HR Benchmarking Report 2019 Ian Cunningham Alina Baluch

HR Benchmarking Report 2019 Ian Cunningham, Alina Baluch, Philip James and Doug Young Department of Work, Employment and Organisation

Context • Stability Index falls from 80% to 77. 1% (SSSC, 2018) • Reports on turnover highlight issues around pay, working time, career progression, but also relationships with line managers. • Publication of reports highlighting problems with • Paying the SLW • Handing Back Contracts and unsustainability of services • Persistence of recruitment and retention problems • Publication of Fair Work Convention’s Fair Work in Scotland’s Social Care Sector 2019

Summary of Participants • Approached 35 organisations and achieved 68% response rate • Distributed via Qualtrics Software • 23/24 participants • Employing 18, 362 people excluding sessional and relief staff (approx one third of VSSS) • Issues covered in this report include purchaser-provider relations, workforce profile, working time and flexibility, pay and conditions, recruitment and selection, employee participation and involvement, training and skills, discipline and grievance, and equality and diversity.

Financial Data • Overall turnover among the participating organisations was £ 633, 662, 521. • The pay bill for the participating organisations was £ 474, 674, 502 representing 75% of turnover. • Seventy-one percent of organisations reported that over two thirds of their income came from local authority sources.

Losses and Gains in Public Sector Contracts • Fifty-four percent reported losses in contracts compared to seventy-five percent that had gained them. Three organisations reported losing contracts, but not making any gains. • Just under half of those that gave a reason for losing contracts reported that this was due to funding cuts and/or retendering by a local authority. • Seventeen percent of organisations reported handing back contracts because they were unable to deliver.

Losses and Gains in Contracts Year 2014 -15 2015 -16 2016 -17 2017 -18 2018 -2019 Lost Contracts (%) 57 39 59 62 54 Gained Contracts (%) 67 71 69 65 75

Redundancies • A majority (58%) of the respondents reported they had made redundancies in the last twelve months. • Of these, 86% had made up to 19 people redundant. 64% of these organisations reported that redundancies were 100% compulsory. • 37% of organisations reported they expected to make redundancies in the next year, affecting between 0 -19 workers. • Issue of redundancies occurring in context of increasing turnover and continuing recruitment problems.

Stability in Organisations Reporting Redundancies Year Organisations making redundancies (%) 2014 – 15 64 2015 – 16 48 2016 – 17 77 2017 – 18 59 2018 – 19 58

Working Time • Contracts offered to front-line staff: • The majority of staff remain employed on a guaranteed hours contract with an average of 80% of staff on these contracts. • Over half of the respondents has its largest proportion of employees on full time contracts (53%), followed by part-time employees working between 16 -30 hours (42%). • Zero hours contracts: • 74% of providers use zero hours only contracts, representing a dip in the proportion of organisations making use of zero hours only contracts from 83% (2017 -2018), 76% (2016 -2017) and 64% (2015 -2016). • On average, 17% of the workforce is employed on zero hours only contracts, representing a slight decrease on last year’s 19% (2017 -2018). Workers on these contracts account for an average of 11. 7% of working time. • Fragmentation of the working day: • This year’s report suggests less fragmentation with 36% of the responding organisations operating split shifts, a decrease of 11% from last year’s figure.

Family Friendly Policies • A slightly lower proportion of responding organisations (50%) offer compressed hours in comparison to the 2017 -2018 Benchmarking Report (58%). • The percentage of organisations offering term time working decreased slightly to 21% (prior report 23%). • However, the responding providers offering flexible hours increased to 42% (prior report 35%). • Staff usage of these arrangements? (i. e. , an average of 1% of the workforce using compressed hours; 9. 6% of the workforce using termtime arrangements)

Working Time • Working beyond contracted hours: • Providers face continued difficulties around staff shortages with an average of 34. 1% of part-time staff working more than contracted hours to cover stretched services. • Roughly half of these respondents (44%) had at least 47% or more of their part-timers working beyond their contracted hours. • Unsocial hours work: • All of the responding organisations reported that a proportion of their staff undertook weekend work regularly (average of ca. 74% of the workforce). This figure represents a 13% increase on last year’s figure. • 77% of the providers allowed some of their permanent headcount to work on the relief register, with the majority reporting that they found it easy to find permanent staff to do so (55%), while 36% found it difficult. • Overtime premia largely unavailable except for some public holidays.

Use of Agency Work Remains High

Absence • Average days lost range from just over two to 16. 57. • The average cost of absence also varies considerably, ranging from £ 95 to £ 1292. 73. • The average days lost for the 22 benchmarking organisations that detailed them is 10. 0 compared with an ‘all employee’ figure for the economy in general of 6. 6 and one for the voluntary sector of 7. 3.

