Our second Third Sector Trends 2022 study report demonstrates that in England and Wales the voluntary, community and social enterprise sector is serious challenges.[1] These new challenges arise from difficulties in retaining and recruiting staff and volunteers in a competitive labour market and social environment.
All industrial sectors need to invest in their people if they are to retain and attract staff successfully and maintain a sustainable, highly motivated and appropriately skilled workforce. The extent to which organisations invest in people is shaped by their size, purpose and practices. Organisations which invest more heavily in training and staff development, this report shows, may reap a dividend in terms of their financial fortunes – but these same organisations tend to be struggling more with retention and recruitment because their staff have highly transferable skills. The research also shows that support from regular volunteers has declined – especially amongst older volunteers and those who joined them during the Coronavirus pandemic.
The Third Sector has often prided itself on low levels of staff turnover – suggesting that staff commitment and loyalty is highly valued by employers.[2] But now that staff retention problems have accelerated it is time to ask whether staff loyalty and commitment has, to some extent, been taken for granted.[3]
Findings from this report show, for example, that many organisations have under-invested in their employees in such areas as training, by providing a flexible work environment and investing in staff development. Under-investment of this kind can undermine loyalty and commitment when employees are faced with a challenging work environment.
Staff retention can sometimes be secured by offering flexible working arrangements. Third Sector Trends longitudinal qualitative study of 50 organisations has shown that many employees opted to work fewer days after emerging from the Coronavirus pandemic. Part-time contracts (such as a four day working week) seem to have become more common amongst senior managers too.[4] But just because employees are contracted to work fewer days, does not always mean that they work fewer hours – and especially so if organisations are under pressure due to rising demand for their services.[5]
When staff leave and vacancies cannot be filled – this can result in managers putting more pressure on those who remain in post to make up the shortfall. Many employees will be willing to go the extra mile in a short-term crisis – as they did during the Coronavirus pandemic.[6] But there are limits. And these limits have already been reached in some organisations where industrial action has been threatened against employers.[7]
Some managers may feel that the staffing problems they face are, effectively ‘out of their hands’ or ‘control’ because external factors such as the cost-of-living crisis has focused employees’ minds on levels of pay. Furthermore, as demands for services from clients increase, managers may feel that it is justified to ask their staff to put in extra hours – or sometimes to cover on a temporary basis for unfilled positions due to staff recruitment problems.
The fact remains that pay in the Third Sector has tended to be lower than in the public or private sectors for many years[8] – and unless this issue is addressed, recruitment and retention problems will remain or perhaps intensify in years to come.[9] Low pay in the sector cannot easily be justified to employees on the basis that Third Sector organisations do socially beneficial work. After all, many employees in the public and private sector are also engaged in such activities but are generally better paid.
In the last decade, problems associated with low pay have been compounded by downward pressure on the value of contracts to deliver public services or major grant-funded or social investment programmes which specify targeted outcomes. This may explain why it is amongst larger TSOs, which are most likely to deliver such work, where retention and recruitment problems are the most acute.
The eagerness of government departments and other public authorities to reduce costs is explicable – especially during the worst years of austerity policies. And yet, many TSOs remained involved in public service delivery under contracts, even if the acceptance of under-costed work must, ultimately, be subsidised from other sources.[10] But the wind may be changing. Recent news stories indicate that some organisations are challenging public bodies about under-costed contracts which they can no longer deliver successfully.[11]
Across the Third Sector, issues surrounding pay and working conditions can no longer be brushed under the carpet. This is presenting boards of trustees and senior managers with some very difficult choices such as whether to or not to accept contracts or grants which are insufficiently resourced to get the job done. And for those organisations which are facing rising demand for the services that they offer due to, for example, the cost-of-living crisis – hard choices will have to be made on when to turn people away rather than putting more pressure on their staff or volunteers.
Things are changing. People are leaving their jobs and it is getting harder to attract new people to take their place. Debates and decisions about how to tackle issues surrounding pay and conditions can be delayed no longer.
All the recent report from Third Sector Trends 2022 can be downloaded here
[1] Employers constitute about 40 per cent of all TSOs in England and Wales.
[2] There is only very limited academic evidence on staff loyalty and commitment in the Third Sector – and that which exists does not show very strong association between organisational values and staff commitment (see, for example, Stride, H. and Higgs, M. (2014) ‘An investigation into the relationship between values and commitment: a study of staff in the UK charity sector’, Nonprofit and Voluntary Sector Quarterly, 43 (3). pp. 455-479. Earlier studies have looked at the impact on staff commitment of charities taking on contracts to deliver public services. Findings indicated that engagement in such work may have reduced commitment substantially (see, Cunningham, I. (2001) ‘Sweet charity! Managing employee commitment in the UK voluntary sector’, Employee Relations, 23(3), pp. 226-240.
