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With exactly one month to go to the Institute of Domestic Energy Assessors (IDEA) conference, its time to revisit the reasons why I am very uncomfortable with a company purporting to be a members Institute behaving in ways that it should not be doing. Behind the scenes IDEA have recently been using a selection of strong-arm tactics to attempt preventing me even discussing my concerns. This has been very disappointing to say the least.

So what has been the progress to date at IDEA?

Initially IDEA was set-up with a Steering Group of 12 people- the idea being to create a professional organisation to represent DEAs. An initial meeting was held, but subsequent events involved the self-appointed CEO then asking a number of Steering Group members to step down. Further events have shown that IDEA then quickly gained momentum in trying to find ways to attract revenue. First on the shopping list was an IDEA HIP and a series of meetings were held with pack providers, obviously a key requirement would be the size of the referral fee to be paid to IDEA for each HIP created. Although this was initially denied, it turned out to be true. Probably the first sign of trouble was the wheeling and dealing that went on with IDEA playing off 3 or more providers against each other.

It turns out the a great deal of plagiarism then went on with documents either knowingly or not-knowingly copied from 3 different organisation- these formed the basis for the constitution, Continuing Professional Development notes and a Code of Practice.

Sadly, further incidents occurred which resulted in the levels of trust being eroded within the set-up of IDEA. There was conflict within the Steering Group, some inflammatory emails and messages were circulated, unfortunately some of these were unprofessional and could be regarded as being derogatory enough to have caused a gross misconduct charge to be brought to anyone in an employed capacity.

So if I know all about these problems can I propose any solutions?

1. Constitution

This is something that usually bores me to tears, I wasn't especially interested when IHI announced they were set up as a Community Interest Company (CIC) probably because I either have been, or am a member of: IET, APM, IQA, NAEA and RICS and I have not come across any particular problems in their structure with the odd exception. Without a constitution that everyone calmly considers, agrees and then publicises so that all members know what the correct structure is for the Institute, you are batting on a sticky wicket. I am not suggesting that its possible to get it right first time, but there are some obvious errors in the IDEA constitution and this may have been a consequence of copying the document prepared by PRNet but not running through it with a fine toothcomb to make it fit a potentially much larger group with entirely different ambitions/objectives. PRNet was set up primarily as a business network serving the North West where IDEA has always been about being the 'largest membership organisation in the industry representing DEAs' and clearly these are two very different goals.

2. Organisational Structure

A professional organisation must have its structure correct. This will ensure that accountability sits in the right place, it ensures that communication is clear and appropriate and it ensures that in the case of an Institute the views and wishes of the members are considered the most important factor in defining the future for the Institute and of course they impact on the decision-making process.

IDEA failed to get a structure in place that was member-led. As it turned out, the Steering Group was not consulted on a significant number of issues and what has happened is that a self-appointed CEO has installed himself for 3 years and has installed a deputy Chairman to assist him. Even the title CEO is not provided for in the Constitution, sadly its details like this that do matter in membership organisations.

3. Company Structure

IDEA is currently set up as a limited company, its not substantially different from NRG Experts in having 2 Directors and there is no reason why it should not have been set up correctly as a non-profit making Community Interest Company other than the fact that you can set up a Limited company rather quickly, whereas a CIC takes a great deal longer when combined with the title Institute. What is astonishing is that the 2 Directors, having a legal responsibility for the company, have never met or spoken.

So what is the correct structure for a non-profit making members
organisation that wishes to get involved in revenue raising beyond membership fees?

1. The Board

Firstly membership organisations are member-led, those representing the organisation are actually representing their members. Their personal views or prejudices are of no consequence in the decision-making process.

2. The Chairman

The Board is made up of members of the Institute, each is elected and ideally brings skills and an insight that is beneficial to the overall Institute. Institutes are headed by Chairman, The Chairman is the person elected by the Board and the Board members are elected by members. The Board are the most powerful grouping in the Institute.

3. The Chief Executive and Managing Director

If required, the Board can appoint a Chief Executive. If the Institute want to have additional revenue-raising capability beyond membership fees they may choose to appoint a Managing Director. The Managing Director is accountable to both the Chief Executive and to the Board. The Managing Director is recruited to focus on raising the required additional revenue which is a target/budget set by the Board. The Chief Executive day-to-day role is to focus on representing the members, increasing the standing and well-being of the Institute and to always be on the lookout for opportunities to ensure the Institute is at the forefront of the industry. Finally the Chief Executive is responsible for balancing the books.

One definition of a Chief Executive taken from Yahoo Finance is:

The chief executive is the highest executive officer in a company, rather like the captain of a ship. He or she is a accountable to the companies board of directors and is often also a member of that board. The chief executive participates in setting strategy with the board and other officers and is responsible for the tactics in meeting the companies goals.

