The chief executive of the RSA has advised charity finance professionals that embracing a culture of innovation will help organisations in the voluntary sector to flourish.
Matthew Taylor, CEO of the Royal Society for the Encouragement of the Arts, Manufactures and Commerce, was presenting as the opening plenary speaker at the CFG annual conference in London this morning.
His speech revolved around his theory on the three different ways change occurs: by the aspirations of individuals; through the leadership of a hierarchy; and from the solidarity forged by reciprocal goals and relationships.
“Charities are very good at hierarchy,” Taylor said. “We might be a bit lefty, but we love our bureaucracy. The same with solidarity – it’s why we’re here, we want to make people’s lives better and share a warm glow.
“What charities aren’t terribly good at is that individualism piece. It’s high-risk, we’re not really sure about it."
Finance usually a tool of hierarchy, not individualism
Taylor went on to describe finance as generally being a tool of hierarchy – a means of letting the people who run the organisation put in place a set of controls and processes which are about looking after the way the budget is spent. “I’m not being disparaging about it, that’s just how finance is seen,” he insisted.
He said that in terms of individualism, there is generally not a great deal of emphasis on how budgets could be constructed in order to provide maximum incentives for individuals to thrive and be inventive and creative.
“It’s not a conversation that happens an enormous amount, yet it does all the time in the private sector. We tend to assume that people will be incentivised by the mere fact that they’re working for this kind of organisation.”
Taylor pointed out that charities are really having to “sweat their assets” in the current climate, and not just in terms of finance but their people, too. “The current situation isn’t about having more money to do more stuff, it’s about how can we better use the resources that we’ve got,” he said.
Performance-related pay is 'crass'
“What I want to propose to you is: could we think about things differently? Are we using the finance function as well as we can to release all the forms of change?"
He continued: “The role of finance shouldn’t be simply to force control within a set of fixed parameters. The finance function should be about enabling leaders to ask really big questions about whether the way that organisation spends money aligns with the mission that organisation has and the model for change that it has.
“It should be about using the insight the balance sheet provides to provoke and enliven a conversation about what else could be done.”
However, Taylor dismissed the ideas of performance-related pay and bonuses as “crass” and “with no evidence they work”.
He said, however, that the sector should manage its finances to provide space for people to take initiative and innovate, a principle that his organisation has embraced with success. Putting money aside for innovation has yielded more and more good ideas as time as gone on, he said.
"What tends to happen in times of straitened circumstance is that you take out of the budget everything that isn’t strictly necessary, and you go down to the very core functions. And the problem with that is it doesn’t allow the space you need for people to think about doing things in a radically different way," he warned.
Engaging staff with finance
Taylor said he thinks that budgets and how the money works in an organisation is a powerful tool for engagement with its staff – all staff. “I think that if you work in an organisation and you don’t know how the money works, you are not a fully empowered member of that organisation,” he said.
The first step, he continued, was to take the time to engage colleagues, members and supporters in understanding how the money works, encouraging them to take responsibility. Then move on to providing them with opportunities to work together to achieve shared goals.
“If you are going to get your colleagues to understand the economic challenges you face, you need to fully engage them – and you need to say ‘what do you think we should do with some of the money we might save?’” Taylor insisted. “They have to have a sense of ownership, so that using money more wisely and being as efficient as you can becomes something that people feel a sense of value about."