Persistent levels of absence Year 2014 – 15 2015 – 16 2016 – 17 2017 – 18 2018 – 19 Days lost per employee due to absence 10. 7 9. 9 8. 8 10. 4 10

Employee Turnover • Employee turnover figures across providers vary from 1. 8% to 40%. The average is 22. 5%. • Eighty-eight percent of the responding organisations (N=24) undertook exit interviews. • Career Progression, new job, personal reasons and pay were the four most popular reasons for employees leaving their posts.

Concerns that employee turnover is rising Year 2014 -15 2015 -16 2016 -17 2017 - 18 2018 -19 Employee turnover (%) 17. 84 18. 7 20. 3 19. 3 22. 5

Recruitment and retention (1) • Recruitment problems remain a continual challenge for providers, a trend across the previous three Benchmarking Reports: • The percentage of respondents indicating recruitment needs are higher had fallen to fiftyeight percent, from sixty-nine percent in 2016 -17. • In line with previous years, eighty-two percent report that recruitment of front-line staff groups was very or quite difficult. o The most common reason for recruitment difficulties for front-line posts was issues pertaining to pay (seventy-four percent). Too few applicants and competition from other local competitors in the job market were the next most common reasons. • Fifty-nine percent reported difficulty in recruiting supervisors, and fifty percent in relation to managers. o Key reasons reported for this were, in order: too few applicants; applicants lacking skills and quality; and pay levels.

Recruitment and retention (2) • 100% of the respondents involve service users in interviewing potential candidates. • The majority of providers, as last year, use staff shortages as an indicator of recruitment needs (78%). • 39% tracked geographic shortages and ROTA planning to assess recruitment needs. • Workforce planning tools were used by 9% of respondents. • 88% utilised exit interviews, and the three most common reasons for leaving were career progression, followed by a new job, personal reasons, pay and conditions, and a career change.

Influence of the Scottish Living Wage • Seventeen percent of participants were accredited Living Wage Employers. • The largest proportion (33%) of respondents felt that making the SLW an essential criteria in public service tenders would have no substantial impact on their organisations. • Nine providers (38%) were continuing to pay an old rate of SLW (£ 8. 45), despite the SLW recently being increased to £ 9. 00 from November 2018.

Influence of the Scottish Living Wage • A number of providers still face problems with differentials between the lowest paid front-line support staff and more senior and supervisory management from introducing the new SLW rate. • A third of respondents were paying their bank/sessional staff below the old £ 8. 75 SLW rate. • Some organisations continued to struggle to pay domestic, catering and maintenance staff the SLW.

“Because there’s been nothing in terms of differential, there’s a whole thing about morale, with people in management levels saying ‘why am I managing for effectively the same money or very little difference’? ” (VS Provider). “Our salaries of our managers and our deputies was not competitive… we are now in a position where we have scrunched differentials as much as we possibly can” (VS Provider).

Sleepovers and the SLW • Fifteen respondents reported operating 302, 606 sleepovers, with an average of 20, 174. • It was estimated by these 15 respondents that the total number of hours sleepovers stood at 2, 420. 848, with an average of 169, 389. • The cost of operating this number of sleepover hours at the SLW rate of £ 9. 00 is £ 21, 787, 632, or an average cost of £ 1, 452, 508. 80. • Represents approx. 4. 6% of overall pay bill across 23/24 participants • Pay bill of 15 participants is £ 358, 693, 936, so percentage devoted to sleepover payments is approximately 6% (5. 5% for NMW) of overall pay bill • Dangers in reducing sleepovers • Declining service quality • Lower levels of pay

“The danger is that workers who were providing sleepovers actually go home with less pay because they haven’t got their sleepover payment, which all feeds into the issue about recruitment and retention, because effectively people’s salaries reduce” (VS Provider).

Training and development • The training budgets ranged from £ 6, 000 to £ 1, 300, 000 per annum, with an average across the organisations of £ 273, 182. 05. • This represents an increase in the average budget across providers of 18% compared to last year. • Forty-six percent of respondents stated that their training budgets did not cover their costs, representing a fall of 8 percentage points compared to last year. • When asked if their training budget had changed over the last 12 months, 62. 5% said it had increased, 4. 5% (representing one individual) said it had decreased, and 33% said it had stayed the same.

Fall in % of organisations not meeting all training costs

Concluding Comments • Some areas of optimism • Increasing contracts over those losing contracts • Slight decreases in use of ZHCs • Better news on training budgets • Continuing areas of concern • • • Public sector cuts still behind many losses in contracts Some organisations continuing to hand back contracts Persistence of redundancies, and plans for future redundancies, yet - Persistent absence, turnover and recruitment problems Problems with SLW reaching front-line workers, differentials and increasing costs associated with sleepovers. • Increase in turnover reflects broader increase in ‘Stability Index’ (SSSC, 2018) • How do we tackle health, sickness absence issues? • Issues relating to SLW reflected in more detailed work undertaken in the sector – Solutions? • Sustainability and handing back contracts