What is the "right" way for chief executives and managers of third sector organisations to respond to a downturn? Are organisations that are based on "values" obliged to behave "better" than others when faced with challenges such as large drops in their income? And, if so, what does "better" look like?
Like many chief executives, I am struggling to make sense of these questions. My organisation, like many others that grew in the boom years, now faces a less certain future. There's no immediate threat; unlike a lot of public limited companies, we don't have any debt, we have committed "owners" in the shape of our trustees, and a lot of our income comes, for now, from the state.
But, like any medium-sized national charity, we will face huge challenges in a year or two, when public spending is dramatically cut by the next (probably Conservative) government. And this will happen at precisely the time when things will be getting harder for the people we are here to help.
Talking to people across the third sector, a variety of views emerges about how best to approach the downturn. Some senior chief executives take a fairly standard corporate line - that their primary duty is to do what is necessary to protect the "business" and its long-term mission. If this means rapid and large-scale job losses and reductions in service, so be it.
This sounds brutal, but isn't necessarily so when we remember that the third sector has its own versions of MFI and Woolies - time-warp businesses that were found out once the good times were over. For the chief executives of such organisations, the recession is the "blazing platform" needed to accelerate much-needed change.
But they are the exception. Most chief executives believe firmly that third sector organisations should have a different approach. One leader pointed to the more complex, "emotionally laden" relationship that exists between charities and their staff - quite different from those in other sectors. It's a powerful psychological contract, which results in staff often giving a commitment to their job well beyond what they are contracted to work, and it's a massive invisible asset on the balance sheet of most third sector bodies. Strip this out and most charities would buckle.
As a result, "engagement" is the watchword for most third sector leaders in this recession. Engagement sounds nice and is almost always "right", but how easy is it truly to engage in the face of impending threats? As I work on my own organisation's response to the downturn, I can see that the urgency of the situation may potentially require some difficult decisions to be made in this sector, long before problems become visible. We will probably need new, leaner business models that take out manual processes; we may need to give up long-held professional practices; serious wage restraint may be needed, as well as more home working and far greater use of IT. There may be more mergers and alliances.
These are all decisions that need to be made sooner rather than later, and should be unsullied by short-termism or the special interests of particular sectors. They require a highly informed appreciation of the medium and long-term challenges. Engagement on all of these is possible, if you're willing to take the time over it.
But, faced with an imminent cliff edge and little quality time available, these are not discussions it's easy to impose on hard-pressed staff, with huge workloads. I can't put my hand on my heart and say I will be able to engage with staff in the way I would like.
What "engagement" for most managers in larger charities adds up to is a heartfelt commitment to communicate change in a sensitive way: to hear people's views; to explain the reasoning behind decisions; to give people as much advance warning as possible; and to seek input from affected groups, where this is possible. In short, to treat people not only with respect as employees, but also as people who have invested a lot of themselves in the organisation.
This emotionally intelligent approach to the consequences of the downturn must be an absolute minimum requirement of any third sector organisation. To ape the private sector, in which the average employee lives in complete darkness, challenges the very idea of a third sector based not on the making of money, but on living values.
To engage fully in the challenges of the downturn will be laudable, but I predict it will remain the exception rather than the rule, particularly in larger charities. For most, engagement will remain fundamentally about communication, rather than about consultation.
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