Human resources: Beyond The Pay Packet

Peter White

From pensions and company cars to discounts on PCs and holidays, more charities are offering perks to attract and keep high flyers.

High City salaries and bonuses have traditionally enticed the best and the brightest staff into the corporate sector. But in recent years, the business world has faced increased competition: a generation of socially responsible graduates is looking at a broader picture as they start their hunt for employment - and the voluntary sector is benefiting from this.

The shift is not because of a sudden increase in voluntary sector salaries.

Charities have found another weapon in the staff recruitment and retention battle: the employee benefit.

In the past, voluntary organisations have not dared to offer a range of flashy work-based perks because of the negative perception of spending too much money on staff and not enough on their charitable activities.

However, as charities strive to adopt more professional business practices and more low-cost, high-value benefits become available, employee benefits have become a more acceptable way to ensure that charities recruit and retain the most able employees.

The Chartered Institute of Personnel and Development's Reward Management 2005 survey shows that 30 per cent of charities plan to amend their benefits packages this year - more than any other sector. Of these, 65 per cent are designing their entire reward strategies to help recruit and retain high-performing employees.

Charles Cotton, reward adviser at the CIPD, says there has been a move to a more professional approach to pay and benefits in the voluntary sector over the past couple of years. "Lots of charitable organisations in the past have tended to follow the public sector, especially local government, but recently they have been designing reward policies and procedures that suit their own circumstances a bit more because of recruitment and retention difficulties in certain areas."

The most discussed perk of late, and one that has been focusing the minds of charity chiefs, is the occupational pension. Private and public sector pension woes have been well documented: companies are unable to afford the lavish pensions they previously promised and the public sector is trying to make changes to highly respected final salary schemes. But these woes present an ideal opportunity for the voluntary sector to catch up and offer a benefit that is equal to, if not better than, the majority of existing schemes.

This was one of the main reasons that children's charity Barnardo's kept its final salary pension scheme open to all staff, despite facing increasing costs. Graham Brown, head of people support services at Barnardo's, says that because 70 per cent of the charity's staff come from local authorities, it needed a benefit that allowed it to compete with these organisations.

"We need to be able to go out there and know that we can encourage people to come and join because our benefits structure is at least as good as they are getting at a local authority," he says.

Oxfam is in the process of updating its pension arrangements. After closing its final salary pension to new entrants, the charity introduced a stakeholder pension plan in 2001 to take into account the large number of employees who work for it on a short-term basis. However, the stakeholder plan was taken up by only 6 per cent of its employees, which encouraged Oxfam to look for new options. Francis Richardson, human resources reward manager at Oxfam, says: "We wanted something that shared the risk more between the employer and the employee than a stakeholder pension, where the risk is borne by the employee."

A number of options are being looked at, including a career average scheme, which combines the guaranteed pay-out of final salary schemes and the flexibility of stakeholder plans. As well as helping it retain staff, says Richardson, the pension policy must fit with the culture of the charity.

"Our pension philosophy is that we want to encourage staff to save for their retirement," says Richardson. "As a charity whose mission is to work with others to find lasting solutions to poverty and suffering, we feel we have a moral commitment to our own staff to ensure they're not going to suffer poverty because we haven't given them the opportunity to join a reasonable pension scheme."

Pensions may be the most topical current concern, but employers are increasingly being advised to look out for the health and wellbeing of their employees, and charities are no different. However, whereas FTSE 100 firms may be able to offer all manner of insurance products and health benefits, third sector organisations must justify the amount they spend on such products much more carefully.

The Royal British Legion introduced an employee assistance programme - a counselling service - for its employees before Christmas to ensure that it could solve sickness absence problems. Head of human resources Sharron Lewis James says: "As a charity we are a welfare organisation, so we're busy caring for everyone else and sometimes forget the pressure staff are under." But she adds that even introducing such a service, designed to keep staff mentally healthy, had to be measured. "I come from the City, and when I introduced an employee assistance programme there I had to show what the impact would be on the bottom line. I can't do that now, but I will be monitoring the staff turnover rate."

Richardson adds that Oxfam has to be careful about what other offerings it includes. "We would be careful about offering 'Rolls Royce' benefits packages because as a charity we have to strike the right balance between being a reasonable employer and the fact that 600,000 individual donors who give money to Oxfam every year are expecting that money to go on charitable purposes. For example, we wouldn't consider offering private medical insurance to staff in the UK because there's a perfectly decent health service for people to go to," she says.

