For the second successive year, a charity is today named The Sunday Times Best Small Company to Work For. Christians Against Poverty (CAP) is indebted to its 123-strong workforce for lifting it to top spot in our 2008 competition on its debut.

They ranked the Bradford-based debt counselling service top in no fewer than 34 of the 66 questions in our exclusive employee questionnaire, designed to identify the best workplaces in Britain. CAP finished outside of the top three on just 10 questions, one of the most dominant performances by a small or medium-sized enterprise (SME) in the five-year history of this list.

CAP triumphed in a year that has seen the bar raised in terms of both the quality and quantity of entrants. Average scores for seven of the eight areas of working life – or “factors” – the essential ingredients of the best workplaces, are up on 2007 (with just the mean score for the Leadership factor remaining stable at 81.2%). The number of contestants, too, has soared with 513 SMEs taking part, 165 more than last year.

Following in the footsteps of last year’s best SME, P3 the social inclusion charity – which remains in the top four of the list – CAP further secures the reputation of the third sector.

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• Best Small Companies to Work For 2008

Turning up the Heat pays off

Strong training and a sense that work is to be enjoyed add up to Heat powering past its rivals into top spot this year

Background

• Hats off to great leadership

• Getting the message across loud and clear

• Fly high with the X Factor

• Why it pays to know what you’re doing

Background

• Charity wins top small company award

• Special awards for best practice

• Rules of engagement

• 100 Best SME's to work for 2008

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• Best Small Companies to Work For 2008

• Highlights from the awards ceremony

While analysis of the results shows it’s not all good news working for a charity, CAP demonstrates that strong leadership is the key to a happy workforce. A top score of 97% for the leadership factor – one of five in which it finishes top – wins Matt Barlow, the chief executive, our special award, see panel, right.

The full list of factors by which SMEs are judged includes: Leadership: how employees feel about the head of the company and senior managers. Wellbeing: how staff feel about stress, pressure and the balance between their work and home life. My Manager: people’s feelings towards their immediate boss and their day-to-day managers. My Team: people’s feelings about their immediate colleagues. Fair Deal: how happy the workforce is with pay and benefits. Giving Something Back: how much companies are thought by their staff to put back into society, and into environmental protection. My Company: feelings about the company people work for as opposed to the people they work with. Personal Growth: whether staff feel challenged by their job, their skills are being used, and if there is scope for advancement.

The strong bond between employee and employer that exists in the best SMEs is evidenced by the My Company factor taking over as top scorer this year, at 82.5%, just ahead of My Team, which returns an average positive score of 82.1% and was the top-ranking factor in 2007. The feelgood factor is evident elsewhere, too, with significant gains seen with Wellbeing, up 1.6% from 70.5% to 72.1%, and Personal Growth scoring 77.6%, up from 76.1%.

Such gains make it even more difficult for companies to enter the top 100 list, let alone become one of the top 10 SMEs to work for – where the year on year gains in factor scores are even more pronounced – indicating that the very best SMEs are moving ahead of the pack in every area.

Giving Something Back this year shows the biggest increase, both among the top 10 companies (up 5.3%) and on the full SME list (a 2.8% rise). Analysis of the data attributes this leap to a general trend in society towards greater benevolence – a reason for charities being so high on the list in 2008.

Three of the questions returning the biggest average improvements relate to concerns about impact on the community and the environment. Employees reporting that profit is not the only thing driving the company now averages a 74.4% positive score (up 4.4% from 70% last year). Recognising that their SME does its bit for the environment gains all the best 100 small companies an average score of 71% (up 3.8% from 67.2%), and believing it puts something back into the community averages 64.7% (up from 61.1%).

As in previous years, there is not a single question in 66 on which the SMEs score worse than the mid-sized companies. There remains a gulf between the performance of the 100 Best Small Companies to Work For and the 100 Best Companies to Work For.

The gap is at its widest on questions to do with leadership where, on average, SMEs have positive scores 7.5% higher than their mid-sized counterparts (81.2% against 73.7%). Of course, it follows that the fewer people in a work-place, the more visible and accessible the leaders are likely to be.

This trend is borne out when responses to individual questions, as opposed to the broader factors, are analysed. The greater fraternity evident in SMEs results in the widest 11.4% gap in positive scores (when compared to mid-sized companies) for teams and departments working well together, SMEs scoring 65.3% positive here against 53.9%.

Leaders are more inspirational (81.1% against 70.7%) and more often listen as well as talk (76.6% against 67.3%).

The results would seemingly indicate that employees in small companies are generally happier, but are people working for charities the most content of all?

Not necessarily. A total of 29 charities entered the SME contest, but just seven made it onto this year’s list – a success rate of 24.1%. This is broadly comparable to the success rate of noncharity applicants, where 25.1% of those entering made the top 100.

The greatest advantage those working for charity enjoy is the belief that their organisation makes a difference to the world we live in. Charity staff return an average positive score of 78.1% for this question – a huge 19.9% higher in than other SMEs.

There are significant downsides to life in the third sector, however, with a lack of job security top of the list. Employees of charities have positive scores on average 5.7% lower than in other SMEs (68.3% against 74%). They are also much less excited about where their organisation is going.

Dr Pete Bradon, research director for Best Companies Ltd, the organisation that conducts the research for the SME list, explains: “It is hard to be excited about the future of your charity if you think you may not be part of it.”

Employees of charities also report significantly higher levels of job-related stress, with positive scores here 2.4% lower on average (at 71.4% against 73.8%). “Where levels of dedication to the job are very high, employees will readily work longer hours,” says Bradon. “I believe employers have a moral duty to protect very engaged employees from damaging work practices.”

CAP leader Barlow confirms that people working for charities can at times feel they need to put in longer and trickier days than elsewhere. “That stronger sense of care can be stress-inducing.”

He also has another explanation – there may be an expectation that a lower salary than elsewhere means people have plumped for a less stressful sort of role, when this isn’t always the case.

While employees working for small charities mainly feel that their leader is running it on sound moral principles (76.4% – 4.7% higher than in the noncharity SMEs), they don’t necessarily think senior managers live its values (the 66.7% average score here is 3.4% lower than in other SMEs). There can seemingly be a mismatch between managers trying to run a business and staff, who think values are being forgotten.

Employees of charities clearly are not immune from the same rules as the rest of business but, with charities topping our SME list for the past two years, it appears that they believe charity does indeed begin at home.

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