Do charities need to prepare for a higher wage bill?

Pro Bono Economics (PBE) has warned that wages for charity staff will need to rise by nearly 9 per cent over the next two years to keep up with inflation. This will not come as positive news to the charity sector who have experienced considerable blows to income streams in recent months. The research has also shown that inflation will impact fundraising income, reducing the real terms value of a regular £20 donation to just £17.20 by 2026.

On top of this, the rise of inflation will be hitting the incomes of people already under financial pressure and will likely cause a surge in demand for charity services, especially those relating to issues of poverty. With pressure on services and outgoings increasing, combined with the threat of depletions in income, charities are likely to be feeling the squeeze.

However, in order to weather this storm, charities will need to invest in their teams and in expertise to ensure that they can continue to prosper, but also to grow. This will mean managing the needs and desires of their current teams whilst appealing to new talent, and this is where salaries will rule the roost.

Ensuring that pay matches talent

Our own experiences within the sector have found that often charities and non-profits don’t always have realistic expectations when it comes to the quality of candidates they can recruit, for the salary they are offering. There is a tendency to want to attract the best talent possible for the role, without a corresponding willingness to offer a salary that matches. If left unchecked, this growing gap between expected and actual salaries will have the consequence of forcing job seekers to make employment choices that centre more around pay, in other words, they will jump ship.

Earlier reports by the Living Wage Foundation found that almost one fifth of non-profit workers earn below the real living wage, a statistic which has not improved in five years. Women, racialised groups and people with disabilities are the most likely to be paid less than the real living wage.

To attract (and retain) the best candidates for your organisation, offering the correct level of salary is key to making them feel valued and respected. It shows that you understand their value to the business and that you understand how much their work is worth – improving retention levels and employee wellbeing.

The power of fair pay

Studies around financial wellbeing have shown that money worries impact your employee's abilities to do their jobs and that workers experiencing higher financial stress levels report more days absent. Financial distress can also lead to presenteeism, where people attend work but don’t perform to their usual standards.

As highlighted by the Equality and Human Rights commission, ensuring that your employees receive a fair wage does more than attract the best talent, it will also have a positive impact on your staff's efficiency and productivity whilst avoiding damaging employee relations and causing low staff morale. It will also have the less visible effect of projecting a positive message about your organisation’s values and potentially boosting your reputation within the sector as a fair employer.

Short term pain for long term gain

As challenging as it may be, charities and non-profits should endeavour to view the information released by the PBE as an early warning system that is simply giving them the ‘heads up’ on what is coming. Yes, increasing salaries may put a strain on current budgets but an investment in recruitment today will mean reaping the benefits in the future.

If an organisation is able to offer a competitive salary, now is the time to do so. We are currently experiencing a candidate-led market, and anything that charities can do to stand out will help them to be a flashing beacon in the sea of job opportunities.

The third sector is in a strong position to offer more

The new ‘Great Realisation’ trend of employees striving to add deeper meaning to their careers, should mean that the third sector already has a head start. Being able to offer a viable alternative to those who already possess the skills in demand in the sector but are looking to add a greater sense of purpose to their career. Our most recent blog revealed research by Workhuman that found that workers across all age groups ranked meaningful work as most important – eclipsing all other options, including positive company culture, compensation and perks.

Combine that with a revamp of other employee offerings such as flexible working, employee benefits and strong company culture and third sector organisations will be in good stead for using 2022 as a year to recuperate and expand.

There is no benefit in non-profits trying to bury their heads in the sand and ignoring the call for increased salaries. They risk losing valuable team members, missing out on attracting skillsets which could help them to innovate and grow and could even be putting their reputations in danger.

If they can accept the prognosis and instead focus on implementing salary benchmarking practices into their recruitment strategies, complemented by improved benefits packages, they will be in the best possible position to remain competitive.

Robertson Bell has an in-depth knowledge of the non-profit, charity and public sectors and specialise in finding the best possible talent for their clients. Get in touch today to see how we can help you to reach your recruitment goals.