One way of keeping staff sane and healthy, without breaking the bank, is to allow them to work flexibly. Work-life balance has been a hot topic among organisations in all sectors. The British Institute for Brain Injured Children discovered the benefits of flexible working policies after staff turnover decreased from 61 per cent a year to zero. The charity, which exists purely on voluntary financial contributions, previously had a long-hours culture, but recently staff have made use of practices such as home working, job sharing and extensions of unpaid and compassionate leave.

The way organisations procure their benefits is an important part of any offering. Clubbing together to get the best discounts and information is a common theme, particularly when choosing voluntary benefits that staff pay for themselves (see case study).

Members of the Charities' Consortium recently got together to help each other get cheaper company car deals. The group signed a three-year deal with Vauxhall Motors to supply 3,000 new cars. Terry Loizou, corporate transport and insurance manager at Barnardo's, which led the group, says that by bringing together 14 charities it was able to enlarge its economies of scale when it came to bulk buying arrangements, thus saving significant sums.

One of the most popular perks involves offering staff heavily discounted PCs. Through a government-backed initiative called HCI, employers can set up a scheme that allows staff to buy computers through their salaries and thus avoid tax and National Insurance. Although the process is designed to make employees more computer-literate, there is also a valid retention element to the package: staff are tied into them for three years.

The Royal London Society for the Blind introduced such a scheme a couple of years ago. Financial director Kevin Barnes says that since it set up the scheme, employee loyalty and computer literacy have both increased, and the charity has saved itself money through National Insurance savings.

"From a business perspective, we will always look at ways that we can reduce the tax and National Insurance burden," says Barnes. "Our scheme is another way that we can make a positive contribution to the balance sheet in this respect."

Offering any perk ultimately depends on the culture of the organisation, and charities must first define what they are hoping to get out of the benefit before embarking on any initiatives. But once that's been done, the list of potential perks is limitless.

As the Royal British Legion's Lewis James says: "One of the problems the charitable sector faces is that it's not paying the top salaries.

So we look at what benefits we can offer to attract people and make them stay."

THE HEALTHY WORKPLACE

Employers are becoming more aware of the advantages of a healthy workforce. And there's no reason third sector organisations can't use ideas already implemented in the private and public sectors to help their own staff become healthier.

1. Encourage employees to ride their bikes to work.

Thanks to a government initiative, organisations are able to set up a scheme that lets staff buy tax-free bikes. Provided the bike is sometimes ridden to work, employees can get huge discounts on top-of-the-range cycles.

For more info, visit www.inlandrevenue. gov.uk/pdfs/ir176.htm.

2. Offer healthy breakfast options. It's always tempting to pick up a bacon sarnie or a pastry on the way into work, but many private companies, such as IT firm Microsoft, have found that by offering free fruit and cereal they help staff cut down on fatty foods - and staff appreciate the cost savings.

3. Organise social clubs. Many firms, particularly in manufacturing industries, have organised social clubs with sports teams and other activities. Encourage staff to join together to form sports groups such as five-a-side football teams; not only should staff become fit, but their motivation should soar.

4. Encourage staff to walk. Biscuit manufacturer United Biscuits set up a wellbeing scheme whereby all employees were given a pedometer and were challenged to see who could take the most steps in a day. Those who walked a certain distance were then rewarded.

5. Ban smoking in the workplace. Local councils across the UK are currently introducing policies to stop staff smoking during the working day. Although this extreme decision might not suit all organisations, preventing employees from puffing in the office could benefit both smokers and non-smokers.

CASE STUDY - LEONARD CHESHIRE

Disability charity Leonard Cheshire spent 18 months introducing a benefits package that would allow it to compete with organisations in the private and public sectors. It has negotiated a package of significant discounts on a wide variety of goods and services, including childcare vouchers, private medical cover, mobile phones and wine. But it has managed to do so without spending a penny.

The organisation linked up with procurement team Charities Buying Group, which encourages third sector organisations to pull together all of their purchasing power and get the biggest discounts they can.

Leonard Cheshire HR director Clare Smith says that the plan, which is open to the charity's volunteers as well as its 8,000 employees, has been appreciated by existing staff. She says it has also helped attract staff from similar posts outside the voluntary sector.

"People who are in similar sorts of work outside the voluntary sector, such as in care homes and domiciliary care, get very few benefits above the state benefits, but they do get more money," Smith explains.

And by offering such an extensive set of discounted perks, the charity can address this.

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