In 2003, benchmarking company Agenda Consulting produced a shocking report into the state of HR management in UK charities. It revealed that they were far from being the compassionate, enlightened employers that most people assumed them to be.
The 117 organisations questioned had an annual staff turnover of 22%, compared with 15% in the public and private sectors they spent 30% less on training and development than organisations in the public and private sectors and only 23% offered any systematic career planning, compared with 48% in the private and public sectors.
The message was clear: UK charities were failing to take a strategic approach to HR and, as a result, were developing problems around how they managed and retained their staff.
So for some charities, change has been on the agenda ever since. For example, Isabelle Simon-Evans was hired by The Children’s Society in June 2004 to deliver just such a change. “The charity had just had a major restructure to fit its new mission, and recognised that to deliver these changes it would need to adopt a more strategic approach to HR. So it created my post [assistant director, people and organisation development] and hired me,” she recalls. “We based the strategy on attracting, nurturing and retaining talent, and on becoming a high-performing organisation.”
In practice, this has involved introducing formal performance management systems, strengthening the charity’s online recruitment offering, launching its first-ever employee survey, and the development of an induction toolkit for line managers.
It is still early days, but the organisation has already won four awards for its HR work, and the second staff survey has shown a marked increase in the number of employees who have had appraisals. This year, the charity has 3% of its salary bill ring-fenced for training – clearly demonstrating the commitment of senior management to HR.
However, not every charity has demonstrated a similar level of commitment. A follow-up survey by Agenda Consulting in November 2005 revealed that, while average sickness absence had fallen from eight days to 6.6 days, and the percentage of employees from an ethnic minority background had risen from 6% to 9.6%, little else had changed in two years. Annual employee turnover had fallen slightly to 21%, but spending on training had remained the same.
There are several reasons why charities are struggling to give HR a more strategic focus. The first is that many suffer from the misconception that their staff are motivated simply because they believe in the charity’s mission.
Peter Reilly, director of research and consultancy at the Institute for Employment Studies, says: “People generally choose to work for a charity because they support its aims, but that does not mean they are happy to be exploited.
“They might expect their pay to be lower than it would be in the private sector, but there is no reason why they should receive any less training or career development than their peers in the commercial world. Also, while charities rarely have a problem with employee commitment, they do need to make sure everyone in the organisation is pulling in the same direction. Consultation and the development of a shared vision is vitally important for charities.”
Charities also face major difficulties when it comes to managing volunteers. Thales Training and Consultancy has provided training to volunteers at St John Ambulance, for example.
“Managing a volunteer requires a different approach to managing a salaried employee,” says Rachel Kay, business development manager at Thales. “The training needs to focus on gaining commitment and buy-in to the culture of the charity, and being clear about what is required from the volunteer in terms of behaviour and attitude.”
Resources are a major stumbling block, as most charities are small employers: 90% of the sector’s income is generated by less than 4% of charities, and almost all UK charities have an annual income of less than £10m. Those that do have the money are usually not enthusiastic about spending it on anything other than the charity’s core objectives.
Stephen Lee, professor of non-profit and public sector management at Henley Management College, explains: “HR departments in this sector are small and even the largest charities tend to have only about half a dozen people in the HR department. The pay is often low and so charity HR does not attract the best people. Furthermore, training budgets tend to be low, and few charities have invested in any of the tools that do the day-to-day personnel work, freeing up HR staff to concentrate on strategic matters.”
The end result is that, in most cases, HR is seen as a department that provides a service rather than one that is involved in planning the direction of the charity. It is an administrative task that is reactive, not proactive. Effectively, it has more in common with private sector ‘personnel’ functions of the 1980s than it does with 21st century HR.
That said, some charities are now starting to make good progress.
Barbara Hannant, head of HR at Motability, a charity dedicated to the mobility needs of disabled people, joined her employer from a commercial background, so was able to introduce the charity to best-practice HR. “When I joined the charity 10 years ago, there were no HR procedures or policies,” she says. “Now, as part of the team of directors, I am closely involved in planning the direction the organisation takes.”
Unless more charities set off down this path, the voluntary sector could be severely limiting its own potential. As Lee points out: “More than any other organisation, a charity is dependent on the performance of its people. So, if they want to achieve their aims, they need to start investing more time, money and effort in HR.”
Case study: the Shaw Trust
The Shaw Trust is the UK’s largest provider of employment opportunities to disabled people. It is the 54th largest charity in the UK, and in the past five years it has grown from 250 staff to 1,200 at 250 sites across the country. It helps 40,000 people a year and estimates that one million people need its help. It has an HR department of about 25 people.
Juliet Adams, national learning and development manager at the charity, says the HR function has changed enormously in the past five years.
“It used to be a case of people doing the best they could, with some line managers offering much more training than others,” she says. “Now, we have moved away from this reactive approach to HR management to become a central part of the business planning process.”
A key element of this has been working out what skills the organisation already has, so it knows where the gaps lie. To do this, the Shaw Trust invested in a software package from Infobasis.
“We used to have people collecting, inputting and analysing this data, but it was too expensive and inaccurate, so we bought software that allows us to see where we are with skills at the touch of a button,” she says.
Most recently, the HR department was closely involved in developing the charity’s strategic goals for the next five years.
“If we are to meet our five-year goals, we will need the right people in the right place at the right time,” says Adams. “And as part of the senior management team, our HR director, Carol Alexander, has been able to ensure that we in HR will be able to deliver that aspect of the plan.”