Downsizing to disaster

Australian War Memorial CanberraThe weeks leading up to the Federal budget are always interesting. Every April, lobbyists start their annual pilgrimage to Canberra to plead for funding. Research scientists and agricultural researchers were quick to do their rounds, and have already managed to get a sympathetic hearing from the Canberra press gallery.

It might come as a suprise, but one lobby group trying to champion the Australian War Memorial and National Gallery in Canberra is the Community and Public Sector Union (CPSU). In a sign of how far some aspects of industrial relations have evolved, the CPSU is fighting the campaign with an interesting set of numbers.

The National Gallery and Australian War Memorial are two of the top tourism revenue generators for the ACT economy. In a study done in 2007, the War Memorial was found to be the top attraction – visited by an estimated 58% of all tourists in the ACT, with the National Gallery ranked at number 4 with 43% of tourists visiting.

Both attractions are owned by the federal government. Cuts that have already been announced in 2010 have been so deep that the two organisations now spend roughly 55% of their budget simply maintaining the items in their collections – and have already dramatically reduced the number of exhibitions for visitors.

In a nutshell, the CPSU is arguing that further cuts will turn major national tourist attractions into empty gestures, with their budgets spent on simply looking after collections stored in warehouses. This is actually something that is now quite common in the US, where many national parks and museums across the country have been closed – typically because budgets have been reduced to levels that only allow basic maintenance of facilities and collections.

The problem the union is highlighting really comes down to leadership.

It is easy for organisations to fall into a habit of relying purely on reducing headcount to deal with challenging situations. The GFC in 2008 was a prime example, where many large Australian organisations shed large portions of their workforce – and then scrambled to rehire at much higher rates a year later.

Rather than relying heavily on downsizing, it is often worth considering whether reinvention is needed.

Every product and service has a use by date these days, and the competitive landscape is shifting rapidly in many industries. Reducing costs may be a necessity, but failing to innovate and adapt to a new market reality will eventually lead to disaster.

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