June 2021 Board briefing
It's hard to believe that we're already approaching the middle of 2021! The year to date has been mixed for many, and our thoughts are with all those affected by the current COVID situation in Victoria. We hope everyone is staying safe and well across the country.
The Board held a full-day meeting on 24 May, where the major items on our agenda were:
- an update on performance in the current financial year
- our new three-year strategy
- our budget for next year
- cash bonuses for executive staff
- preparations for the Board election.
Performance in the current financial year
We are pleased to report that our membership has continued to grow since our last update. We now have more than 194,000 members, an increase of over 2000 since March. While membership has been growing more slowly through May we expect to see some further growth through the June sales period, and to finish the financial year with a healthy level of year-on-year growth.
While our other sources of revenue have suffered due to COVID-19, the growth in membership means that we are on track to finish the year with a small surplus in our financial accounts. That will be consistent with the commitment we have made to voting members to return the budget to surplus after several years of large deficits that enabled us to invest in growing the capabilities the organisation needs to remain sustainable.
We have also achieved some great successes in our impact work over the past few months, with our work on bushfire insurance a highlight. You may recall that during the 'Black Summer' bushfires in early 2020, CHOICE found a number of unfair exclusions on bushfire cover in home and contents insurance policies. We recently checked again, and approached insurers that had failed to fix the problem over the past year. Some responded but some still resisted, so we published their names as a warning to consumers. This shamed the laggards into action and, as a result, all home and contents insurance policies now have acceptable definitions of bushfire damage.
Our new three-year strategy
Since we last communicated to you in early May about the work on our new strategy, we've received feedback from some of you, and the management team has tested the strategy with staff. We had our final discussion about the strategy at this Board meeting and were pleased to approve it.
The new strategy commits us to three key outcomes over the next three years:
1. We drive big changes and more people know us for it
Building upon our success in recent years, we want to drive change in new areas of importance for consumers. We'll do this by doing what CHOICE does best – putting together the best mix of experts with skills in research, investigative journalism and campaigning, to identify where consumers are experiencing harm, and to campaign for reform. In doing this, we want to work with people like you, as well as with partner organisations that share similar values to ours. Our campaigns team has done some excellent work to analyse some of the new issues we could work on, and we look forward to sharing the first of these with you in the next few months.
We'll also want to continue to respond to issues that emerge and require a rapid response – as we did with bushfire insurance – and to talk more about the changes we achieve for consumers, so more people know about this part of our work.
2. Our membership is larger and more engaged
Having seen how we've been able to grow membership during the COVID-19 pandemic, we now want to take that further. To do this, we plan to create new ways of helping members, so as to attract new people to CHOICE and broaden the ways in which we assist current members. This will include doing more to meet the needs of the growing number of people who seek sustainable options when buying products and services.
We also want more of our members to be actively engaged in CHOICE, so we'll be focusing on encouraging people to do more with us more often, whether that's participating in our campaigns, helping other members via our online community, or helping us to research problems as part of crowd-sourced investigations.
When we consulted on our earlier thinking in this area, some of you asked whether this meant we'd be stopping product testing, so it's important to say that's not our intention. We want to keep doing the things that members value but we also recognise that there are now important issues that affect consumers beyond products where we need to fight for fair, just and safe markets.
3. We are an organisation that people want to join and work for
We want CHOICE to role model the sorts of changes we want to see in the world. This area of the strategy will involve building a more diverse and inclusive team and workplace, so that we're able to attract and retain the best people and meet the needs of an increasingly diverse Australian community. It will also involve focusing on how we build teams within the organisation that can collaborate to drive better outcomes for consumers. Finally, we'll apply an ethical and sustainable lens to the way we operate, which will include being open and ethical about the way in which we handle people's data, taking further action to reduce our carbon emissions, and thinking about how to expand our positive social impact.
Underpinning all of these strategies, we'll continue to make sure that our operations are effective and efficient, so that we're making the best use of our resources.
As well as approving the strategy, we've set a range of targets to measure our impact for consumers, people's engagement with CHOICE, our financial sustainability and our social and environmental performance. We'll be reporting on progress against these targets during the life of the strategy.
We're excited to see what our people can achieve under this new strategy, so thanks to those of you who provided the feedback that helped us to refine it.
Our budget for next year
We have approved a budget for 2021–22 that supports the first year of the strategy. We expect to continue to grow membership – although not quite as rapidly as we have over the past year. We're also hoping to continue to grow revenue from our CHOICE Recommended scheme, which recognises high-quality products, and donations from members who feel inspired to contribute a little more to support our work.
We'll keep most expenses close to what they have been this year but will increase expenditure on data and cybersecurity, so that we can better understand how people are engaging with CHOICE while ensuring that the personal data we collect is stored safely. We'll also provide a pay rise to our staff to recognise increases in cost of living. They were very patient while we froze salaries in 2020, given our uncertainty about the financial impact of the COVID-19 pandemic on CHOICE.
Overall, we expect to deliver another small surplus by June 2022.
Decision on cash bonuses for executive staff
For the last decade or so, CHOICE has provided small cash bonuses – to a maximum of 10% of salary – to a small number of management roles. The decision to introduce this approach pre-dates the current Board members and management team, and the practice has been less common under our current CEO. Given broader debates in recent years about the value, impact and appropriateness of bonuses, we felt it important to revisit whether CHOICE should be providing cash bonuses as part of its remuneration system.
We spent some time discussing this issue at the meeting, noting that there is no good source of evidence on good practice in not-for-profit organisations, and that the research on the effectiveness of bonuses in general is contested.
Given the diversity of backgrounds of directors, there were a range of views explored. We noted that we offer competitive salaries and attract senior people who are motivated by the purpose of the organisation. Given the absence of broader evidence about the value of cash bonuses or comparators from similar organisations, and considerations around the practical and ethical issues relating to cash bonuses, we decided that executive bonuses aren't an appropriate or necessary remuneration practice for CHOICE for now, so we'll be phasing out the few that remain. We are encouraging the CEO to continue to work with staff to identify the best ways to reward and recognise high performance at all levels within the organisation.
Preparations for the Board election
Under our constitution, we're required to let voting members know the skills that the Board considers to be priorities in the Board election process when we call for nominations each year. As the first step in this process, we identify the overall set of skills required to provide effective governance of the organisation, which provides the basis for a detailed audit of the skills of existing directors. We spent some time at this meeting discussing these skills and considering them in the light of our new three-year strategy. We'll let you know which of those have been identified as high priorities in our next update, which will come around the same time as the call for nominations.
We're next meeting in late July to review our performance in 2020–21 and check on how the management team is going with the early stages of delivering the new strategy. We're also hoping to be able to use that gathering to hold a farewell dinner for our former Chair, Sandra Davey, which wasn't possible last year due to travel restrictions. I'm sure those of you who remember Sandra's updates during time as Chair will be glad to know that we're doing this.
We'll be back in touch in early August, but in the meantime please feel free to email us at firstname.lastname@example.org with any feedback or questions.
Anita Tang and Robert Southerton
Board leadership team
CHOICE has been championing your consumer rights since 1959. Fiercely independent and proudly nonprofit, your membership makes this possible. You can further support CHOICE by making a donation.