Refurbished at great expense only three years ago, the Action on Hearing Loss headquarters in Highbury and Islington, north London, are in many ways the ideal offices for a national disability charity. Located just moments away from the tube station, they are packed full of the latest disability technology. Yet, just before Christmas, the offices were sold, becoming the latest cost-saving measure as the organisation seeks to balance the books after one of the most challenging periods in its 109-year history.
After several years of its spending outstripping its income, the almost unthinkable happened to Action on Hearing Loss: it nearly ran out of money as it teetered on the brink of exhausting its £3m credit limit with the bank.
"We were within weeks, if not days, of running out of cash," says Mark Atkinson, who was brought on board as chief executive in October 2018 to turn around the financial situation. "We would have been unable to pay our creditors, unable to pay our staff, unable to continue as a going concern. It’s quite staggering that a 108-year-old charity came that close to running out of cash."
The financial situation was so bad that its auditors, PricewaterhouseCoopers, went so far as to question the charity’s ability to carry on in its annual accounts in 2018.
Fast-forward a year and the situation is looking considerably brighter. Its new auditors, Crowe UK, have given it a clean bill of health in its latest accounts and the cash-flow situation has "got a whole lot better", says Atkinson, who has a track record in delivering the radical transformation of charities after a three-year stint as chief executive of the disability charity Scope, during which it sold its regulated day-care services.
Atkinson says there have been two main parts to the financial recovery plan.
Part one has been about following that age-old piece of financial advice, not spending more than you earn. "We’ve put significant financial controls in place throughout the charity," he says, pointing out that much of the overspend in recent years has been in delivering "good charitable stuff" to service users. "We have really challenged ourselves to ensure that we’re getting maximum value for every pound that we spend.
"We have also relocated our finance function from London to Peterborough and are looking to relocate more out of London in a managed way," says Atkinson.
New policies have been implemented for hiring staff as well. "We don’t have a recruitment freeze in place, but we do have some rules around hiring new people," he adds.
Part two has required selling some of the charity’s biggest assets, most notably its head office, to pay its creditors and generate additional cash. Its recently published annual accounts showed the charity had a deficit of £4.3m on an income of £39.6m at the end of March 2019. The sale of the head office will generate about £8m, which will help it to clear its £3m revolving credit facility with Lloyds Bank, pay off any outstanding mortgages and repay its creditors and suppliers.
"In 2018/2019, we were paying our suppliers typically within 70 to 75 days – that’s not a sustainable position," says Atkinson. "It meant that not only did our suppliers have to make decisions about whether or not they wanted to work with the charity, but it was also deeply inefficient because our staff were spending a lot of time on the phone dealing with suppliers who quite legitimately wanted to be paid for goods and services provided."
A deal has been struck with the new buyer that allows the charity to remain in the building until September. It then intends to rent a smaller office somewhere in either north or east London. In the intervening period, Atkinson says, he plans to spend some time asking which roles and functions need to be based in London. "We now have 50 staff in Peterborough and we think there’s an opportunity to relocate more out of London," he says. "Our ability to recruit and retain skilled financial staff in Peterborough has gone really, really well."
So what have the staff made of all the upheaval? Such big changes can often breed resentment between staff and senior management. Atkinson concedes that it has been a "difficult time".
"We have been through a period of constantly trying to reduce cost, often through salami slicing away," he says. "That takes its toll on people. Our overall staff turnover is currently about 31 per cent, which is too high. I want to
reduce this significantly over the course of the year."
But he believes the fact that the charity has grasped the nettle and made some big decisions on strategy and future direction has given staff confidence in the future, and the organisation has not shied away from having frank conversations with them.
"One of the things I was quick to prioritise was having an open and honest relationship with staff," says Atkinson, who has spent most of his career working in charity communications. "In the early part of 2019, we did lots of communication with staff about the financial recovery plan and the new strategy, and tried to change the culture so that people could speak up and share ideas, spot risks and opportunities and tell us what we focus on. Staff and volunteers have responded brilliantly."
Despite being open about the organisational challenges he has faced, Atkinson is quick to point out that his first year at the helm hasn’t been all about cutting costs and selling off the family silver. The charity has also worked hard on its income generation.
In April, Tim Willett, formerly a senior fundraiser at the lifeboat charity the RNLI, was brought on board to oversee fundraising and comms. The move has gone well. Atkinson says that Action on Hearing Loss is on course to have its best-ever fundraising year and is currently on track to post a £500,000 surplus in the coming financial year. "That will be the first time in about 10 years that the charity will have made an operating surplus, and I think that it’s important as part of our financial recovery plan," he says.
