Social Housing: A Disruptive Model

Social housing is undergoing change. It faces a dual injunction: to rationalize its costs and to drive a different managerial dynamic to respond to the new economic and social context.
It is up to the sector’s actors—elected officials, CEOs, and administrators—to abandon the old social housing system as it has always existed. Concentration of actors and disruption in governance approaches will be key to ensuring a viable future for the sector.
The model of the expert, all-knowing leader in a conservative environment must give way to more diverse profiles, coming from outside the traditional circles, having experienced multiple cultures, with managerial appetite and a unifying leadership profile, in order to inspire others to join and contribute to the new project.
Florent Pennuen, Executive Search Consultant at Grant Alexander specializing in the Public, Para-public, and Social Economy sectors, sheds light…

Some figures to understand the current paradigm
ESH: 2.1 million housing units
OPH: 2.4 million housing units
for 700 landlords across France.
HLM:
4.5 million households housed in France, or 1 in 6 families and nearly 1 in 2 inhabitants.
17% of residences in 2017 vs 11% in 1973.
The state transfers €18 billion to HLM organizations, including €8 billion for housing benefits (APL).
HLM expenses: €21 billion, of which:
€8.4 billion financial charges,
€4.8 billion property taxes,
€8 billion management and maintenance costs.
Vs. self-financing capacity of €2.1 billion.
2.2 million people benefit from APL.

The figures speak for themselves: the economic situation of the social housing sector is fragile.
The HLM economic model relies on a combination of three elements: equity, subsidies, and modified loans.
Today, HLMs rely heavily on borrowing because their own funds are insufficient to finance housing construction. Over the past ten years, state support for social housing has shifted from one-third personal aid + two-thirds construction aid to 95% personal aid + 5% construction aid.
Moreover, the reduction of APL by €5 per month per recipient will impact HLM accounts and strongly affect self-financing (a decrease of €1.8 billion).

The social housing sector must adapt to legislative reforms and the reorganizations they necessarily induce.
The Evolution of Housing and Digital Planning (ELAN) bill aims to “reorganize the social housing organizations network” with the objective of “achieving the right balance between proximity and pooling,” where proximity ensures management responsiveness and pooling ensures efficiency in procurement, information systems, project management, and optimized use of equity. “The link with local territories must be maintained,” specifies the draft law, avoiding the multiplication of contacts for local elected officials.
The finance law and the ELAN law will inevitably impact social housing, with consequences in terms of organization, skills management, and governance… It is the moment for General Directors to rethink their strategy globally, particularly regarding HR policy, and to align it with the expected openness to other services and the broadening of skills anticipated by USH actors.

Why a disruptive model?
OPHs and ESHs face profound societal changes.
The typology of HLM housing no longer matches current family structures. Today, the traditional nuclear family with parents and multiple children is increasingly rare. The need for smaller units is growing.
The system remained conservative, not questioning housing allocation based on family structure changes or income levels. Allocation conditions and rent setting (including future revisions) will evolve to foster social diversity and fairer contributions according to actual income levels.
To face these challenges, and due to viability thresholds, reorganizations are necessary to avoid jeopardizing HLM financial balance. These arise with territorial, intercommunal, and decentralization issues.

These changes require a transformation of HR approaches and support.
Organizations, management, and governance are directly impacted by the sector’s restructuring.
The shift must move from a technical model to a managerial model, moving away from HR policies influenced by local authorities toward genuine HR management with a focus on competencies, employability, posture evolution, and expectations.
The challenge is even greater as payroll is the second-largest expense for OPHs and ESHs. HR policy must therefore align with strategy, defined in parallel and in coherence with it.
All public activities have been, are, or will be mobilized to meet a desire for different management of public funds, allocation adjustments, and structural evolutions.

Four main challenges are observed:
Structural reorganization through regional consolidation (like URSSAF…), creation of shared service centers, pooling/concentration/mergers, e.g., creation of Territorial Hospital Groups for hospitals or for local authorities under the MAPAM law.
Governance evolution with adjustment of elected positions (e.g., reduced elected official role in hospital governance) and fewer DG positions due to concentration. This involves modifying responsibility levels between regional and decentralized sites (e.g., CPAM, URSSAF, GHT…), where site directors no longer have the same prerogatives or delegations.
Introduction of ICT (digitization, DMS, LAD…) and digital tools.
HR policy evolution: professionalization of teams, evolution of profiles and postures…

Ultimately, General Directors must lead a strategic transformation, a multidimensional reorganization within a constrained timeframe, defining HR policies aligned with strategy, which acts as a key lever for transformation success.
This context raises managerial and leadership questions to deploy expected competencies across the management line and guide teams with a realistic and sustainable vision.

New HR landscape in the USH world
Beyond expertise and know-how, tomorrow’s social housing managers must more than ever have a leadership dimension to mobilize teams in a heavy restructuring context, with proximity to support, guide teams, explain transformation, and embed new professional and managerial practices.
While managing daily operational challenges of their OPH or ESH, the 2018 USH manager must adopt reflexes of a director/leader/initiator, a creator in difficulty, while charting their roadmap to meet diverse demands.

A manager able to drive change in a transformation context must gather the following core leadership management skills:
Situation analysis
Strategic vision
Open-mindedness
Capacity to create, innovate, transcend the existing
Capacity to act (think as a man of action, act as a man of thought)
Organizational leadership: translate vision into operational reality
Adaptability
Mobilize and drive, embody transformation
Relational competence: listening, reflection, perspective
Balance flexibility in cooperation with conviction
Delegate and develop teams
Emotional control
Our Grant Alexander Athlete Thinking® philosophy and methodology focus on mental dimensions that optimize performance.
Qualities must, of course, combine with required experience and alignment of the profile with company values and project.
Identifying Athlete Minded leaders in any situation is a priority for our Grant Alexander firm. Our experience in HR consulting, recruitment, and high-potential development enables us to read and challenge major competencies conducive to managerial success, especially in transformation contexts.
June 2018 –
Florent Pennuen, Executive Search Consultant Public, Para-public and Social Economy Sector