Hello to the IDEA Group of Companies
So the Institute of Domestic Energy Assessors (IDEA) are having a members poll asking if they support the institute's ambition to become an accreditation scheme and/or Panel.
The results (as of writing):
Become an accreditation scheme:
- Yes: 134
- No: 23
- Undecided: 16
Become a Panel (or 'Business Procurement Unit'):
- Yes: 158
- No: 14
- Undecided: 8
Judging by the general responses made by members, I get the impression that those strongly in favour of the proposals are finding it really tough out there. They feel that if the IDEA can win some sizable contracts, they may get more work for acceptable fees... whatever that means in today's marketplace.
Who can blame them? I certainly don't: It's a possible lifeline, afterall.
However, the desperation for work and the eagerness to have the IDEA grab some of it for them, would entail the complete re-invention of what the institute was set up to achieve.
Not only that, despite utterings to the contrary, nowhere within the constitution does it mention anything about commercial activities. Indeed, the stated objectives in the official document is written in typically commendable tones:
Mission Statement
"IDEA is an organisation which will represent the interests and uphold the professional standards of its members who carry out Energy Assessment in the Built Environment"
Objectives
The IDEA shall have the following objectives –
- To be a central representative body to put forward the views of its members to Government departments and agencies, Parliament, Home Information Pack Providers, Industry working groups, Professional and other Trade bodies, and all relevant organisations operating within the Energy Assessment Industry.
- To facilitate routes for the provision of life-long learning by members and to source up to date information on all relevant technical and best practice issues as part of their ongoing career development.
- To establish and maintain links with approved training and education bodies
- To raise a positive, professional profile of the DEA
- To Promote the EPC as a valuable and informative report
- To provide a forum for the exchange of information.
- To pursue such policies as the elected Executive Committee identify as being necessary or desirable.
This reads exactly as one would reasonably expect from a representative organisation.
Yet there are no provisions for becoming an accreditation scheme; no mention of becoming a Panel; nor any mention of becoming a training provider, either.
In fact, there is no mention of any proposed commercial ventures at all.
The real constitution?
It's not until one reads the accompanying Powerpoint presentation slides - not the official constitution - that we first encounter the 'commercial' word, and the possibility of becoming an accreditation body:
"Possibly become the largest accreditation body to establish consistency and professional standards in the industry or as a minimum monitor and uphold professional standards of our members"
Clearly, becoming an accreditation body has either been on the table since last year (since the constitution was apparently drafted in Nov/Dec 07), or this is an attempt to bolt-it-on, outside of the legal constraints of the institute's remit; which poses a question already raised to me by several DEAs:
Is the IDEA using its position - and member-base - as a marketing vehicle for outside business interests?
Other bullet points in the Powerpoint presentation are to:
- "Engage with all major players in influencing future development of the industry" (Engage? Or compete? Read the "Objectives" again)
- "Establish a sustainable management structure"
- "In support of the above establish a commercial branch of the institute run as a business with profits supporting main institute activity"
It's almost as if the Powerpoint presentation is a separate commercial constitution... or is it the real constitution? One could hardly be blamed for thinking so, given the institute's activity to date.
How the constitution restricts the IDEA's commercial aspirations
These days, it is hard to imagine any business that can confidently pledge to never rely upon debt - whether for expansion or for riding the troughs. The institute - not being a business, as such - has ruled out any borrowings in its constitution:
"11.2 The Institute shall not borrow money"
It can only raise funds via the following prescribed channels:
"11.6 The Institute is empowered to raise funds by receiving subscriptions, donations, sponsorship and gifts."
...which is probably exactly how one imagines all such similar member-based entities making ends meet (although the word 'gifts' is open to interpretation I guess!).
So there's not much room to play with here, basically: it can't borrow; and can't sell anything- apart from subscriptions. What's more, it can't raise a profit...
Not for profit
In fending off accusations of 'profiteering' and 'conflict of interest' and such-like, it is often defended with the phrase: not for profit. Which is (rightfully) stated within the constitution.
