There’s nothing more demoralising in the workplace than feeling undervalued by your boss. Staff working in an environment where they are underused, in a job that fails to play to their strengths, are no gift to productivity rates.

That said, it’s a surprise that the UK’s economy isn’t already grinding to an apathetic halt. Research conducted by business psychology consultancy OPP has found that employers across the board are wasting the talent of their employees and failing to realise their potential.

The survey, which took in the opinions of 3,000 workers across six European countries, found that 31 per cent of UK-based employees believe their organisation was failing to help them meet their potential. A further 19 per cent went on to say they believed their employers had no idea where there real talents lied. As a result, 38 per cent were committed to changing their careers in the near future.

OPP’s head of marketing Lucy McGee says the survey shows that, once hired, staff are often simply given a job with no thought of how best to keep them motivated, or how to deploy them in a way that is best for both them and the company. “Day-to-day, clock-watching employees impact on productivity and a demoralised workforce has the potential to destabilise a business very quickly,” she warns. “Businesses risk wasting significant time and money if they don’t change.”

The outlook is no brighter for the third sector. Staff have the same expectations of charitable organisations when it comes to training and career development as they would of the private and public sectors. Where charities are failing, they are pushing staff away from the sector as a career path.

Anecdotal evidence certainly points towards a worrying trend: disillusioned young staff leaving the sector for corporate roles in an attempt to feel recognised and appreciated. One employee who recently left a large London-based charity, returning to full-time study to pursue a different career, says it was the charity’s failure to recognise and develop her skills that drove her early departure from the sector.

“I had a capacity to do much more on top of my job description and was becoming bored. This was acknowledged at all management levels, and our director agreed that the organisation wanted to retain me and help me with my own career development. In practice there was poor support in getting any kind of training,” she says (see below).

The charity’s loss is also the sector’s, showing the knock-on impact of one organisation’s poor human resources department. “I would certainly think long and hard before coming to work for a charity as, although I have loved my job, in many ways my career has suffered and stagnated,” she adds.

A former employee of another large national charity, now working in the private sector, concurred. Poor line management was to blame for a recent “tidal wave of resignations” at the organisation, they admit.

Concrete figures on satisfaction rates among employees are hard to come by, but even those responsible for improving opportunities for third sector staff have admitted there is a major problem. The Workforce Hub was established to ensure that the third sector was promoted as a career choice, and to support charities in their attempt to offer training and genuine career development to their staff.

Spokesperson Elise Cross says many voluntary and community organisations are at risk of poor recruitment and staff retention practice because they don’t actually know exactly what skills and competencies they are looking for, and may actually lack the skills themselves to identify such gaps.

The end result is the wrong people working in the wrong jobs. But what can be done to prevent this? “Training needs analyses are useful, as are appraisals and supervisions to identify any development opportunities or requirements,” she explains.

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But this is not the only solution. Cross says workforce motivation and staff turnover is also driven by a far more complicated factor. “There is much evidence that the strength of a psychological contract an employee has with employers can factor into retention,” she says. “Part of this contract is to do with job satisfaction, involvement in decision-making, developing skills and learning.”

Training opportunities themselves do not guarantee staff retention. A sense
of being properly utilised by their organisation seems to be the key for employees. The Chartered Institute of Personnel and Development believes businesses across all sectors are noting this trend and acting on it.

“Certainly it’s something that’s a growing concern,” says CIPD advisor Victoria Winkler. “What’s happening a lot more is that there is a move away from simple planning and developing training courses. Utilising people’s skills is much more about finding what interests them, what contribution they feel they can play, and whether they feel they have any skills gaps.”

Much of this relies on the skills of line managers, to listen to their staff as well as to coordinate any learning they may need, and their job is becoming more complicated by the week.

The onslaught of new technologies has left organisations in a constant state of flux, requiring a range of talents from their employees. “What they need now are individuals that can respond to change, are agile and pick up new things,” Winkler adds. “Skills gaps are set to become more pronounced, due to existing shortages and because of the rapid pace of change in the way we work.”

If organisations do not address such skills gaps, or offer their staff the chance to skill up and move around within the departments, they will lose their competitive edge. If disillusioned staff are migrating to the private sector, perhaps that is where the third sector can find its answer to the problem.

