FBC Interview Series: Linda Carmody
Linda wears her multi-faceted and geographically varied financial services career with a lightness that suggests she isn’t singularly defined by her many years as a senior executive with one of the largest global financial institutions. In fact, if anything she is at her most passionate when she talks about her work with a school for girls who have social, emotional and mental health needs, PhoenixPlace.
Linda is a Fund Boards Council member, and recently met with FBC for a wide-ranging chat about her career, the work she is currently doing, the Financial Conduct Authority’s Assessment Management Market Study, and more. What follows is excerpt of that discussion.
FBC: Tell us a little about the work you’ve done with the school, and the challenges you’ve had to face, and how you and your colleagues addressed them
Linda: Yes, happily. I am chair of an advisory board for a new school for girls who have social, emotional and mental health needs. Launched in 2014, the school is a specialist provider fulfilling a very important social need. While initial demand was high, and the school grew quickly, unfortunately it struggled to get the right professional talent, didn’t have the right controls in place, had no clear strategy and crucially, premises that were not really fit for purpose.
When I stepped in to the chair, the Office of Standards in Education, Children’s Services and Skills (Ofsted, the regulator) had just done their first review delivering an ‘Inadequate’ rating, that resulted in almost 50% of the students being withdrawn. This was more serious than anything I had bargained for.
Growth had come at the expense of proper processes, standards and controls. The regulator made it clear we needed to get these in place before we could be fit to grow again. Over the next couple of years using well-known management techniques and a whole lot of hard work, commitment and passion, my colleagues and I defined and implemented a strategy, a new governance model and executed on a school improvement plan to enhance quality.
Ofsted recognised a significant improvement and awarded us a ‘Good’ rating at their next review. This was a whole two-level improvement, and a comment from them on the innovative approach to governance, to boot! Absolutely delighted!
FBC: You say there are similarities between this process and the FCA’s market study and Assessment of Value (AoV). How could that possibly be?
Linda: More than what meets the eye, actually. As an independent school, being regulated is our license to trade. How Ofsted rates us is critical to our success.
To be told we don’t measure up was a tough message to contend with, and there is a natural tendency to become defensive.
“They don’t understand what we do! They can’t see the value,” was the immediate reaction. But on reflection, what is value to our students, our community, our staff? Did we really know? In truth, I don’t think we really did.
Things have moved on, and now we are talking to an enterprise finance group about funding for our new school and they have their own way to measure value. It is called ‘Social Impact’. In fact, this year we took a cohort of students previously excluded from school through their GCSEs, and in all but one case, were offered sixth form places. That’s social impact, and it speaks for itself.
But does it, really? As impressive as it is, it is one key measure but, not the only one. What are the others? What do our potential investors value? What else do we need to be doing? To understand this, we are going to have to take a fresh look using a new framework, a different lens used extensively in social enterprises to define and articulate social impact. It’s called the ‘Theory of Change’ (see infographic and link below for more information), and rather interestingly, reminded me of the FCA’s Assessment of Value and the various criteria they have laid out as a guide for producing the annual AoV reporting for UK authorised funds.
Fund managers also know they deliver value, but is how they define value the same as how investors and other’s in the value chain define it? What is value to them?
Perhaps AoV is a way to view what is already being done, just using a broader lens.
(Source: CAN Invest, an organisation that supports voluntary, community and social enterprises (VCSEs) to build sustainable businesses by providing capital and business support. More information can be found at can-invest.org.uk)
FBC: This is very interesting
Linda: Many people I have heard talk about the AoV use phrases such as ‘it’s a journey’, ‘we won’t get there quickly’, ‘we will make mistakes’, ‘It will take time’.
Reflecting on our school effort, yes, I can absolutely empathise with that view. Did we deliver on everything? No. Are we still on that journey? Yes. And yes, we made (many) mistakes. But we’re still here and now, we are going to get a new building, but we won’t get the money for our building if our investors can’t understand and appreciate our social impact. Our value.
I mentioned the ‘Theory of Change’ framework earlier. In essence it is a description and illustration of how and why, a desired change is expected to happen, in a particular context. You identify the desired long-term goals and then you work back to identify all the conditions (outcomes) that need to be in place (and how these relate to one another causally) for the goals to occur and then they are all mapped out in an Outcomes Framework.
Is this a way to think about AoV? Can desired outcomes be identified across all the seven FCA-stipulated criteria and stakeholders? And can we work back from there to determine what is needed to get there? And then using the same framework, report to our clients on progress against these initiatives, and how they are contributing to the long-term goal? And is ‘social impact’ also an important measure for the fund management business overall, on whom millions of people rely, for their long-term financial security.
FBC: Yes, that certainly makes sense. So, how do you, and others like you, make a difference to an industry that at the best of times isn’t the most receptive to change?
But seriously, we talk a lot about an industry ready for disruption in all manner of ways. Well, the one area where there is definitely some scope for disruption is in the cognition that is applied to governance in fund management.
I have had an established career in financial services over many years, but also the good fortune to parlay this experience in other areas, from where I have also learned a huge amount, and able to bring that back in an advisory and governance capacity.
I firmly believe the FCA’s desire for greater governance, transparency and value will only be delivered on when we are able to build a strong foundation of oversight on behalf of, and for, all aspects of the fund management industry, but specifically for the end-investor.
Theory of Change:
In addition to being an FBC member, Linda is also a CIFDI-qualified director, and can be contacted at email@example.com