This article was originally created for Hayes Knight (now Nexia Auckland).

4 October 2016

Every now and again the media picks up on a story involving a government agency, council or charity supposedly spending up large on staff entertainment, big salaries or ‘perks’ and the cry goes up about the inappropriateness and wastefulness, given that it was public money, or money destined for worthy causes. Even when the spending specifically relates to celebrating a great success, or a significant milestone, the public still often views it as being an unnecessary extravagance.

I recently discussed this issue with a trustee of a large charity and they obviously felt that they were constantly in a no-win situation. To attract and retain good professional staff they are continually competing with corporates, while at the same time there is an expectation from donors that the organisation is run on the smell of an oily rag. Another recent example of the same issue came from a friend of mine who works for a state owned enterprise. They had been given a budget for an annual social event of just $20 a head, with partners being able to attend if they paid their own way. Ultimately they were able to get creative and pull something together, but they still generally felt undervalued and that management were being miserable; exactly the opposite of what a team social event aims to achieve.

Meanwhile, in the average corporate, there is no issue with putting on social events for staff. In fact, Friday night drinks and a couple of decent work do’s a year, at a cost of $100 plus a head, is often seen as the norm from both management and team perspectives. On that basis, if you work for a charity, council or state owned enterprise, you’re fresh out of luck, while if you work for a corporate, it’s party time!

At the same time, charities in particular are expected by the public to keep wage costs to a minimum, and there is a perception that those working full time within them should be ‘doing their bit’ by accepting less than a market wage. This adds to the problems faced by charities in keeping good professional people long term.

The fundamental problem with what I have outlined above is that just about everyone, regardless of who they work for, has a need to feel recognised and rewarded (both in monetary terms and in other ways) for the work that they do. If councils and charities are so tight-fisted that they never splash out on even modest entertainment for their employees, while at the same time they potentially pay less than market wages, they’ll struggle to retain good people as a result. Regardless of how altruistic people are, ultimately most need to be recognised and rewarded to remain motivated in the long term.

Happy, motivated employees are productive employees – it has been proven time and time again. Often a part of keeping morale up involves the employer providing a few drinks and the occasional night out, or rewarding the team in other ways that invariably involve cost. Long term, the costs (both directly and through lost productivity) of continually replacing and training people becomes enormous, so it is false economy to avoid spending on the team, if doing so creates a better work environment.

In my view, the New Zealand public need to recognise that in order to operate efficiently and economically long term, the people working within publicly accountable organisations (charities, government agencies, councils) need to be rewarded in the same manner that people in private corporates are. Ultimately when these public organisations lose their good people, it is the general public that loses out.

Tristan Dean
Business Advisory Director
T +64 9 414 5444

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This article was originally created for Hayes Knight (now Nexia Auckland).