Privatisation poses new challenges for NFPs managing their workforce
The rollout of the National Disability Insurance Scheme (NDIS) has led to the privatisation of some disability services, while a number of not-for-profit (NFP) providers have merged.
There has also been direct outsourcing of aged care services to third-party providers, both private and not for profit.
Prominent lawyer Luke Geary, who heads Mills Oakley’s NFP practice in Brisbane and founded social enterprise law firm Salvos Legal, told Pro Bono News that the privatisation of social work presented a new set of challenges for the NFP organisations absorbing this work.
“You have people who might have been working at a government agency for a number of years as part of the public service, being transitioned to work for a private provider… that may be a not for profit,” Geary said.
“So if you take 200 government employees and are mixing them with your existing 300 or 400 other employees, you’ll have a cohort with one particular background or experience and a cohort with a very different experience.
“You’re going to have a couple of issues. One is their attitude to the goals and mission of an organisation. There may also be more tangible issues, such as the pay and working conditions that the public service offered versus what the NFP offered.
“Also from a legal perspective, if you’re taking on employees from another employer, you’re often taking on the latent liabilities of those employees – so things such as looming worker’s compensation or a potential common law action.”
Despite these challenges, Geary said taking on government services could be “very positive” for NFPs if managed well, and added that governments were looking to fund larger organisations to “get more economies of scale”.
“So you’re going to see a lot of mergers in the NFP sector. You see it also in the aged care environment, where the model of funding has changed to make it more appealing to grow by acquiring other similar-minded businesses. So you’re going to see more merged workforces,” Geary said.
“If managed well, it could provide a well-trained, well-scaled addition to your business very quickly, so you can increase your market share and help more people. But if it’s not managed well, your existing workforce can become unsettled, unhappy and unproductive. And the workforce you acquire can also become unhappy and potentially never quite merge with the business.
“So its high gains but also high risk. It comes down to the culture, and how you manage winning the hearts and minds of employees who didn’t seek out your organisation, who were forced upon you by their existing employer or market conditions.”
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