In the first year of IDEA, the Steering Group should have fulfilled the role of the Board, given it was made up of members, and it was also cherry-picked to include people who had certain skills and knowledge that could prove valuable to the future of IDEA.

Where has IDEA gone wrong in all this?

IDEA has taken a top-down autocratic approach. Detractors will point to polls being held on IDEA forums, I will point out that the polls are on topics asking whether its a good idea or not, but the reality is the incumbent leadership have already got the ball rolling without the knowledge, agreement or approval of the membership or the Steering Group. Equally the polls have not received significant publicity to the members, and the level of voting is statistically insignificant to the decision-making process when considering its overall membership numbers.

A top-down and autocratic approach to running things can work of course, but you have to be inclusive in the way its conducted. The moment IDEA started ejecting/blocking/banning/suspending its own members it was heading into trouble and was going to be open to subsequent ridicule. In an industry where it has become established there is little commercial loyalty DEA/HIs expect more of the professional bodies and many feel let down with what has gone on. None of the members organisations that I have been/am part of would take actions to ban/suspend members lightly and certainly not without an accurate and robust policy in place together with approved procedures and accountable decision-makers in place.

IDEA has not been able to provide straight answers to some simple straight questions, this has created a culture of suspicion. IDEA has banned, thrown out without consultation and suspended some members. This has taken place without a disciplinary procedure being in place, without due consultation and is on extremely weak legal ground.

The IDEA Business Procurement Unit (BPU)

This is a particularly fancy name for a panel. Without the approval or agreement of its members IDEA starting holding meetings with potential BPU customers. What IDEA has failed to recognise, in my opinion, is that being a panel can do substantial damage to the reputation of a company. For example, speak to any of the many hundreds of DEAs who have trained through SAVA/NHER and ask them how they feel about the SAVA Business Exchange (BX) now paying 40.00 for each EPC offered to DEA/HIs? Without the correct legal framework in place, what would happen if a large bad debt arose with a customer who could not pay the BPU for x thousand EPCs that had been carried out and then enters liquidation? Certainly DEA/HIs have already seen a number of panels fold owing them funds, probably the most well known being Habitus, (albeit they were mostly employed DEAs).

The incumbent Government was disturbed to see that Labour Party members could be liable for any default on the loans to the Labour Party. So at this point in time, it would be the Steering Group who might be liable for any financial deficit of IDEA, in the future it could be each and every member. Another area where I take issue is that the IDEA Business Procurement Unit is in fact competing with its own members. To use this analogy, its perhaps worth pointing out from my own professional memberships that the National Association of Estate Agents does not open estate agency branches in order to compete with its members, the Royal Institute of Chartered Surveyors does not tender for building surveying work from the major mortgage lenders and so does not come into conflict with its building surveyor members.

It is well understood in this new industry that DEA/HIs are pitching for work in every conceivable way, to agents, solicitors, the public, pack providers, local authorities, housing associations and so on. For IDEA to be pitching for this work is in direct competition with its own membership- something I would regard as totally unacceptable for what is purported to be a member-led Institute. I am not against the Business Procurement Unit because its competition for NRG Experts, I don't care about that (I have always suggested that if fee levels implode and my business is not something I want to do or enjoy, I'll walk and go and earn an income elsewhere since I am well qualified to do so.)

IDEA and its ever-increasing list of revenue streams

From the very first Steering Group meeting it was apparent that IDEA was going to run for free to members for the first year and this was to be balanced with the income that New Blue Media (an internet advertising/presence company) could generate.

I have previously listed 10 ways that IDEA can receive revenue, but it turns out that in a very short period, there were actually far more revenue streams than anyone had previously pieced together.

I have no problem with Institutes creating additional revenue, I pay the IET to attend events, I pay RICS for books from the RICS bookshop and I pay the NAEA for technical and legal documents- clearly the member organisations are benefitting from my income but at their core is working for their members. My concern is the overall attention that IDEA has paid to its members wishes rather than its seemingly never-ending focus on gaining additional revenue. Its remit after all is to be a membership organisation representing its members, not simply to keep charging them for services.

Here are the various revenue streams that have been identified:

1) HIPs A deal to supply HIPs to DEA/HI members pays IDEA a fiver for every HIP produced.

2) Conveyancing A recent newsletter details a method for DEA/HIs to promote conveyancing services. Fee paid to IDEA is not in the public domain.

3) Telephone calls IDEA intends to earn a small amount of money from the HIP helpline that DEA/HIs may call by having a small surcharge on each phonecall.

