Faith, Hope and Charity(organization structure and staffing costs in a charity)

Tania Diamond is the Director responsible for a children's charity which has been in existence for ninety years. Its current activities are centred around the running of nine pre-school community day nurseries for children mainly in the age range 3 - 5. It has also just opened a day nursery for the `under fives' for a local public sector employer. Shortly another `under fives' nursery is to be opened for another local public sector employer. Sixty seven full-time staff are employed at the nurseries and five full-time and three part-time at head office. Tania is responsible, as Director, to a lay board of directors. Each nursery is run by a Manager. An organisation chart is shown as Appendix 1. One of the changes that Tania has introduced has been to re-designate the Managers from their former title of ‘Matron’ to that of ‘Manager’. Some nurseries operate on a sessional basis where children are taken for mornings and/or afternoons. Others operate on all day basis. Nurseries that have a significant number of children for the whole day have a full-time Domestic Services Officer.

Tania has been with the charity for two years during which time she has had to devote her energies to putting the administration and finances on a sound basis. This has not proved particularly easy as the financial situation has been difficult. Income from charitable donations has been steadily decreasing. Donors have in general less money to spare and many more requests to deal with. The grant from the local council has been `pegged' so there is no inflationary element and even to get a grant at all involved much hard work view because of the Council's desire to cut expenditure. Although the charity does contract to take some children nominated by the Council, where there is a statutory requirement to provide nursery care, most of the children admitted do not have a statutory entitlement to receive nursery care. Sometimes, however, it is found that a case can be made to the Council for children that the Society has accepted, for funding them on a statutory basis. The accounts have been brought into balance by raising fees quite significantly on a `means tested' basis. Whilst most of the nursery places are given to children who don't quite comply with the strict criteria for statutory provision there is a policy of having some balance in terms of social intake.

The current balance between income and expenditure is likely to be short-lived because of a projected deficit of £40,000 in the next financial year which would significantly reduce the accumulated reserves. This deficit has been calculated on the basis that a backlog of building maintenance tasks has been steadily accumulating, that fees cannot be increased much further, that the Council grant will continue, but at a pegged level and that the income from charitable donations will decrease at the same rate as in the previous year. Included in the projections are the anticipated cost of an annual pay award of one and a half percent and the cost of the annual salary increments. The total bill for salaries and related expenses is just under £1 million and salary increments are in the region of three to three and a half percent. Allowing for people at the top of the scale, and leavers being replaced by new employees at the start of the scale, it is estimated that the cost of the incremental increase is approximately 3% of the net salary bill of £869,000. Many of the charitable donations are or have been obtained by some of the lay Directors exploiting their very useful connections with charitable trusts and other aid giving organisations. One worry though is that the lay director who has taken it upon herself to systematically approach potential commercial donors wishes to be relieved of this arduous task.

Income from commercial donors was approximately £25,000 in the last financial year. Small, but significant, profits are expected from the nurseries run for local employers. These profits will be used to cross subsidise the community nurseries. However the charity is concerned that if it opens too many nurseries for local employers it will lose some of its image as a deserving charity. (Further financial information is given in the simplified version of the annual accounts given at Appendix 2).

As well as there having been a legacy of financial problems there are also organisational problems that Tania has had to cope with. One of the worst of these has been the sheer pressure of work on her. As well as having to run the Head Office Tania has also had to give considerable support to many of the Nursery Managers. They are a dedicated and highly motivated group but with their background in child care many of them have found management a new concept. Staff management is one of the issues which many have found difficult and, for example, few have the skills to handle staff absenteeism or discipline effectively. A new and sophisticated child profiling system has just been introduced which involves regular in-depth assessments of each child's development which it is expected will involve regular individual discussions with parents. Tania has been able to leave this development to the Training Officer but has little time for strategic initiatives herself. She also is aware that some of the Nursery Managers feel neglected by her and feel she should visit nurseries more often. However, there is little in the way of slack in the form of staff resources at Head Office, either quantitatively or qualitatively to take the load off Tania.

As a way of assessing the personnel function, Tania has commissioned a person on a temporary outplacement from the large commercial company for which she used to work to prepare a report. The report has now been submitted and the secondee is due to return to her normal employment.

