Management Report

Organisation: Cleckheckmondsedge Community Regeneration Forum

Name: A Hill

Date: 08/09/2010

Overall Score: 202 / 390

Comments:

Anywhere below 250 is poor. It is likely that you have triggered a ‘red flag’ comment in the full report but even if you have not, you should put all plans for expansion on hold while you address the serious problems in your organization. It might not ‘feel’ that bad but that is probably because you have become used to ‘muddling through’.

Undertake a review with your staff team and board. It will be best if you bring in someone from outside who will challenge your approach as well as offer help, advice and support. There may be tough decisions to take. If there are, take them now.

A successful social enterprise is one where the governance, the organisational and the operational systems are fit for purpose, fully engaged, reviewed and improved regularly. Successful organisations will be led by people prepared to drive improvement forward. With a score below 250, you are not in the ‘succeeding’ camp and will not persuade investors and funders to support you. Take radical action now.

 

Governance

Our Question	Your Response	Our Feedback	Score
Can all the key people in your organisation and your chair and board/committee, say in 30 seconds or so, exactly what your core business is?	Probably a fair few could	OK, but spread and embed it more. As you go forward with your new proposition, your entire organisation needs to be fully engaged and clear about your mission and your core business. Your core business statement is not just a list of the projects you are currently doing. It is much closer to the mission which drives you.	7/10
Thinking about your proposed major step forward, how well prepared are you?	We have a good idea about the direction we will need to go in and have already conducted early discussions with the staff and Chair, getting on with the detailed plans	Good; you now have an ideal opportunity to involve your staff team in finalising the detailed plans;	20/30
Which of these statements best describe your board and its primary role?	Generally strategic and forward looking, involved in evaluation and financial oversight;	Good. The role of the board/committee is to be strategic and forward looking. But it also needs to focus on the compliance and planning side. Effective organisations have boards or committees which have a rounded view of their role. Of course different forms of incorporation have differing formal duties, but these should not get in the way of making the organisation the very best that it can be. At this level the board/committee needs to move forward to deepen and strengthen its role;	20/30
Does your board meet regularly with good attendance and systems?	The Board functions ok, but with limitations.	Taking the organisation on to its next stage requires a strong board. Driving improvement will require attention to how well the board operates along with how well it is served. If there is a good attitude but patchy attendance with many members not reading the papers in advance, you need to tackle the board and its performance as a major challenge and this needs to be led by the chair. Boards often allow themselves to be led by the senior staff where they should look to the Chair. He or she needs to be on side and if they are not up for it, someone else needs to be found. Your board must radically step up its performance. Ensure the board is served well with papers always going out on time. You should not have to regularly table reports.	10/30
Has your board undertaken a skills audit, or reviewed what skills it needs, and acted on this within the last 24 months?	Yes, we have had an audit and have used the results.	Congratulations! Great. Development and the management of growth require great leadership as well as excellent management. Stay on top of this.	20/20
Does your board take active part in building the medium to long term forward plans for the organisation?	The Board is somewhat engaged; plans and proposals are considered in the course of the board’s business and comments and responses have a significant bearing	OK. The involvement is real and has some direct effect. You should use the development stage you are embarking on as the basis for radically stepping up the involvement of the board. You need to discuss planning and how to structure and develop it within your organisation as a matter of urgency. Your step forward implies that you have a clear picture of what you wish to do, so it should be tied to your overall strategic plan. If you do not already have one, consider setting up an executive committee to address this and other issues between full board meetings. Ensure all board members have a clear understanding of the need for a structured planning cycle.	5/20
How would you describe the relationship between the Chair of the board/committee and the Chief Executive or Senior manager?	Satisfactory on most counts	Good, keep working on it. The success of an organisation depends on the expertise and strength of the team and if the leadership duo is not working closely together and does not enjoy each other’s trust, then there can be difficulties.	20/30

 

