Housing charity Shelter came under fire from trade unions earlier this year over new staff contracts that affected pay and working hours. The charity claimed the changes were necessary to allow it to compete for funding from organisations such as the Legal Services Commission.
Shelter is not the only charity feeling the heat. The recent controversy is just one example of the challenges facing many organisations that find themselves changing the way they work in order to stay competitive.
Impending recession, tighter public funding and increasing competition for donations are putting pressure on traditional charity structures. Some organisations are introducing efficiency measures in an attempt to stay competitive, while others are considering a merger or new ways of working.
For human resources professionals, these changes bring particular challenges. It is their job to keep staff motivated and loyal at a time when resources are being squeezed and ways of working restructured.
Mike Emmott, employee relations adviser at the Chartered Institute of Personnel and Development, says charities are being affected by the current economic climate just like other businesses. But charities perhaps have less room to impose tough restructuring regimes or redundancies than commercial companies, he believes. "Many staff at charities have high personal and ethical standards and expect the same of their employers, which makes it particularly important for charities to act responsibly and not cut corners," he says.
Redundancies, particularly of highly skilled staff, should never be lightly imposed, says Emmott: "A lot of businesses shed staff in the recession of the early 90s but then regretted it when the economy picked up and they were left without crucial skills. Today, companies are more willing to hold on to people through the tough times."
He adds that in any restructuring or major change it is essential that the employer communicates as much as possible with staff: "When you think you've communicated your message as much as you can, take a deep breath and start again, because it takes a long time for people to really hear it."
With today's technology it is much easier to make sure information is conveyed, he says: "Among other things, you have email, intranets, line management hierarchies and Monday morning briefings to get your message across."
But charities undergoing change should not put so much emphasis on communicating their message that they neglect the practicalities, argues Anne Strach, HR director at disability charity Livability, which has gone through a major merger (see case study). She says that in times of major change it is important that staff are able to continue doing their jobs and are not affected by practical problems, such as the inability to use a new IT system.
She says: "People can get demoralised if their ability to do their job is constantly being affected by things such as not being able to use a new email system, so make sure you sort out those practical challenges as well as communicating the big picture."
School grounds charity Learning through Landscapes went through a restructuring two years ago in an attempt to reduce overheads and become leaner and better able to identify income generation opportunities. More recently, the charity has started to grow and has taken on more staff.
Catherine Andrews, chief executive of the charity, says it is very important to keep staff motivated during and after a change and explain the benefits to them.When LTL was restructured, all staff involved in delivering services were brought together under one director instead of having separate bosses for staff involved in training, membership and advice to local authorities.
This has benefited a lot of staff because their roles have become more stimulating and they are working in larger teams and with more varied responsibilities, says Andrews. It is also helping the charity in its income generation, because it means staff who advise local authorities are also more aware of the training the charity offers, for example.
It is also important to make sure staff feel supported in their roles, says Andrews, for the benefit of both the individual and the organisation. For example, LTL had a very able training officer who had been extremely busy delivering training across England, says Andrews: "The growth of the team has allowed us to bring in more junior staff, so we have greater capacity to respond to the demand for training and, more importantly, we are developing her role and giving her more responsibility in recognition of the experience she has gained."
Andrews says it has been valuable to present the change process as positive: "We've wanted people to understand what they can get out of it, such as being able to develop their own roles through further training or having new responsibilities."
Rachael Maskell, national officer for not-for-profits at trade union Unite, warns charities against pushing through efficiency changes at the expense of services. She argues that the commissioning of public services to charities is often crude and comes down to cost. "That often means a driving down of terms and conditions and fewer people delivering the services," she says.
Maskell believes that the experience of change in the housing association sector provides a warning to charities. Financing pressures led to amalgamations of housing associations to gain from economies of scale, but the new, larger organisations became too distant from service users, she says.
Instead of wholesale commissioning of public services by local authorities, Maskell says she would like to see a system in which charities can add value while the local authority remains at the core of the partnership. She says: "There's a real cost in the current system for the raison d'etre of charities because they have to keep changing shape to suit the commissioners, rather than the commissioners changing shape to reflect the interests of service users."
CASE STUDY - LIVABILITY
"Communication, communication and more communication" is one of the mottos of the HR professionals at new disability charity Livability, formed from the merger of John Grooms and the Shaftesbury Society.
The charities merged last year in an attempt to become more competitive in an increasingly tough funding environment. The merger has cut costs at central office and made the charity better placed to win local authority contracts, says HR director Anne Strach.
But Strach stresses that there have been major challenges in achieving the change. "You can't underestimate how much disruption there is and how long the process takes," she says.
Because of this, it was crucial for both charities to communicate their plans to their 1,800 staff in the run-up to the merger and for that communication to continue after the merger in June 2007. A statutory consultation is required for mergers, but it is important for charities to go beyond this, says Strach. "We decided early on that we wanted to communicate as much as possible to staff on an ongoing basis, because when there is an information vacuum people jump to their own - often wrong - conclusions about what is going on," she says.
The difficulty was to communicate to a workforce that was spread out across the country. "We used many methods, including regular management briefings and updates in our newsletter," says Strach.