4) Sponsorship Both as main and subsidiary sponsors of the Institute but also for sponsorship for newsletters, advertising on the web page, printed communication sponsor (7.5k per annum), electronic communications sponsor (2.5k per annum), organisation sponsor (30k per annum), and event sponsorship

5) Annual Conference Exhibitors have been asked to pay 750 pounds for a stand and of course attendees are paying 30-50 per ticket (max 250 members attending)

6) Accreditation Scheme A deal with ECMK means IDEA could receive a fee for every EPC lodged through the IDEA/ECMK deal. Estimated to be 50p to 1.00 for every EPC lodged.

7) Virtual Exhibition Hall An online exhibition hall that sponsors pay to advertise in. One of the original ideas from New Blue Media but not implemented yet.

8) Homepage advertising The original idea was to drive web traffic, both professional and from the public, to the IDEA homepage, with a high enough level of traffic, adverts could be hosted and revenue raised based on fees received on a Pay Per Click basis. Not wholly implemented by New Blue Media but HES do have various advertising banners. Revenue received is unknown.

9) Business Procurement Unit Not only does a professional body wish to accredit its members, it also wants to compete against them by pitching for work, pocketing the management costs of panelling the work (typically 15-20% for a lean panel) and actually encouraging less money reaching the overall DEA/HI 'pool' as a consequence.

9) Membership fees Currently put out to only those members who have elected to receive emails from IDEA, a figure of 150 was suggested. With 1600+ 'members' who all joined for free, it would be reasonable to assume that 300-400 members may actually pay an annual fee of 100-150, total 30-60k. More likely to be 150 members paying around 65 for Year 2.

10)Insurance Being sold with the HIP, insurance introducer fees are typically fairly good, any fee being paid to IDEA remains unknown.

11) Training, IDEA were getting an income from each training session they were providing. Although IDEA called it Continuing Professional Development, the training was not recognised by all the accreditation schemes so for the sake of accuracy I shall simply call it Training. 50 for an IDEA member & 60 for non-members.

12) FindaDEA IDEAs own version of the free online directory of DEA/HIs. Find a DEA priority listings 49 per annum.

13) HIP IDEA Road Show 20 pounds a seat.

14) HIP IDEA Professional Indemnity and Public Liability Insurance retailed to members at 165 or 215 but the amount retained by IDEA is unknown.

15) Template Websites Price at 24.50 per month for a two year contract

16) Search validity insurance for IDEA HIP. Extends the validity of the searches within the IDEA HIP from 3 to 9 months for an additional 12 inc VAT. Unclear what IDEA receive from this.

17) IDEA promotional materials for DEA/HIs to promote the IDEA HIP
Its the IDEA promotional materials for DEA/HIs to promote the IDEA HIP. The costs are particularly high.

Size__Qty____Price
A5___ 50 ____65.00 = 1.30 per leaflet
A5___ 250____180.00 = 0.72 per leaflet

A non-profit making members organisation would use an administrator to send these out at as near to cost price as possible. When ordering they would probably manage to place an order for say 30,000 of these flyers at a cost of 1,100. This equates to a cost of 0.04 per flyer. I have a regular order of 30,000 flyers every 2 months- of equal quality/type of print etc so my estimates are not unreasonable.

Lets say a DEA/HI orders 100 flyers, not an unreasonable number for a lone-worker covering a 20mile radius. So under the existing offer they would pay: 2 x 6 5= 130+ 6 postage + 23.80 VAT = 159.80

Under a sensible offer, 100 flyers would cost 100 x 0.04 = 4 + 6 postage = 10.

There is no VAT if you choose your print options carefully, which you would when trying to offer best value to members. Of course there are design costs to reimburse, but they are a one-off cost.

Whats the other Institute been up to then?

Its not all sweetness and light, membership numbers remain 'light' to say the least and there is currently a 'perception' problem that its geared to Home Inspectors and has no interest in Domestic Energy Assessors per se. Recent evidence is that the Institute of Home Inspection (IHI) are trying to start changing this perception. In terms of revenue as a comparison with the various revenue streams identified above, IHI has just one source of revenue- membership fees.

Conclusion

I don't think there is one really, it would be nice to say: will this all simply go away as a problem; its not important and can be ignored; who cares about any of this; is the outcome the starting of a new Institute; is anyone going to stop the apparently damaging actions of IDEA and so on, but I sense this is candle that has got quite a lot longer to burn yet. Certainly IHI are not going to revolutionise their presence dramatically in the next 3-6 months, but IDEA could potentially go 2 ways, on to great things, or completely implode and die. Certainly worth mentioning that almost every one of the former Steering Group members would love the opportunity to get involved again with IDEA but without a change in the style or personalities that have driven the commercial activities to date, they won't be getting involved. Once bitten, twice shy it would seem.

I guess the key queston is will the Conference be 'evolution' or 'revolution'?

Labels: IDEA-Conference-1-Month-to-go IHI Home-Information-Pack Criticism-of-professional-organisation