Boston Mwense: Demand for higher wages in ‘lean’ years – how should charities respond?

05 Oct 2023 Voices

As part of our special content to mark Charity Finance Week, Boston Mwense considers the options for charities facing demands from staff for higher wages...

In times like these it’s not uncommon to hear phrases and words such as: “we are now living in unprecedented times”, “cost-of-living crisis”, “the big squeeze”, “high inflation/interest rates”, “food bank”, “soup and bread”, “what the Bank of England did next”, “foreclosure” etc.

And it doesn’t matter the place – you hear them in homes, offices, churches, pubs, gyms, race tracks, even at funerals – the list is endless. Clearly the emphasis is on cutting back, as different entities look for ways to increase revenue or income and cut back expenditure.

Let’s isolate and dissect “we are now living in unprecedented times”, and is it true these are unprecedented times? I looked up unprecedented in the Oxford dictionary and the definition was: “Never done or known before”.

You guessed my reaction; we’ve been here before and perhaps even seen worse if you are fortunate to have lived long enough.

For instance, taking inflation as one of the yardsticks often commonly used to measure the extent of the “squeeze” in October 2022 it peaked at 11.1% whereas in 1970 it hit 25%.

The comparison is not intended to downplay the current economic challenges but to merely add context to the situation.

The demand for higher pay dilemma

During this perplexing and discombobulating economic quagmire, how should charities respond to demands or requests for higher wages from staff? What else can be done to help staff weather the adverse economic storm besides increasing salaries?

Steven Kerr, chief learning officer at Goldman Sachs advised that: “One of the primary principles of effective management is that rewards should be the third thing you work on. Measurements should come second, and both rewards and measurements should be subordinate to performance definitions, ie clear and unambiguous articulation of what needs to be done.”

However, in 2013 Tomas Chomorro-Premuzic argued in the Harvard Business Review: “Intuitively, one would think that higher pay should produce better results but scientific evidence indicates that the link between compensation, motivation and performance is much more complex. In fact research suggests that even if we let people decide how much they should earn, they would probably not enjoy their job more.”

Writing in Business News Daily earlier this year, Bassam Kadoo agreed and asserted that: “An attractive salary entices job seekers (or employees) but it won’t guarantee employee retention, motivation and engagement.”

Readers are free to decide who wins in these arguments. The fact still remains, more money may not motivate or help with staff retention but more money in the pockets can surely go a distance in resolving a number of personal or family issues we are all accustomed to.

The call for more money by staff is therefore one that should not be taken lightly regardless of the sector, be it private, public or charity.

Traditionally, and arguably for good reasons in some cases, charities are reluctant to pay market rate or inflation bursting wages except where it is unavoidable or for technically challenging roles, eg a medical director for a hospice may earn a higher salary than their chief executive and almost everyone would be ok with it, including the chief executive concerned.

While some charities scan their external environment before awarding pay increases, for example benchmarking with comparable charities, others ignore this and consistently pay way below their peers, all in the name of “this is charity money” even when they can afford to pay a little bit more.

Recommendations and conclusion

Usually, demands for higher wages by charity staff are not without merit. It’s because they can feel the squeeze and the executives or trustees should keep one eye on their people and the other on their beneficiaries to try and cater for both within their means.

There should be a radical shift from the traditional default position of “we are a charity so we can’t afford” to try and afford in proportion to the charity’s financial capacity. Awarding a pay increase following strike action should be morally reprehensible if the charity can afford to pay a decent wage before things get sour.

In order to survive and thrive, charities should not ignore investing more in their most prized resource on their books: their people.

Arguably, it is relatively harder for a charity to fulfil its mission in a remarkable manner and style if its staff have to endure month after month on meagre pay supplemented by necessities topped up from food banks, endure wintry conditions without heating, unable to afford a decent and balanced meal etc.

Indeed, the goose needs looking after in order for it to continue laying the golden egg.

Some of the steps charities should take to address demands for higher wages include:

  1. Listen and benchmark current salaries to see how they are doing relative to other charities of similar size and means and try to close the pay gap.
  2. Paradigm shift, executives/ trustees should be open minded and determined to pay decent wages, of course within available resources.
  3. Proactively work on providing other benefits without being prompted. According to a recent report by CharityJobs, some of the desirable benefits to employees include:
  • 25+ days annual leave, excluding bank holidays.
  • Remote working options.
  • Flexible working arrangements.
  • Free tea/ coffee.
  • Training and development.
  • Mental health and wellbeing support.

Boston Mwense is finance and support director at BLESMA

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