What Michael Bichard’s landmark governance report means for the institution
The publication of Michael Bichard’s review into the future of the Royal Institution of Chartered Surveyors is a landmark moment for one of the world’s biggest professional bodies. Alison Levitt QC’s 2021 report on the governance scandal in 2018-19, which led to four high-profile resignations, was acutely embarrassing for an institution with a global presence and headquarters on Parliament Square.
It also tore the lid off a simmering resentment among the membership over the direction in which the RICS had been going. Many felt that, despite paying annual fees which were nearly £700 for some members, they had little say over the big decisions at the institution and received poor value for money.
A survey in 2021 found that just 9% knew what the RICS spent their membership subscriptions on and trust in the institution had slumped by a third in a year.
Michael Bichard, a former senior civil servant responsible for a string of high-profile government inquiries, has sought to put the body back on track and regain the trust of members.
These changes will require “nothing less than a transformation of the institution”
The intentions of his six-month review include returning control of the RICS to its members, re-affirming that it is first and foremost a professional organisation and not a commercial enterprise, and creating a governance structure which is clearer, simpler and more accountable.
He has also recommended new committees to drive public interest initiatives and to improve services for members, and a review of fees to make them fairer and more transparent.
These changes, he says, will require “nothing less than a transformation of the institution”. But he adds that they must be carried out at pace to prevent members leaving to join competitor institutions - a lingering threat to a broad-based body which represents 18 specialisations.
It is also urgent, he says, to ward off the “justifiable concerns” of the government, which has threatened to launch investigations of the RICS if it is not seen to be operating effectively.
To outline what will change and what this will mean for the RICS, here is a breakdown of Bichard’s main recommendations:
Senior roles shake-up
One of the causes of the 2018-19 governance scandal was confusion over the responsibilities of the RICS’ many senior roles, according to Levitt. To simplify the institution’s leadership structure, Bichard has recommended that the roles of president and chair of the governing council should be merged.
Splitting the roles was intended to allow the president to become more outward facing and ambassadorial, but Bichard said it has resulted in blurred accountability and uncertainty in the outside world over who has ultimate authority.
To support the president as chair, an independent member of the governing council will be appointed (more on this below) and a new board will be established with responsibility to deliver the business plan. Current governing council chair Nick Maclean has said he is considering applying for the role of chair of the board.
Bichard has also recommended that the role of chief executive should be renamed director-general to better convey its responsibilities. The current chief executive oversees delivery of the RICS’ strategy, but might in some instances have conflicts of interests when voting on the board.
Bichard said discretion over the new director-general’s ability to vote should be given to the chair of the board. Current interim chief executive Richard Collins has said he hopes to apply for the director-general role when his term ends on 5 October.
A new committee dedicated to improving member services
Poor value for money is often one of the first complaints about the RICS from its members, who have felt they get little in return in terms of support for their fees and are asked to pay for CPD rather than getting it for free.
As Collins puts it, many members felt that their membership was “simply buying a licence to be sold more stuff”. In a survey last year, the number of respondents who said they were satisfied with their membership fell from 63% the year before to just 43%, a historic low.
Bichard has recommended the creation of a new membership services committee to ensure the RICS drives up satisfaction levels. He says the committee will oversee the service which members receive, plan further improvements and advise on how strategy is operationalised so that members feel valued and engaged.
Fees will be reviewed
The RICS has the second-highest fees of any professional membership body in the world, but little transparency has been provided in the past to explain how these fees are calculated or how they are spent.
A review of fees, confirmed by Collins last November, is now set to get underway. Maclean said the review will look at whether or not the way fees are currently calculated is fair and will aim to simplify the current system.
“The intent is to make it more transparent, simpler and the objective set to the group of people doing this is to make sure that everyone feels that it’s good value for money,” he said. Collins added that the RICS needs to fundamentally change its strategy to ensure real value is offered to members in terms of free CPD, events and networking.
Commercial activities to be made clearer
Members have often complained that the RICS has left them behind in its pursuit of commercial gain. Bichard has explicitly stated, as a core principle of his review, that the institution should be a professional body and not a commercial enterprise and that the decisions it takes “should be driven by that and the interests of the profession and not by seeking always to increase its income”.
>> Also read: RICS governance scandal: coverage all in one place
While he said he would expect a well-managed RICS to be able to turn in a surplus, he said its commercial activities should be more identifiably separated from the institution’s other arms. This new arrangement would be overseen by a commercial committee which reports to the board, while the governing council should be responsible for overall commercial strategy.
Ideally, Bichard said, the strategy should add value for members as well as income for the institution: “Commercial income should be subsidising members’ subscriptions, not the other way around.”