But I think it's clear, given the revenue-generating constraints imposed upon it by the constitution, that the institute is positioning itself as a hub to receive the revenue it needs from outside commercial ventures: Third party businesses detached from the institute; operating in the marketplace; with staff and overheads; a different legal environment; amongst desperate competitors in a desperate market, and, the vagaries of profit and loss!
Fierce HIPs market
It's a very risky strategy: the market is fierce - everyone knows that; fees are diced and sliced at a rate that is now difficult to follow; panels are desperate to keep the cash flowing, even at the expense of margins.
Some say panels take too much of a cut from the top - easy to say when you don't have staff, offices, phones, insurances, equipment, and all the multitude of expenses that must be met, regardless of volume activity.
And the IDEA expects the businesses it controls to sustain both themselves, and the institute... whilst paying "decent" fees and remaining competitive?
Distractions
As if there isn't enough demands on what the institute should be doing without the huge additional burdens of running all the proposed enterprises!
When the deal with Hip2Go was launched, there was barely no other conversation to be had for weeks. It drowned everything.
Is there really time for any more distractions from the core Mission Statement and Objectives? Isn't there enough to do?
Cutting out the middle man (DEA Panels)
'Cut out the middle man', scream the proponents of IDEAs' proposed "Business Procurement Unit" (AKA: Panel)... only to unwittingly welcome another that will operate in the exact same cut-throat market.
Whilst it is true there are some cowboy outfits out there, equally, there are genuine panels and employers that truly abhor having to cut their fees and standards. Does anyone really believe that panels and employers - having invested so much since the beginning (before many DEAs even began training) - with business plans that, in good faith, offered hitherto acceptable fees, are really enjoying the squeeze taking place in the market?
And the vitriol of DEAs each time they are forced to cut fees?
It has happened to the best of them; no one has escaped making that decision - so how will the IDEA compete, without competing?
It is dangerous to assume that the major players will charitably honour any safe haven for the IDEA.
Indeed, when the Hip2Go deal was launched at a bargain basement - market-beating - price-point, what happened? At least two other HIP providers quickly matched, or undercut it.
So it could be argued that the IDEA has helped create yet another arms race for fellow DEAs. And don't forget, most DEAs are not HIP providers; nor do they want to be, I'd wager. Yet, the IDEA's move into HIPs puts yet more pressure on them... you!
Bad timing
What's more, this has to be the worst possible time to enter this market; there's no sane reason for doing so - no first-mover guarantee of immortal dominance.
Richard Branson made a point of conquering mature, established markets, because they have predictable cost-bases and the cowboys have largely been driven out. The HIP industry, in contrast, is quite the opposite - it's the frickin' wild west out there right now!
And a crowded one at that!
And if that's not enough to convince you, then ask yourself: How will an external commercial venture support both itself, and the institute, whilst still offering acceptable fees and high quality service?
Oh, I've already mentioned that haven't I!
The IDEA may be 'not for profit', but the commercial offshoots it seeks to depend on will certainly need to be profit-making for they will carry the burden of subsidising the IDEA, as well as investing for its own future survival in the market.
The IDEA accreditation scheme
If you want a good quality accreditation scheme, you need a high calibre of staff receiving decent benefits and conditions of employment. You want them to be loyal, friendly and knowledgeable of the industry they serve and work... you don't "run it on a shoe-string".
There is detailed and methodical work to perform having potentially serious legal ramifications. Finding good staff is difficult - keeping hold of good staff is absolutely key... and expensive.
How is the IDEA to find staff capable of undertaking the responsibilities of an accreditation scheme? Training them would be expensive and timely, and poaching them from other schemes would be equally expensive... not to mention potentially damaging to relations - relations which the IDEA should be seeking to strengthen, if it is to fulfill the Mission Statement and Objectives outlined above (which would be difficult as a competitor).
Where will DEAs turn?