Barbara Hannant moved from the private sector to take up the post of head of human resources at Motability just over a decade ago. When she arrived, the organisation was failing to offer its staff the HR support they needed. There were no opportunities for training, and staff had received no feedback on their performance.

“They had really had virtually nothing,” Hannant says. “Within a matter of weeks, I had put in place an induction process for new starters, and then the next priority was to put in place an appraisal system.”

Hannant says working towards Investors in People helped to placate those staff initially resistant to the change. Now members of the Motability team are working towards MBAs, NVQs and other recognised qualifications. Though staff turnover wasn’t monitored before the new HR system was put into place, anecdotally it has dramatically improved. Since monitoring began, the level has dropped from 12 per cent to less than 7 per cent.

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Not all charities have these structures in place. Hannant says it is the lack of a formal HR function, and commitment to staff development, that accounts for the dissatisfaction expressed in the OPP survey.

“I’m not surprised at the outcomes. A lot of organisations don’t place a great deal of emphasis on training their people,” she says. Getting the message across to the smallest charities will be extremely difficult, and the reluctance to pay external consultants to address the problem will only serve to exacerbate it.

Until a robust survey of the third sector is carried out, it is difficult to tell whether the problems around lack of staff support are endemic, or whether it is limited to a few charities, or even to a small number of employee-manager relationships within those organisations.

Charities are, it seems, listening to the voices of those leaving a career in the third sector disappointed. Charities cannot rely on a sense of vocation, or on their non-profit status, to retain frustrated staff.

Helen Rice, director of learning and development at the DSC, says the organisation sees many charities keen to make a step change in the way they manage and develop their staff, as there is a recognised gap.

“There is a wonderful multitude of interesting careers in our sector, but if you’ve got a bad manager you don’t feel like that,” Rice says. “Many people who contact us are contacting us because they need support to improve that part of their business. It’s definitely clear that there is no real structural programme for people entering the charity sector.”

In the third sector, staff have to be multi-skilled, but the lack of a formal career path can be off-putting for new entrants. The fear of losing the essence of voluntarism may be preventing charities from modernising their HR processes. But Rice says they should play to their strengths in order to attract employees and keep them motivated.

“I think people don’t realise how many different aspects there are in it. I’m surprised that people don’t feel the opportunities are there,” Rice urges. “If you’re in a staff team of 12, there is no reason why you can’t do a bit of everything.”

Charities must heed the message if they are to retain their staff. Advertising the opportunities they offer and following up on these promises will make the sector an even more attractive proposition to an ambitious, young and morally-driven workforce. Failing to make these changes will leave it playing second fiddle to the HR-savvy private and public sectors.

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Getting it wrong: how to lose an employee in two years

In July 2007, an employee of a large London-based charity left the organisation to change careers. She departed disillusioned and frustrated after failing to be developed over her two years at the charity. Ultimately, she left the third sector because she felt underused.

Though her line manager had recognised her potential at appraisal, promises of promotion and extra responsibility were not followed through, largely due to the lack of organisation at senior level.

“I went out and got myself extra qualifications which management said were required for my career development. A year later, the charity still failed to get itself organised enough for me to use the qualifications,” she complains. “I was directed away from my job because our staff turnover was so high that I often had to fill in and try to keep the department’s head above water.”

Disappointed with the lack of commitment to her career from her employer, the former staff member has now returned to full time study in order to pursue an entirely different career, likely to be focused on the public sector.

“The charity was very disappointed when I left, and tried to convince me to stay, but it was too late,” she says. “They should have had a proactive approach to maintaining staff rather than trying to stop them when they are about to leave.

The charity needed me to patch up for its high staff turnover, but ultimately that tactic has lead to it losing yet another member of skilled staff.”

She believes that she is not alone in leaving the sector because of the failure of managers to develop their staff. She says if charities were more committed to staff career progression, turnover would dip and departments would function more efficiently, allowing staff to use the skills they are employed and trained to use.

“I have worked in the private sector before and things seem to be much more organised. I don’t imagine that a private sector organisation would have lost the value that a person’s ability, qualifications and skills would bring.”

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