The times they are a chang'n, and as leader you should be aware
Cause if the change on the inside don't match that on the outside
You head'n for some gloomy times.
Bob Dylan, Jack Welch and Will Phillips
Are you leading a museum?
Are you seeing a change in the economy?
Are you prepared?

If you answered 'yes', no need to read further. This Management Briefing presents strategies for planning for the best while preparing for the worst.

The Data—Here is what I see. How about you?

Stock Market: Flat. What is the impact on your museum?

Foundation and non profit endowments will not be spinning off he gains of the last decade. Corporate investments in non profits may also decline.

In the insurance industry, profit is made by charging enough to cover insurance losses and by investing the premium before it is needed to cover losses. The booming stock market made it easy to make investment profits. Most insurance companies lowered premiums to get market share. In other words they did not charge enough to pay for losses. Now that the market is flat poor underwriting has causes a rise in insurance prices.

Layoffs: Most companies now know how hard it is to build a workforce, so we suspect layoffs are not taken lightly. Yet... In the year 2,000:

• Dotcom layoffs 36,000

• General Motors 36,000

• Whirlpool 6,300

• Aetna 5,000

• Union Pacific 2,000

• Montgomery Ward 37,000

• Total layoffs about 500,000 in 2,000. That's a little over 2,000 per day for every working day in 2,000. In the early 90's it was 8,000 per day. Unemployment, however, stays down. It is not clear what this means. Moving from a job at GM to one at McDonalds?

Business Performance

• Microsoft warning quarterly earning will be short for the first time in 10 years.

• NASDAQ down fifty percent in less than a year.

• Conference Board Consumer Confidence Index fell for fifth straight month.

• LTV bankruptcy.

• Montgomery Ward closing after 128 years.

Personal Finances

• Consumer debt has doubled in the last decade. This does not disappear quickly.

• E commerce facilitates even easier debt build up.

• Retail spending down. Look at Christmas 2000. Some say its consumer fatigue. We have every new gadget-SUVs, DVDs, MP3s, Palm Pilots and cell phones. With faster than ever material acquisition, some may even be realizing that more stuff is not the answer. What is?

• Energy is at its highest % of spendable income since 1973.

• Consumer confidence now at its lowest level in seven years is reported in the NY Times 2/18/01

Economics

• Recession talk on Wall Street for the first time in a decade (USA Today 1-10-01).

• Stephen Roach of Morgan Stanley Dean Witter says its due to declining consumer confidence, higher energy costs, tighter credit and a weak stock market.

• Consumer confidence is reported at a 7 year low by the NY Times 02-18-01.

• The over all tenor of the business press shows little deep concern. This is a bit like the captain of the Titanic not being concerned, because he has not hit anything...

• Yet, leaders do not wait until the crash to have proof of a concern.

Philanthropy

• The Wall Street Journal reports that pledged donations from prior years are being paid at current market (i.e. lower) rates in 2,001.

• The Chronicle of Philanthropy reports many non profits faced lulls at the end of the year in what is often the busiest giving season for them.