Reforming the international strategy
Bichard has said the RICS should change its overseas strategy to focus more on spreading its influence rather than recruiting members. He questioned whether increasing the number of members, which has been done primarily to drive up income from fees, was a sustainable strategy in countries where RICS membership is often not required to practice.
Instead, he said the institution should follow the route taken by bodies such as the Institution of Civil Engineers and become better at building partnerships with other organisations, firms and governments.
Bichard has also recommended that power should be swiftly devolved to overseas regional boards, and from them down to more local boards, to address complaints from some international members of excessive control from the central office.
The RICS’s international expansion over the past two decades has led to frequent criticism that it has neglected UK services. One member told a review last year that the RICS had “totally lost its way and has very little engagement with UK members… the only reason you need us is to produce fees”. Bichard said the response “captures the anger which many members feel”.
But, despite admitting that the policy has been contentious, Bichard argued the RICS is an international institution because projects are no longer always managed within national boundaries. “That may not be the day-to-day reality for many UK members,” he said, “but if it is to remain respected and relevant, the institution has to work on the basis that surveying is an international profession.”
Governing council to better reflect geographical location of members
Another criticism of the international expansion has been that it has left the UK and Ireland under-represented on the RICS governing council despite 70% of members being located in this country. Currently, each UK and Ireland governing council member represents 18,850 members, compared to less than 3,000 members represented by governing council members from other regions.
Bichard has proposed that each of the RICS’s five world regions should have at least one member, with an extra member added whenever that region’s share of the global membership grows by 10% increments. That means that the Americas, Europe and the Middle East and Africa, which account for 2%, 8% and 4% of members respectively, should currently each have one governing council member. Asia Pacific, which accounts for 15%, should have two members, and the UK and Ireland should get eight members.
This system would allow regional governing council membership to ebb and flow over time as the global membership changes, leading to a “healthy turnover” of the council’s members.
More representation for specialisms on governing council
The RICS is an unwieldy institution representing a wide range of professions, making it vulnerable to losing members to more specialised rivals. Paul Morrell, the government’s former chief construction advisor and a RICS member for 50 years, has even suggested that breaking up the institution could make it operate more effectively.
To address this, Bichard has recommended sorting the RICS’ 18 professional groups into seven groups, with each to be represented by one governing council member. These members could either be appointed by chairs of the professional group panels or through an election. Bichard has also advised bringing back a representative of younger RICS members to sit on the governing council, as was the case before 2017.
Senior independent governor
Unlike many governance bodies, the RICS governing council currently has no independent members. Bichard says that two independent members should sit on the council to bring both board experience from other sectors and an understanding of corporate governance, with the roles to be advertised for a three-year term.
One of these members, the senior independent governor, would be able to sit on any other committee. Bichard said they should be allowed to “ask whatever they want”, including flagging issues which need to be covered or policies which are failing.
While carrying out the review, Bichard said that many members had asked for the abolished role of honorary secretary to be brought back. He said that the senior independent governor will act like a “supercharged honorary secretary and will have the same impact and even more”.
Independent reviews every five years
Last month, the government announced plans to give itself the power in the new Levelling Up and Regeneration Bill to carry out independent reviews of the RICS “from time to time”. These would look into the RICS’ governance and the “effectiveness of the institution in meeting its objectives”. The reviewer would make recommendations in a written report to the government, which could be published.
Bichard appears to have a response to this. He has recommended that the RICS’ governing council should commission independent reviews once every five years to “consider the institution’s effectiveness in upholding public trust and confidence”. These reviews should be published and also placed before Parliament and devolved assemblies.
Bichard insisted that this proposal was “not at all” intended to ward off ministers from carrying out their own reviews, and said that he was going to recommend five-year reviews before the government’s announcement. But, in his review, Bichard said his proposals “could form the basis of further discussions with the [government] over the precise wording in the Bill.”
New panels dedicated to public interest and sustainability
Bichard has recommended the creation of a new public interest panel to look at what issues are coming down the tracks and how the RICS can show leadership on these issues to improve its reputation. This panel, which would advise the governing council alongside a similar panel focused on sustainability, would contain senior RICS members and Bichard has suggested that it could be chaired by a past president.
A similar idea was proposed last year by a group of RICS members including former president Louise Brooke-Smith. The group called for a “public interest sounding board” which would sit alongside the governing council as a place for members and the public to provide direct feedback to the institution’s leadership.
Stephen Hill, director of property consultancy C20 Futureplanners and the group’s spokesperson, gave his ringing endorsement to the plan and said of Bichard that he “can’t think of anyone else that could have done a better job”.