For me, one of the most important arguments against the institute running an accreditation scheme - a representative institute -, was made by one of its own members:
Where should an IDEA member seek support if problems arise with the same accreditation scheme it controls?
That, to my mind, immediately rules the proposal out; no further debate necessary.
But more worryingly, when the above argument was asserted, the response was along the lines of: 'Well, whether we're an accreditation scheme or not, there's nothing we can do anyway; it would just go up to the ABBE or C&G!'
So, is there any need for a representative body at all then?! The response completely failed to address the nuances of the varied problems that crop up in any business where a calming intermediary may be able to smooth relations and/or offer clarification.
How will the IDEA fund a start-up accreditation scheme?
In the DCLG's document that sets out the criteria for approving an accreditation scheme, it states that:
Scheme operators shall demonstrate that they have sufficient financial stability to provide confidence that they can continue to operate throughout the period of approval granted by the Secretary of State
(Emphasis mine)
So, if the IDEA is granted approval to operate as an accreditation scheme for 12 months, it somehow has to show it has the financial wherewithal to remain afloat for that period too. It must also satisfy that it can do so in the face of "unforeseen events".
Another investor?
Which surely begs the question: how will that requirement be satisfied, given that the membership is frequently told there is very little - if any - money?
I can only surmise there must be an outside investor... which, once again, begs the question that has often dogged the IDEA; that of transparency.
Transparency
Whenever the question of funding has been raised, it has almost always been initially met with defensive obfuscation, followed by a drawn-out begrudging disclosure. In the case of the IDEAs tie-up with Hip2Go, there was an initial flat-out denial that any exchange of monies was taking place at all. Only recently has it been admitted that a £5 payment is made, per HIP introduced.
Now, it could well be the case that, at the time of denial, there were no payments taking place - perhaps due to insufficient volume - but clearly there was an arrangement in place which should, at least, have been transmitted to the membership from the start.
Similarly, no explanation for where the funds came from to become an AHIPP member (several thousand pounds), either.
The reticence in expressing - upfront - how the IDEA plans to operate and fund itself is probably more damaging than the fact alone: It ferments a suspicion that something is being hidden, which is difficult to shift once lodged into the psyche of members in future relations.
DEAs are not stupid
People are not stupid; everybody understands money is needed to operate an organisation. In fact, people understand that truism far easier than being told the opposite. So why hide it?
Members have a Right to know who is pulling the financial strings... especially when it's not them! It's important. They need to make their own judgements as to what potential conflicts of interest may arise from the relationship. Note, I'm not necessarily alluding to those that may arise for the IDEA itself here; there may be implications for individual members, which they should be aware of.
Before I sum up, one last comment on the obligations the DCLG demand: If the IDEA were to become an accreditation scheme, it must demonstrate it will be capable of handing over "core information and resources" to a successor organisation, should it cease to trade - which would be ironic if the successor organisation was one that sought to drive the IDEA out of business!
And why wouldn't they? There are already 8 accreditation schemes competing for the same pool of DEAs. Most of them have invested significant amounts of money - some over several years without a return - do you think they won't vigorously defend their market share?
Permission to institutionalise
Finally, I'll end with a direct quote from the Companies House website which underlines the restraints imposed upon the IDEA:
institute or institution - approval for use of these words is normally given only to those organisations which are carrying out research at the highest level or to professional bodies of the highest standing. You will need to show us that there is a need for the proposed institute and that it has appropriate regulations or examination standards. You will need evidence of support from other representative and independent bodies.
About Us - Guidance (Companies House)
Fork in the road
So what is the IDEA to be? An Institute representing its members, or a vehicle to push the products of outside commercial interests? An eBay shopfront, you might say... or a cooperative even!
Either path has its own merits, arguably; but there can only be one path, IMO.
I only hope it chooses the right path because I think it would be a huge demoralising blow to an already battered army of DEAs if it should fail in its Mission Statement and Objectives.
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