Organisational Health

Our Question	Your Response	Our Feedback	Score
Thinking about systems you use to manage your finances, does your organisation use:	A spreadsheet system like Excel?	This gives some structure, but it is insufficient to provide an effective basis for managing your business now, let alone when you go forward with your development and increase your turnover. When you approaching funders for support you will find that they will take note of how much you are in command of the finances of your operation. A dedicated system such as Sage enables you to manage your financial information well, to know where you are at any given time, and to deal with changes to financial data quickly.	10/20
Good systems incorporate a financial forecasting system linked to financial management. Which option below applies to you in relation to financial forecasting systems:	We have and regularly and consistently use a financial forecasting system	Congratulations! Good; this is as it should be. Healthy organisations are not only accounting well but have the systems in place to predict and plan. The systems will provide you with the ability to see challenges as they arise and equip you to make informed decisions in relation to the development you are proposing;	20/20
Do your systems demonstrate how project delivery targets contribute to your organisation's overall objectives?	Yes: Our systems clearly link our mission, strategic objectives and project activity targets. We pursue business opportunities because they help us to achieve our organisational objectives.	Congratulations! Great, as we all know it is essential to know what it is you are doing and why! The more you bring the targets of your business in to alignment with what you want to achieve as an organisation the better. Customers will come to you as an effective and confident deliverer. You will go forward as an organisation in control of its business rather than as one which simply awaits the decisions of funders and commissioners. Of course setting your targets will be an integral part of your performance monitoring and reporting - which we come to in the next two questions. Your target setting should be addressing wider organisational issues around board and staff development and new business development. It should address the medium and longer term and target setting should be a part of the planning cycle referred to in the earlier questions. Ideally, you need to have an integrated matrix showing output targets linked to your objectives on one side and to your operational delivery resource on the other. Whatever system you develop make sure it is one you ACTUALLY USE	20/20
Do you actively use an up-to-date system to monitor performance on a month-by-month basis in relation to outputs?	Somewhat: We do have a system but do not use it as an integral part of the management function.	Performance monitoring can function within an organisation at many levels: ensuring that staff understand exactly what they have to achieve and by when; enabling managers to have an overview on progress and to address issues together. It is often best ‘owned’ by one person with a good eye for detail, someone who is a ‘completer/finisher’. You should build on what you have so far and strengthen your systems as you go forward with your development.	10/20
Do you use these targets and performance systems as the basis of regular reporting to your board/committee and within the staff team?	Somewhat: We use these targets and performance systems from time to time to inform board and management team.	You can use good information as a means of getting board and staff alike to develop a sense of ownership of your business. Ask the board/committee what they want to have by way of reporting and present some different options. Separate discussions between the senior staff member and the chair will help. You probably have someone on your team who will be very interested to develop effective ways of combining information and presenting reports.	10/20
Do you have regular management team meetings where you set actions and targets for key team members and where all managers update each other on relevant issues?	Somewhat, we do meet quite regularly but without sufficient focus and structure; or, managers get together when they need to and managers pop in and out of each others office to communicate;	As you get bigger you need to move forward from informality to more consistent structured arrangements. If yours is a team that works on friendship and trust – that’s the best kind. But structure and consistency need to be added to friendship. Remember that you may be bringing in new people as part of your step forward and they will be better able to fit in and contribute if you have effective structured meetings .	10/20
Do you have an effective IT system which supports the sharing of documents and e-mail access?	No ; we do not have a networked system. We can only share documents on an ad-hoc basis e.g. through e-mail and memory sticks and use external e-mail accounts	Warning! Take action now. You will lose large amounts of time by just muddling through. If you are serious about a step forward, you need to have this aspect of your business sewn up. Identify your needs, talk to other organisations and ask them how they handle it. Check out the ICT Hub.	0/20
Do you regularly back up all your IT based data, have appropriate security to protect your system and IT maintenance support?	No - we recognise we need to address all these areas	Warning! Institute a back up and security system now! If you suffer a catastrophic system failure or a fire, your entire business will be very difficult to pull together again. Look to the ICT Hub www.icthub.org.uk Look at what similar organisations in your area are doing for IT maintenance. You may be able to purchase IT support from a nearby organisation that you trust.	0/20
Do you produce regular briefings and good news stories for your partners and stakeholders over and above reporting requirements?	Somewhat: We produce occassional briefings and good news stories for our partners and stakeholders but more often it is tied to performance reporting	You are well aware of the importance of marketing and communicating your services and celebrating the positive impact they make. You can build on this. Partners and investors alike will note your successes. and you should put effort in to getting your good news stories out. Staff will also be pleased to be part of a team that commands attention. Developing your communications and promotion can be a positive team building exercise for both the staff and the board. Explore how you could develop this by having it as an agenda item at a Board away day. Your communication strategy needs to face both inwards to staff and outwards to partners, stakeholders and others. Positive reports can also form an important part of the evaluation process.	10/20
Do you know how your two closest ‘competitors’ are performing in relation to their turnover, what their key sources of income are and how strongly they are positioned in the sector, relative to your organisation?	No: We do not put much, if any, energy in to this as we have other priorities.	Warning! Your organisation is probably under pressure and firefighting much of the time. You need to look up and see what is around you. If you don’t, you may be going down a path in which no one else is interested. If you are planning a major step forward you must have a strong business case based on an assessment of what is happening in your area. Knowing what the ‘opposition’ (even if they are friendly) is doing is critical. Certainly the funders will want you to demonstrate that you know your sector. Your should have people on your board who can lead on this. Chair and Chief Executive need to review and identify someone who can bring together the information that is needed. Another way is to invite a knowledgeable person from the sector or from your umbrella organisation to come and speak to the board.	0/20
Do all of your staff have contracts of employment, regular appraisals and personal targets?	Somewhat; we are well on the way to finalising all of our contractual and Human Resource systems;	Keep going; it’s one of those parts of managing that can slip easlly. Of course there is much more to a well motivated team than good Human Resource systems. But, it is certain that if the systems are not in place to manage or motivate personnel, difficulties will follow. Make sure that implementing the necessary systems is a high priority with identified responsibility to deliver by a given date.	10/20

