Social enterprises are fast growing in popularity. There are at least 55,000 social enterprises in the UK, with a combined turnover of £27bn, according to government data. They account for 5% of all businesses with employees and contribute £8.4bn a year to the UK economy.
But what are they? Many people are not really aware of the term or what it means. Sally Reynolds, chief executive officer at Social Firms UK, which aims to create employment opportunities for disadvantaged people, explains: “A social enterprise is a business that trades for a social or environmental purpose. It reinvests its profits to help its mission – such as creating employment for disadvantaged people or reducing landfill.”
Across all sectors
Social enterprises operate in all industries and across all countries. Fifteen, Jamie Oliver’s restaurant that employs disadvantaged people, is a good example of a social enterprise, as is The Big Issue, the street newspaper sold by homeless people.
The term is a relatively new one, but the concept has been around for years. Charity shops, for example, are a form of social enterprise. What is new, according to Kim Stoddart, managing director at social enterprise, Blue Rocket Group, an ethical media relations agency, is the number of people coming into the sector.
“The thing with social enterprises is that you are giving something back through your work,” she says. “You are not just going to work to get your salary, and this is increasingly important to people.”
There is also a growing need for more traditional organisations to do business with social enterprises, because it is what people want.
Jonathan Bland, chief executive at The Social Enterprise Coalition, agrees: “It is appealing to people and businesses who want to actively contribute to society in a meaningful and sustainable way,” he says.
Many social enterprises are crying out for certain skills – in particular, HR, legal and finance skills – to help them grow. This is because a lot of the smaller social enterprises don’t have the budget to employ an HR professional. “It is very rare for a social enterprise of under 50 people to have an HR professional,” says Reynolds.
There might be a shortage of actual HR jobs, but Stoddart thinks that will change as the sector grows. At the moment, the biggest need is for HR professionals to lend their skills on a voluntary or consultancy basis or to take up board positions.
But, HR professionals should not view it as simply a matter of giving their skills and experience in a charitable act. There is a lot to be learned from getting involved in a social enterprise, and it can be very good for career development as you really have to get your hands dirty.
Colin Crooks, chief executive at recycled furniture enterprise Green Works, agrees that HR professionals have much to gain. “Even if you’re only doing a couple of hours a month, giving advice on how to manage people and systems,” he says.
“It gives HR professionals the chance to really create something, and you get the sort of experience that people often don’t get.”
What he means is that many social enterprises lack proper HR policies and procedures. They are writing the rules as they go along, but it’s best if they get an HR person to write them. “Some organisations, you go in and say: ‘What’s your grievance procedure?’ and everyone looks at you with an interested eye and says” ‘That’s a good idea’,” says Hazel Douglas, director at Oxford HR, an executive search consultancy serving the social enterprise sector. “You have to be prepared to start from scratch and deal with a lot of variety.”
As a result, any HR professional working for a social enterprise will get first-hand, in-depth experience of the whole process – from planning and implementation through to the assessment stage.
Say a social enterprise has training needs – you could be charged with assessing what those needs are, how best to meet them, which training providers to use, how to get funding and how to assess the results. It’s not often that HR professionals get to manage the whole process, so it looks great on your CV if you can say ‘I did all of this and these were the results’.
A lot of social enterprises find they need some HR expertise when their business is doing really well. Rapidly growing businesses need careful management.
“There are a lot of challenges around people as a company grows,” says Crooks. “Such as how you grow a business, how to grow skills, if people need to be taken out of the business and so on.”
Gaining this kind of experience can be particularly useful if you want to move into a strategic HR role or into management but have struggled to gain the relevant experience. “It provides you with fantastic challenges and it puts you into a different category of management,” says Crooks.
This is particularly the case in organisations such as Green Works, where people management skills are really put to the test. “The people we employ bring a lot of baggage to work and absorb a lot of management time,” says Crooks. “They need a lot of structure, advice and signposting.”
Richard Cummings, the HR manager at Green Works, agrees and says he does a lot more one-to-one work with staff than in previous organisations. And it’s not just those who come from a disadvantaged background – the experienced, senior staff need extra guidance as well.
“I get a lot of managers knocking on my door asking for advice. A lot of them come from corporate backgrounds, where they had different people issues,” he says.
Good people management
This requires very good people management skills and the ability to listen well. Crooks thinks HR professionals at organisations like his need to have the normal repertoire of HR skills, plus a little bit more.
“There is a need for empathy and understanding about what can be done with particular problems,” he concludes. Anyone who works in HR for a social enterprise needs to know that a one-size-fits-all approach isn’t appropriate.
That said, all the proper HR policies and procedures need to be in place so that best practice is followed. Social enterprises are, after all, not charities, but businesses that need to be run well.
Case study: Real People
Homeless charity Broadway Homelessness and Support launched a social enterprise in 2006 in the form of an HR consultancy, Real People.
Broadway had impressive HR policies and practices in place and wanted to improve the standards of people management in the third sector by offering strategic support to other charities who either lacked HR resources or needed to improve their organisational performance.
“Broadway has always done very well at HR, but the third sector is crying out for good HR operators,” says Helen Giles, HR director at Broadway.
Giles, who also heads up the Real People team, says they were approached by the London Housing Foundation, a funding body for homeless charities, to help smaller charities make the way they recruit, motivate and develop their staff more professional.
The consultancy has been so successful that it now provides support for numerous other organisations. “It’s not just for homeless charities now either,” says Giles. “We work with membership organisations, arts organisations and many others.”
Real People’s turnover in its first year was £140,000, a sum that has since increased by 46%. All of the profits made by Real People go back into Broadway. It also helps reduce the costs of the company’s own HR infrastructure, and safeguards HR roles in a time when the economic climate might have put them at risk.