Pay and benefit?
September 2008
When Professor Tim Besley, an external member of the Bank of England's Monetary Policy Committee, commented in a national newspaper that the current high level of inflation, which hit 4.4 per cent in July and is set to rise to 5 per cent or more, 'will fall again next year and be much closer to the 2 per cent target by the end of 2009', he added the caveat that this 'will only happen if people don't chase inflationary wage increases'.
The TUC, unsurprisingly exhorts the Bank to ‘cut interest rates and the Government to take the cap off public sector wage increases’. James Codrington’s article on stagflation suggests that a period of underlying inflation is a long-term upward trend.
With the British Chamber of Commerce gloomily predicting recession around the corner and unemployment rising by around 300,000 over the next two to three years, the third sector is in for a rocky time, despite its unique position in the economy. Returns on investment (
see News review) and the reduced availability of debt finance for capital projects (
see Nick Sladder article, Feeling the crunch?), bring the focus sharply back to what organisations are able to control – their expenditure.
CaritasData research indicates that of the top 3000 charities, 300 have staff costs representing over 50 per cent of their expenditure. Keith Hickey reminds us ‘there are two assets that will be invaluable to you in these uncertain times, your staff, including volunteers and trustees, and your brand’
(see Keith Hickey article, When the going gets tough). So asset allocation is the key. Richard Jones shares how The Heart of Kent Hospice effected a civilised governing board restructure (
see Richard Jones' interview) with very positive results.
When it comes to staff, the balance between tough decisions on employment cost control and brand equity is an uneasy one – as we know from Shelter’s ongoing industrial relations saga. The CIPD’s Annual Reward Management Survey showed only around a quarter of charity employers have a planned approach to setting pay, compared with around 40 percent in the commercial sector (
see Andrew Walker article, What's it worth?). With well publicised shortages of talent in key areas, such as fundraising, this is going to have to change. Functions and posts that have worked well in the past may not be relevant going forward, so flexibility and adaptability is key. A review of a charity’s overall organisational structure may well be in order to enable it to deliver on its charitable objects in an adverse economic climate.
Author: Clarissa Dann
Clarissa Dann was the editor of Caritas as well as an HR and management online service,he People Bulletin until July 2011.
She is now the editor of the specialist trade finance magazine, Trade and Forfaiting Review which can be viewed at www.tfreview.com but does write on charity finance and investment from time to time.
Clarissa has a background in legal and professional publishing, as well as business journalism and holds an MBA from Cass Business School. She has been one of the judges for the non-profit category of the Chartered Institute of Marketing's Excellence in Marketing Awards for the second year running.
She has also acted as clerk to the trustees of a small almshouses charity and as a member nominated trustee to a pension scheme of a multinational publishing company.
Click here for other articles written by Clarissa Dann
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