Exactly how to make your charity more productive is a question that seems to be troubling many a charity manager these days. A recent survey of voluntary sector decision-makers, commissioned by the software company the Access Group, found that almost nine out of 10 respondents said they needed to improve their organisations’ productivity.
But improving productivity is one of those elusive issues that appears a lot easier in theory than in practice: almost the same proportion of managers said improving their organisations’ situation would be challenging.
Charities are far from alone in struggling to address this problem. Figures from the Office for National Statistics in 2019 showed that UK productivity fell at its fastest annual pace in five years between April and June, after two previous quarters of zero growth, a sustained period of decline that allegedly represents a continuation of the UK’s "productivity puzzle".
Flattening national performance is an ongoing issue for the country. As the economist Paul Krugman said: "Productivity isn’t everything, but in the long run it is almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker."
But should any of this matter to the voluntary sector, which is, very broadly speaking, more focused on campaigning and providing services for beneficiaries than producing widgets?
According to Anne Kazimirski, associate director of data and learning at the charitable think tank NPC, a focus on productivity is a key aspect of helping charities and funders maximise their impact. "Charities that focus on their productivity achieve more for their beneficiaries," she says. "Ultimately, that’s what we’re all trying to achieve in the social sector."
Rhodri Davies, head of policy at the Charities Aid Foundation, agrees that measuring productivity for charities enables them to be more efficient and produce better outputs, but only if they have the right measures. The national model of calculating productivity, where a measure of total outputs is calculated against a measure of inputs used in the production of goods and services, and growth estimated by subtracting the growth in inputs from the growth in output, arguably can’t work within the voluntary sector’s context.
"There’s the classic example in commissioning with Meals on Wheels: it was measuring the amount of people served, but that led to the organisation undercutting on price, bringing microwave meals and cutting the length of the visits down by 15 minutes," Davies says.
"All of a sudden people had multiple health and social issues, because they had been getting a vast amount from the conversations they’d been having with people."
But if charities can establish a workable model for measuring productivity, he adds, it would not only allow them to operate more effectively, but also provide a better argument about the existing value of what they are doing, for example, for funders and commissioners.
Jon Boys, labour market economist at the Chartered Institute of Personnel and Development, says measuring productivity is difficult for many organisations, particularly given that 80 per cent of the UK economy is based around services rather than goods. This is especially true of organisations in the voluntary sector, Boys says, when the outcome might be intangible or the benefits might accrue over a long period of time.
So how can charities best approach finding a solution to the problem?
Kazimirski says charities should start by trying to understand whether they are achieving their goals effectively. "If you deliver services, are people turning up or coming back?" she asks.
"Are the people who are coming actually your intended target group? Do people like or appreciate the support you are giving? With what confidence can you say that people’s lives have improved as a result of your activities?"
She adds: "Aiming to understand your impact and getting feedback to ensure you are using your resources in the right way is really important."
Conducting a cost-benefit analysis can also be useful for understanding effectiveness, Kazimirski says, but she warns that this can be difficult to do well and relies on good data that shows what is changing for a charity’s service users and how much is down to the charity itself.
One method some charities might consider using, particularly smaller ones, is a 360-degree feedback strategy, which uses the feedback generated by co-workers to measure the productivity of an employee.
This involves each employee having their productivity evaluated by their peers, including people who might be above or below them in the management chain, in terms of how well they’ve fulfilled their duties and contributed towards the wider goals of the charity.
Others might consider using time-tracking and project management software to measure productivity at a glance. Electronic timesheets can help managers evaluate how a team or individual might be performing based on how much they are achieving each day.
Boys advises that charities focus on their staff. "A good place to start is to concentrate on people management," he suggests. "Things like effective line management, appraisals and recognition can boost effectiveness."
And aside from measuring benefits for their service users, Davies says, charities should also try to capture the benefits of their work for their volunteers.
"The benefit of volunteer work is probably in some cases at least as much to the people who are doing the volunteering as it is to the people in receipt of the service," he says, noting that voluntary activity can help tackle loneliness, improve social cohesion and teach people the skills of civic engagement.
Another suggestion for improved productivity is for charities to work on measurement with others working in the same sector or in the same geographical location, according to Kazimirski.
She cites the £40m Youth Investment Fund learning project, which she says is one of the largest shared measurement projects in the UK charity sector, and something on which NPC has been working.
"We believe that, by working together, charities can learn from each other to adopt best practice and achieve more for their beneficiaries," she says, a sentiment that, should a new metric for productivity be designed, would undoubtedly be among the top desirable outcomes.
UK productivity in numbers
0.3% Recently named "statistic of the decade" by the Royal Statistical Society, this is the estimated average annual increase in UK productivity in the decade
or so since the financial crisis. The figure was chosen because it represents a sharp contrast to the pre-crisis period of 1997 to 2007, when productivity growth averaged about 2 per cent a year.
£5,000 The UK’s productivity puzzle is costing private sector workers an estimated £5,000 a year on average in lost income, Katherine Kent, head of productivity at the Office for National Statistics, said in 2019.
25% According to the think tank the Resolution Foundation, UK productivity would have been 25 per cent higher in 2016, had the recession not happened.
17 Where the UK fell to in rankings of labour productivity per person employed and hours worked in 2018, according to the data browser Eurostat. Ireland was ranked the most productive country.