOs membership of a board is so important, because they must have that sense of partnership and shared responsibility in discharging the organisation’s duty to be compliant. Their expertise and their oversight of day to day operations is a key factor in ensuring the board achieves compliance.


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