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4 June 2013, 14:43

Why recruitment from the private sector may be increasing in charity finance teams

Post byDoug Hull

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Charity Finance Group’s latest People and Pay Survey (formerly Salary Survey) showed a significant increase in recruitment from the private sector into charity finance teams, but what are the drivers behind this trend, for both employees and charities, and what might it suggest to us about wider changes in the sector? Let’s begin with the numbers. 338 CFG member charities participated in the People and Pay survey this year, and 41% of these recruited someone to their finance department in 2012. Of these, 59% reported having recruited someone from the private sector, compared to just 32% reported in last year’s survey. Why make the move? Clearly the financial reward when working in the charity sector is often considerably lower than elsewhere, especially for highly qualified staff, such as many finance professionals – ICAEW’s latest salary survey showed that the average finance director now earns £111,700 (plus a £30,000 bonus), compared to just £61,429 in the charity sector according to our survey. So why are increasing numbers of people willing to accept a pay cut of more than 50% in some cases to apply their skills in the charity sector? Unsurprisingly, perhaps, the most common reason given by respondents who had moved from the private in the past five years was ‘seeking to make a difference’, followed by ‘seeking more interesting work’. With several commercial sectors facing criticism for various forms of unethical behaviour over recent years (think horsemeat, banking, tax avoidance…; the list goes on), it is not hard to see why some employees may begin to look at the wider impact of their work. Alison Hopkinson, Director of Finance, IT and Trading at Tearfund recently moved from a senior role at computing firm Dell and told us about her motivations for changing: “the significant salary cut and long commute didn’t excite me much but I went along to the interview out of curiosity. When I met the executive team at Tearfund I was completely blown away. It hadn't crossed my mind that I could use my skills in a more rewarding way than trying to squeeze the last drop of profit from a PC!” It is also possible that the opportunity for more flexible working is an attractive draw of the charity sector for some – 42% of respondent charities this year offered finance staff flexitime, and, 39% were offered the opportunity to work from home. Charities are often seen to lead the way on flexible working, although this may level out with new laws announced by Nick Clegg in November 2012. Why recruit finance staff from outside the sector? For charities there can be many attractions to recruiting from the private sector. An employee with a private sector background may bring a fresh perspective on issues and offer new ideas, and this can be particularly valuable at a time when resources are stretched and the external environment in which charities operate is changing rapidly. For example, recruiting from the private sector arguably goes hand in hand with the growing commercialisation, for better or worse, of many aspects of charities’ work. As grants increasingly switch to contracts and ‘payment by results’ remains the government’s flavour of the month in public services contracting, commercial expertise can be highly beneficial to charities relying on this form of income. The figures from the survey support this; recruitment from the private sector appears to be particularly prominent among charities relying on delivering public services for more than half of their income, and 39% of finance directors said they were responsible for contract management. CFG’s latest Managing in the ‘new normal’ – adapting to uncertainty survey also suggested that 55% of charities had increased or begun trading or social enterprise activity during the economic downturn, and the number of high street charity shops has risen significantly as charities seek more sustainable income streams. One in four finance directors who responded to this year’s survey said they were responsible for exploring and developing new income streams, and finance staff with a commercial background and insight could play a key role in delivering success when initiating or expanding commercial activity. What do newcomers make of the sector? Respondents who had moved from the private or public sectors in the past five years offered a mixed bag of both positive and negative reflections on the charity sector. On the plus side, there were many positive comments on the treatment of staff and work atmosphere; the “more caring culture”, “relaxed environment”, and “dedication of staff” were all reported as positive aspects of life in the charity sector. However, others felt their charity was being held back by “slow decision making”, a “lack of business guile” or a reluctance or inability to “adequately reflect variability in performance through variable pay awards”. Recruiting staff from the private sector can be a valuable and effective way to improve efficiency and gain a fresh perspective on emerging trends, but it is certainly not the only option, and charities should also seek to capitalise fully on existing resources to help them develop. 76% of respondents to this year’s survey felt they would particularly benefit from additional training in at least one area, and a quarter felt their current role doesn’t make the best use of their skills and abilities. There are many benefits to recruiting from outside the sector, but the invaluable commitment, expertise and ambition of existing staff should be recognised and capitalised upon too. You can view an executive summary of the CFG People and Pay Survey 2013 here. The survey was kindly sponsored by MHA.

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Why recruitment from the private sector may be increasing in charity finance teams

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