However, he’s acutely aware that it needs to do more. "Like lots of other organisations, we’re heavily reliant on certain types of income," he says. "There’s a challenge to diversify our voluntary fundraised income. We are on course for our best legacy performance in a decade, but we are also too dependent on that income."
Now, Atkinson says, the charity wants to invest in long-term relationships with supporters who believe in its vision and purpose, and who want to support it through their own ways and means.
"There has been an emphasis on volume rather than quality of support," he says. "What I’m keen to do is make sure we have a really compelling reason for people across the country to support this charity in whatever way they choose: by volunteering for us, for example, and by raising money or by supporting our campaigns."
Crucial to the future will be the organisation viewing itself as more of a mass-market brand. There are about 12 million people in the UK with some form of hearing loss or tinnitus, and Atkinson believes it needs to be reaching more of them. The strategic challenge, he says, is to channel more energy into activities that reach a larger number of people.
In essence, this means Action on Hearing Loss plans to focus on three key areas. First, campaigning for improvements, which includes holding policymakers to account, influencing public attitudes and making sure markets work better for people who have hearing loss. Second, it wants to be a place people can turn to for advice and information about hearing loss, deafness or tinnitus. And, third, it wants to invest in treatments to help those with hearing-related conditions
Controversially, it will also follow the lead of Atkinson’s previous employer, Scope, by moving the charity away from being a direct provider of social care by transferring services to another provider in 2020. Action on Hearing Loss’s social care services currently support about 560 people and employ some 600 staff, about two-thirds of its current overall headcount. They also account for £17.5m – almost 45 per cent – of its current annual income.
"We did something similar when I was at Scope, and the disability charity Leonard Cheshire has done something similar recently too," says Atkinson. "It’s significant for us because we started providing residential care services for people who are deaf in 1929. We do it exceptionally well."
But although the charity recognises the difference these services make to those who use them, he says, they support only 560 people. "In order to make this organisation have greater reach, we came to the conclusion that we should move out of being a direct provider of care services so we could focus our efforts on campaigning, advising and connecting deaf people," says Atkinson.
Traditionally, large disability charities have chased organisational growth, arguing that the bigger they become the more impact they can have on those they support.
However, Atkinson believes this approach has done a "huge" amount of damage to the disability movement, leading it to focus on scale and trying to "hoover up contracts", often from smaller, local charities. He wants Action on Hearing Loss to have a different type of relationship with other charities that support those with hearing loss.
"I’m not driven by turnover," says Atkinson. "I’m driven by reach and impact. If that means acting as a collaborator with organisations so that we can achieve our purpose in a quicker or better way, then I’m up for that."
Atkinson is rapidly forging a reputation as an organisational change specialist after his exploits at both Scope and now Action on Hearing Loss. He acknowledges that he enjoys working with organisations "where there’s an appetite for change and doing things differently", but that doesn’t necessarily mean he is motivated only by big turnarounds, or that he plans to jump ship once the big decisions have been made.
"I’ve been here for 14 months," he says. "We’re now in a much stronger financial position, we’re launching a new strategy and moving head office.
"Towards the end of my time at Scope, I felt that the next phase of its journey required a different leader and different style of leadership. We’ll get to a similar situation here. But I feel like I have several more years here before then."
Nevertheless, he says, he does challenge himself on whether he wants to oversee another radical transformation. "It is exhausting," he concedes. "Not just for me but the people around me.
"I do wonder whether I want to join a more stable platform in the future."
Mark Atkinson CV
›› October 2018 to date Chief executive, Action
on Hearing Loss
›› April 2015-October 2018 Chief executive, Scope
›› October 2013-April 2015 Executive director
of External Affairs, Scope
›› May 2010-October 2013 Director of policy and external Affairs, Ambitious About Autism
›› March 2008-May 2010 Director of communications, Youth Sport Trust
›› July 2004-March 2008 Head of press and public Affairs, Citizens Advice
›› June 2001-July 2004 Senior press officer, Local Government Association
›› June 1999-June 2001 National vice president, National Union of Students
›› December 2019 to date Board member, Habinteg
›› March 2019 to date Board member and member of the Audit and Risk Committee, Social Care Institute for Excellence
›› December 2015-December 2019 Trustee, Prisoners Abroad