How good are charities at managing their people?

From employment tribunals to pay systems, how does the human resources landscape in charities compare with other sectors? Patrick McCurry reports

The voluntary sector has often been regarded as worse than other sectors at managing staff. But is that reputation justified? Clear evidence is hard to come by, although in 2008 the trade union Unison said its members from voluntary organisations were nearly twice as likely to bring employment tribunal cases as members from other sectors. Unison attributed this, in part, to the fact that many charities were small and lacked professional HR support.

But research published last month by the research consultancy Agenda Consulting suggests that charities might not be so out of step with national trends. The People Count Third Sector benchmarking study says the number of formal warnings per 1,000 staff was 8.7 in charities - about half the national rate, according to Agenda Consulting director Roger Parry.

He says this suggests voluntary organisations are managing such difficulties better than other sectors, having informal chats to sort out problems rather than resorting to official warnings. Parry does point out the danger, however, that if charities avoid issuing formal warnings, even when this is appropriate, they might be storing up more difficult problems further down the line.

Lucy McLynn, a partner at the law firm Bates Wells Braithwaite, says she suspects the low warnings figure for charities is due to a reluctance to challenge poor performance. She says: "Many charity employees earn less than they would elsewhere, and the trade-off is that they are working for an organisation that is in line with their values. This can mean that managers are less willing to pick up on performance issues."

People Count Third Sector says that grievance cases numbered 5.6 per 1,000 staff, which is roughly in line with national rates, according to Parry. On employment tribunal applications, the report says that, using a mean average, applications represented 1.1 per 1,000 staff - less than the national average. The Chartered Institute of Personnel and Development, which conducts cross-sector research, was contacted for this article but was not able to comment before deadline.

Jane Klauber, a partner at Russell-Cooke Solicitors, says many smaller voluntary bodies lack HR capacity and don't always follow correct procedures when dealing with poor staff performance. "Managers are not always robust enough at the start, which means there is not always a paper trail to back disciplinary action," she says.

There has been a general fall in tribunal applications since new fees were introduced in 2013, she adds, and tribunal activity in the voluntary sector will reflect this trend.

McLynn says that, although the number of tribunal cases might be in line with other sectors, the nature of those cases can be different. People who work for charities often have a strong sense of personal mission or conviction, so they will often be very reluctant to take their employers to tribunals, even if they feel badly treated, she says.

"Conversely, those employees who do get to tribunal stage can feel a much stronger sense of betrayal than employees from other sectors, which can make these conflicts much worse," she adds.

Among the other findings in the report is that 43 per cent of voluntary sector respondents recognised a union, compared with a national average of 21 per cent. But union membership decreased in line with the size of the organisation, with larger charities having less unionised workforces.

The report also covers pay systems - in other words, the factors that employers weigh up when deciding on pay levels. The most popular methods, it says, were annual cost of living awards, job evaluations and taking into account the market for particular skills. Performance-based pay was used relatively little, at just 7 per cent, the report says.

"Pure performance pay is not used that much," says Parry. "When it first arrived there was a lot of interest, but it hasn't really taken off, perhaps because of fears about its divisiveness."

Although nearly 90 per cent of respondents said their pay system met the needs of the organisation, Parry says the reality is probably more complex: "Organisations realise they need pay systems - otherwise someone's pay depends on how good a negotiator they are. But all pay systems have their strengths and weaknesses."

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