The current job market suggests that there should be a surplus of good candidates. However, the experience of many employers in the charity sector is that suitable and motivated candidates are in short supply. This has led numerous charities to consider their structure and approach to reward.

A greater focus on performance rather than length of service or 'commitment to the cause' is driving a more business-like view of pay and benefits packages. A comparison of sector pay rises in the three months to the end of June 2011 by the IDS Pay Report shows a 1.3% rise for the charity sector compared to 2.5% over all sectors.

Benchmarking

Ensuring a competitive reward offering is important, but who should charities benchmark themselves against in terms of pay?

A common misconception is that charities are only competing with other charities for talented individuals. While there are specialised roles relating to the specific purpose of the charity or to fundraising, many roles, such as administration, finance, HR and marketing, are transferable and many aspects will be common to other employers. A competitive rewards package will therefore need to take account of a wider range of benchmarks, and it will be important to view pay and benefits as a whole. This does not necessarily mean that pay will be subject to upward pressure, and in some charitable sectors there is evidence of undercutting in a 'race to the bottom' to be more competitive. This is particularly prevalent in charities which are largely reliant on contractual funding from the public sector.

Staff motivation

Pay progression, or a lack of it, has an impact on staff motivation and retention. When individuals reach the top of their pay scale, they may need some additional recognition if pay increases or promotions are unaffordable or unsuitable. This could be recognition as an expert in their field or access to a broader range of development opportunities – in fact, anything that adds to the status and profile of the individual.

Striking a balance

In the current job market the not-for-profit sector may be seen as a safe haven, and the risk is that some new recruits may have a distinctly short-term commitment to the charity. Realistically, staff will move on in time to improve their career prospects, and some turnover is actually healthy. Too much turnover, however, plays havoc with team structures and team-working so you will need to make sure that your career and pay progression models cover and encourage the right timescales, keeping people motivated but not pricing them out of the market.

Vital questions to consider in relation to career and pay progression models

  • Who are you competing with to attract good staff?
  • How do you reward and motivate people when pay rises are unaffordable?
  • What sort of turnover of staff is it realistic to expect?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.