Weighing up the cost of success

If you are an HR manager in the voluntary and community sector, the chances are that you are struggling to recruit for those ever-
vacant posts, or failing to plug the glaringly obvious skills gaps. But don’t think that you are alone.

According to information from Vol-Resource and the Prime Minister’s Strategy Unit, the voluntary and community – or ‘third’ – sector employs one in 50 of us in the UK, which is more than half a million people. And three million volunteers regularly donate their time and efforts. HR clearly has a huge resource on its hands, but unfortunately, the problems are just as big.

A 2004 study called People Count, by Agenda Consulting and the Charities HR Network, suggests that third-sector employers have to recruit nearly a quarter of their operational staff each year, compared with just 15% in the public and private sectors.

Amy McLaren, PR and media officer at the National Council of Voluntary Organisations, says high turnover causes a drain on resources.

“In 2002, it cost an average of 4,301 to replace a member of staff, but this didn’t include the costs of covering the gap, management costs or the lowered morale and additional stress for other employees. When these are included, the costs could be as much as half a year’s salary,” she says.

Replacing those who leave is hard work. The Voluntary Sector National Training Organisation states that one in two organisations have difficulty recruiting staff. Reasons given for this include few or no applicants, a lack of experienced, qualified or skilled applicants and the low salaries on offer. And keeping hold of staff is just as difficult. The People Count report shows that on average, employees stay with third-sector organisations for two and a half years, compared with five years for other sectors.

Traditionally, the third sector has suffered from short-term funding that sacrifices investment in staff in favour of knee-jerk organisational survival. If managers are spending all their time trying to keep the organisation running, scrabbling for funding and kicking off projects, investment in staff is the last thing on their minds. And a multiplicity of stakeholders – service users, users’ advocates, trustees, funders, volunteers and suppliers – can create tensions within the organisation itself.

McLaren believes that the third sector has gained a reputation for being a poor employer. “Some organisations tend to prioritise serving the cause at the expense of the staff,” she says. “They do not always recognise that if they invest in staff, the cause will be better served.”
But it’s not all bad news – many organisations in the sector are trouncing these problems by using HR best practice.

Broadway, a charity providing a range of services to homeless people, is one such example. Indeed, it did it so well, that it appeared in the Sunday Times’ Best Small Employer List 2005, and became the first charity to gain the Investors in People Management and Leadership standard.

For Broadway’s HR director Helen Giles, the major challenges had been a shortfall in staff and managers able to deliver high quality support to the charity’s clients.

“We had high vacancy rates – 20% in our front-line roles – and were failing to attract appointable people,” she says. “At times, we relied on expensive, but often poor quality, agency staff, and our clients became dissatisfied with frequent staff changes.”

As a result, Giles and her staff planned and implemented a strategy to attract, develop and retain the most committed and talented people.

“The strategy is multi-faceted, but at its core is a test-centre approach to recruitment,” she says. “Instead of being hung up on how much previous experience people have, we test for people with real commitment, drive and transferable skills. Our recruitment process is competency-based, and includes written, psychometric and role-play tests.”

Giles also believes that Broadway’s trainee entrant scheme has attracted potential staff from a wider pool.

“We have employed many excellent people who wanted to transfer from other sectors to do something meaningful, but hit the barrier of employers’ insistence on previous experience,” she says. “By making our jobs available to people with transferable skills we have boosted the diversity profile of the workforce.”

And the organisation is recognising the benefits of investing in the development of her new recruits.

“We have an approach to career development that enables us to grow our own staff, specialists and managers,” says Giles. “The average number of annual training days per employee is 10 – almost twice the national average – but the direct costs of providing this is half the national average, because we skill-up our own staff and managers to train others.”

All of Broadway’s managers undertake an intensive one-year programme in people management and leadership skills.

“Our middle managers then go on to a further modular programme covering the strategic and ‘hard’ skills of management,” she says. “In this way, we are developing our own pool of people with senior management potential.”

The effects have been dramatic: Broadway’s vacancy rate has fallen from 20% to less than 2% in the past three years. Voluntary staff turnover has dropped from 23% to 16% against a sector average of 30%, and sickness absence is half the sector average, at 2.5%, or six days per person per year.

Broadway’s initial concerns were echoed by Caroline Moye, communications manager at Asthma UK, a charity dedicated to improving the well-being of the five million sufferers in the UK. She explains that the organisation started out with minimal employment policies and practices, and an unstructured way of managing, developing and rewarding staff.

“We suffered from high staff turnover and found ourselves competing for a small pool of highly competent managers within the sector,” says Moye. “As we grew, we recognised the need to clarify roles and responsibilities, and to address staff development in a more formal way to ensure we were making the most of our staff by leading, managing and developing them to meet our ambitious business objectives.”

Asthma UK saw the Investors in People framework as an aid to staff development, but staff surveys highlighted problem areas. “The surveys showed that staff felt management was inconsistent and leadership skills were poor,” says Moye. “Line managers were not providing support, encouragement and development and inexperienced managers didn’t know how to value or recognise staff efforts. There was a lack of delegation, planning and time management which created motivational issues in and across teams.”

As a result, the charity implemented a management development programme, which made use of 360-degree appraisals, action learning sets, coaching and mentoring, and the development of a core competency framework, to establish required behaviours.

“The managers were involved in designing the programme, and the central theme was self-awareness,” says Moye.

The programme has produced excellent results. Moye believes that the workforce is now more focused and motivated.

“Management styles are consistent, and all staff have objectives and a development plan,” she says. “Managers are more self-sufficient, with less need to rely on HR, and problems such as disciplinaries and grievances have disappeared. Levels of absence are well below the national average.”

If a suite of management programmes or a sound recruitment strategy seems too big or expensive to implement, take a moment to consider whether you can really afford not to. A brief flick through the 2005 Sunday Times 100 Best Companies To Work For list will show that four of the top 16 organisations are from the third sector.

St Anne’s Hospice, which is second on the list, is an independent hospice, caring for more than 3,000 people each year. Pay and benefits are not the motivators: only 34 of the 298 employees earn more than 25,000, and only eight earn more than 35,000. And benefits only stretch to coffee, tea, toast, and ‘two for one’ at the local bowling alley.

Terry McDonnell, St Anne’s chief executive, recognises that job satisfaction is the driving force. “As a not-for-profit organisation, our budget is limited,” he says. “However, our strength lies in recognising the value of our staff.”

At St Anne’s, training needs are identified at performance reviews, in-service training is held weekly and is open to all. There is a dedicated institute for staff development, and job shadowing is encouraged.

Those organisations that have successfully tackled the entrenched recruitment, skills and managerial problems of the third sector have done so by implementing a robust recruitment strategy based on competence over experience, a sound management development programme, and training plans and opportunities for all staff.


SEE NEXT WEEK’S Personnel Today for our talent management special report on staff retention

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