[3] While the evidence is limited, some studies have indicated that unspoken expectations that charity employees work above contracted hours are common. One survey of 3,700 staff found that 95 per cent of respondents were working over their contracted hours. But 47 per cent also said that they were satisfied with the hours they worked – suggesting strong levels of loyalty and commitment. See: Aimee Meade (2015) ‘Almost all charity staff work beyond their contracted hours, survey finds’, The Guardian (10th June) https://www.theguardian.com/society-professionals/2015/jun/10/almost-all-charity-staff-work-beyond-their-contracted-hours-survey-finds. More recent studies have expressed concern about staff burnout – although the strongest explanatory emphasis has been placed on rising ‘service demand’ during the Coronavirus pandemic rather than exploitation of employee commitment (see: for example, Andy Ricketts (2021) ‘Nine in 10 charity workers have felt stress, overwhelm or burnout over the past year’, Third Sector (20th January) https://www.thirdsector.co.uk/nine-10-charity-workers-felt-stress-overwhelm-burnout-past-year-survey-shows/management/article/1705083. See also:
[4] See Chapman, T. (2022) Going the distance: how third sector organisations work through turbulent times, Newcastle upon Tyne: Community Foundation Tyne & Wear and Northumberland. https://www.stchads.ac.uk/uncategorised/going-the-distance-how-third-sector-organisations-work-through-turbulent-times/. NCVO have used evidence from the Labour Force Survey to demonstrate that 31 per cent of Third Sector employees work at home or hybrid working arrangements (a mix of work at home and separate from home) compared with 16 per cent in the public sector and 25% in the private sector, see: NCVO UK Civil Society Almanac 2022: https://www.ncvo.org.uk/news-and-insights/news-index/uk-civil-society-almanac-2022/workforce/#/.
[5] This is not to argue that four-day weeks cannot be beneficial to staff personally and in terms of employee efficiency and/or productivity without increasing hours of work or reducing pay. See Jasper Jolly (2022) ‘A hundred UK companies sign up for four-day week with no loss of pay’, The Guardian (27th November), https://www.theguardian.com/business/2022/nov/27/a-hundred-uk-companies-sign-up-for-four-day-week-with-no-loss-of-pay
[6] See new evidence in: Rees, J., Macmillan, R., Dayson, C., Damm, C. and Bynner, C. (eds)(2022) Covid-19 and the voluntary and community sector in the UK, Bristol, Policy Press. https://policy.bristoluniversitypress.co.uk/covid-19-and-the-voluntary-and-community-sector-in-the-uk
[7] See, for example, Sam Wait (2022) ‘Over 500 Shelter workers to strike for two weeks over pay dispute’, Civil Society Media (10th November) https://www.civilsociety.co.uk/news/0ver-500-shelter-workers-to-strike-for-two-weeks-over-pay-dispute.html and Harriet Whitehead (2022) ‘Support service charity faces first strike in 50-year history’, Civil Society Media (7th December) https://www.civilsociety.co.uk/news/support-service-charity-faces-first-strike-in-50-year-history-over-pay-dispute.html.
[8] See, for example, Andy Ricketts (2022) ‘One in seven voluntary sector employees paid less than the living wage, research finds’, Third Sector, (23rd June). https://www.thirdsector.co.uk/one-seven-voluntary-sector-employees-paid-less-living-wage-research-finds/management/article/1790848 and James O’Halloran (2022) The price of purpose? Pay gaps in the charity sector, London: Pro Bono Economics. https://www.probonoeconomics.com/Handlers/Download.ashx?IDMF=06cde62a-a1f7-4c1c-8463-f08dfc142c7b; see also: Charity Times (2022) ‘Charities may not be able to sustain growing pay gap with businesses’, (20th July) https://www.charitytimes.com/ct/Charities-not-able-to-sustain-growing-wage-gap-with-businesses-research-warns.php. Richardson, J. with Mahmoudi, Y. (2021) Low pay in the third sector, London: Living Wage Foundation: https://www.livingwage.org.uk/sites/default/files/Low%20pay%20in%20the%20Third%20Sector%20Briefing%20Note_0.pdf
[9] See: Marsh Commercial (2022) ‘Charities surviving a retention crisis’ (31st May) https://www.marshcommercial.co.uk/articles/charities-surviving-a-retention-crisis.
[10] In some circumstances, managers have signed under-costed public service delivery contracts to sustain services in their communities (see: Chapman, T and Gray, T. (2019) Striking a balance: a study of how community businesses in Bradford, Hartlepool and Middlesbrough build working relationships with the public, private and third sectors. London: Power to Change. https://www.powertochange.org.uk/research/striking-balance-study-community-businesses-bradford-hartlepool-middlesborough-build-working-relationships-public-private-third-sector/). These findings helped to explain why decisions to subsidise contracts was quite a common phenomenon (see for example: Rob Preston (2018) ‘More charities subsidising public service contracts, finds CFG research’, Civil Society Media, 6th January) https://www.civilsociety.co.uk/news/charities-paying-more-to-subsidise-public-service-contracts.html. More recent qualitative evidence from Third Sector Trends indicates that managers in larger organisations who are facing recruitment and retention problems are rethinking the consequences of subsidising contracts, (see: Chapman, T. (2022) Going the distance: how Third Sector organisations work through turbulent times, Newcastle upon Tyne: Community Foundation Tyne & Wear and Northumberland. https://www.stchads.ac.uk/wp-content/uploads/2022/10/Going-the-distance-how-third-sector-organisations-work-through-turbulent-times-July-2022.pdf). The third report from Third Sector Trends 2022 (January 2023) will demonstrate that commitment to public service delivery under contract has declined substantially since 2013 amongst medium-sized TSOs (from 23% to 15%) and larger TSOs (from 52% to 36%). Only the biggest organisations (income above £1million) have increased involvement in contracts (from 61% to 64%).
[11] See, for example, Patrick Butler (2022) ‘Disabled care home residents evicted in charity’s dispute with councils’, The Guardian (25th November): Disabled care home residents evicted in charity’s dispute with councils | Social care | The Guardian; Harriet Whitehead (2022) ‘Inflation means charities “cannot go on” subsidising contracts, paper warns’, Civil Society Media, (8th September) https://www.civilsociety.co.uk/news/inflation-means-charities-cannot-go-on-subsidising-contracts-paper-warns.html.
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