 

Financial Analysis

Solvency Ratios
Current Ratio	While you have enough cash to cover all your short term commitments, you may want to consider your use of cash and whether there is an opportunity to invest some of your cash in short-term investments such as money markets or short-term bonds
Current liabilities to net assets	You will start to raise concerns for suppliers who you maybe asking for credit, as your current creditors are a high percentage of the overall assets of your organisation. It will therefore cause them to assess you as a riskier customer and may cause them to limit your number of days of credit.
Number of months of operational cost provision	You have at least the recommended number of months of operating costs covered through fund available, continued careful planning and monitoring of cashflows on a monthly basis will help to ensure your healthy cashflow.
Debt to Equity Ratio	Investors and creditors are interested in not only the short-term liquidity of a company but also its solvency or ability to remain in business over the long run. The capital structure of a company is the focal point in making this determination. Most companies need a minimum investment by the owners to start a company. Many businesses benefit by incurring debt. Finding the right mix and managing that mix of debt to equity is as important to the long-term health of the company as working capital is to the short-term health of the company. The Debt to Equity ratio is a common measure for long-term viability. In this case your debt to equity ratio is within the generally recommended levels and therefore your organisation would be considered a lower risk proposition and therefore more attractive than other organisations with a higher debt to equity ratio.
Efficiency Ratios
Collection Period Ratio (days)	You are collecting cash from your customers in less than 45 days, this is considered a healthy result as you can quickly increase your cashflow.
Turnover to Assets Ratio	This ratio shows that you are effectively utilising your assets to generate income. For example you are running a community and conference centre that is utilised 85% of the time, including weekends and evenings.
Turnover to Net Working Capital	This result suggests you are staying in business by delivering profitable services.
Creditors to Turnover	This indicates that you owe less than 30% of your income to the payment of creditors indicating a relatively healthy ratio of positive cashflow into the organisation to assist in investment decisions or building reserves.
Profitability Ratios
Profit Margin	While profit margins vary by industry sector, a profit margin of between 10 and 15% would be considered an profitable business. Review your margins against your industry peers and if it is considered low, action should be taken to increase income and/or reduce costs as a proportion of income.
Return on Assets	This ratio measures the return your organisation is making on its assets. While return on assets vary by industry sector, a return of less than 40% would be considered a missed opportunity. Review your margins against your peers and if it is still considered very low, action should be taken to increase the income generated from your assets and/or reduce costs. For example: if you run a community centre are you utilising the space during open hours as effectively as possible? do you have large rooms hardly used? can you think of alternative uses?
Return on Shareholders Equity	This ratio is measuring the typical return an investor could expect when investing in your organisation. To achieve a return of more than 10%, a financial investor might invest in the stock market (e.g FTSE 100 index fund) or a high growth company. However, for most social investors the social benefit is highly valued and therefore this adds to the financial return. A higher financial return allows you to invest more in your social mission and make you a more attrative proposition to what is a growing competitive investment market.