Points in the report which particularly concern Tania include the following :

1. There are no disciplinary, dismissal, or appraisal procedures, nor are there any formal procedures relating to the development of staff. The grievance procedure is informal. There is a probationary review process but staff are not spoken to at the end of their probation. The quality of technical training is excellent. Those staff without the professional qualification in nursery care are encouraged to obtain it with in-house competence based training. A range of seminars on other relevant issues are also arranged. The Society has been accredited as an assessment centre for National Vocational Qualifications in Child Care and Education and now undertakes some training for other organisations on a fee paying basis. Whilst Tania is not so worried about the absence of formal training policies she is concerned that training needs to be looked at strategically. She is more worried about the absence of some of the other formal procedures. This is particularly so as there is an on-going allegation of racial discrimination, which although apparently weak, is incurring significant legal expenses.

2. There is no formal absence control procedure and Tania is concerned that some absence may be undeclared. Details of sickness are collected but there is no analysis of the data.

3. There are no formal policies regarding equal opportunities.

4. The situation regarding working hours is best described as a `can of worms'. Some of the nursery staff work a 35 hour week, whilst others work a 39 hour week. This has come about partly because the opening hours at the nurseries vary. There is also a staggered shift system for staff to ensure that the cover at any nursery is in accordance with the minimum staff-child ratios stipulated in the Childrens' Act at all times during the day. The head-office administrative staff work a 35 hour week, but not on a shift basis. Contracts for all nursery staff state that `staff should take half an hour for lunch', without specifying whether the break should be paid or unpaid. Contracts for the nursery staff working a 39 hour week state that `You will work eight hour shifts between 8 a.m. and 6 p.m. with half an hour for lunch Monday to Friday inclusive. Time off in lieu of the 39 hour week will accumulate at a rate of one hour per week.' The implication of this last statement is that some staff are actually working a 40 hour week. The position regarding breaks is made even more complicated by the following factors:

(i) At one of the 39 hour nurseries staff take a 45 minute paid lunch break - off site if they wish.

(ii) At some nurseries it is necessary to have staff on site so that the minimum staff:child ratio is maintained.

(iii) If the assumption is made that staff should be paid for the lunch break if they have to stay on the premises then all staff at the 35 hour nurseries are, under these circumstances, working a 37 1/2 hour week. Staff at some of these nurseries do have to have lunch on the premises because of the ratio issue.

(iv) At some nurseries where staff can leave the premises, the lunch break is regarded as being unpaid so that their hours of work are brought into line with their contractual hours of work.

Other general points are:

(i) Staff salary scales are applied on a standardised basis to all the nurseries except that staff are placed on either a 35 or 39 hour a week salary scale.

(ii) Whilst there is no union organisation, staff are aware of the different arrangements at the various nurseries - particularly as there is some movement of staff between nurseries.

(iii) Some of the Managers are very rights conscious.

(iv) There is no recognised trade union and very few of the staff are trade union members.

  1. Salaries are kept in line with those agreed by the relevant National Joint Council. Salary levels are in line with work offered in comparable employment - e.g. at Social Service Department nurseries. However the holiday arrangements are more generous. Staff with under five years service get twenty days annual holiday entitlement, whilst those with five years or over get an extra five days. There is also an entitlement to six privilege days per year, regardless of length of service, and to bank holidays.

Whilst the contracts of employment statements state that `some annual leave entitlement may need to be taken during annual closures of the nursery at Christmas and Easter', this provision is not enforced. There has also been an increase in the Christmas closure period which is now for a week. The volume of holiday entitlement is such that often agency staff are employed to cover for staff on holiday. Also staff often accumulate significant amounts of unused holiday that are carried into the next holiday year.

Question

Assume that you have been appointed on a short-term contract to make a report to the Charity about what specific changes should be made in its policies and procedures. State your recommendations and give your reasons.

Appendix 1

Organizational Chart

Appendix 2

Simplified version of annual accounts

Figures given in units of £1,000

Last but one years figures shown in brackets

Income

/

Expenditure

Grant / 746 / (715) / Salaries / 869 / (715)
(mainly Local Authority)†
Nursery Fees / 370 / (234) / Social Security costs / 85 / (69)
Donations (all sources) / 63 / (67) / Other pension payments / 25 / (23)
Interest / 17 / (26) / Rentals, building maintenance and other costs related to accommodation / 222 / (174)
Income from property rented out / 7 / (11)
Contributions to new nurseries / 4 / (14)
Other (incl. training fees) / 5 / (1)
Totals / 1,212 / (1,068) / 1,201 / (981)
Surplus / 11 / (87)

Footnote:

† The grant from the Local Authority also includes money for children the Charity has contracted to care for.