Outmoded management systems are crippling our most important cultural institution.

Source: Toronto Star

The CBC is a complex organization.  It operates in both official languages on a national, regional and local basis and in several aboriginal languages in the north.  It has both TV and radio networks, numerous audio and video specialty channels, a substantial internet presence, rents or owns dozens of buildings and hundreds of transmitters and other equipment.  It has thousands of employees from a wide variety of disciplines.  It is more complex than most other large companies or government departments. And it is without question our most important cultural organization.

However, CBC, like all public services, is facing budget cuts and the following analysis indicates that the CBC may not have developed the right management skills or systems for implementing cuts of the magnitude announced recently by the federal government. For years CBC has gone along without effective management systems and this could prove disastrous today as the CBC must cut millions of dollars in expenditures and maximize revenues.  Improved management systems would mean significant savings, along with increased revenues, and go a long way to meeting the corporation’s need to cut $115 million (plus no inflation funding for salaries and no funds for severance payments) from its budget over the next  three years.

There are several impediments to good management of the CBC. Presidents tend to be replaced every five years, just after they begin to understand the byzantine organization. In addition, many of the CBC’s senior people, including the presidents, have little or no experience working in or managing a large broadcasting organization.  The senior management team of CBC should have a healthy mix of seasoned broadcasters, who have actually made radio/TV programs, and people familiar with the business tools for managing and overseeing the human, technical and financial resources of a large broadcaster. The current senior management team has less combined broadcasting experience than any team in the CBC’s history. A president who doesn’t understand the CBC and an inexperienced senior team – is this who you want protectingCanada’s most important cultural institution?

When management finds an organization difficult to manage, a first response is often to issue snap-shot reports on financial and other performance. Performance reports, however, often just paper over the fact that there are no real management systems in place.  In addition to these snap-shot reports, CBC issues an annual corporate plan, numerous reports on corporate policies, reports on transparency and accountability, reports on corporate bylaws, reports on official languages, environmental performance reports, reports on Access to Information requests and it just began issuing quarterly reports on revenues, expenses and programming achievements.

Reports from consultants are another technique to try to establish independent “facts.”  In 2011 CBC hired Nordicity to do a report on how Canadians compared to other countries in terms of financing their public broadcaster.  The report supported the idea that CBC is underfunded relative to other countries.  Nordicity was also asked in 2011 to write a report defending TV advertising on CBC, which it did, using some unconvincing arguments and repeating much of the first report.  Seemingly independent of its work for CBC, Nordicity took the comparative international analysis much further and presented the findings to aU.K.audience last summer.  In this report the CBC is listed as the worst-performing public broadcaster on the basis of audience ratings, an element missing from their reports for the CBC.  The entire thrust of theU.K.study seems philosophically at odds with their CBC studies.  (All of these reports are available on the CBC’s and Nordicity’s websites.)

Reports can serve many useful purposes, including conveying the impression, especially externally, that management is in control and on top of all issues.  Reports on performance are necessary (sometimes even legally so) but they are not a replacement for good management systems.

One small window we have on the CBC labyrinth is the annual financial reports of the CRTC. For instance, these reports provide the only public source of information about the number of staff employed by the CBC. All reports issued by the CBC are woefully lacking information about CBC staff, which is strange since staff account for a majority of the corporation’s expenses, as much as 60 per cent according to CBC president Hubert Lacroix.

Here are some highlights from the CRTC financial data, comparing 2010 to 2009:

• CBC revenues declined by 2 per cent in 2010 to $1.767 billion; the Parliamentary grant represented $1.14 billion (65 per cent) of total revenues
• despite the reduction in revenues, total CBC expenditures actually increased very slightly to $1.663 billion in 2010; program expenses increased modestly by 3 per cent
• but one area, sales and promotion expenses, increased by 15% overall.  Sales and promotion accounted for $136 million in 2010, with increases of 17 per cent at CBC TV and almost 40 per cent at CBC News Network and RDI; an explanation as to why sales and promotion expenses of the CBC’s main TV services increased so markedly seems in order. Combined these increases in TV sales and promotion budgets accounted for roughly $20 million, which seems to have been taken from CBC radio budgets (see below)
• CBC administration expenses accounted for $210 million in 2010, a decline of 18 per cent from the previous year, led by a 34 per cent reduction in CBC radio administration expenses.  This begs the question as to how this was accomplished in a one year period.  It would be useful if CRTC were to provide more details on this large $200-plus million expense category
• CBC reduced salary expenses by almost $100 million in 2010 to $837.6 million (-10 per cent), a remarkable achievement for one year and one needing some explanation
• overall expenses of CBC TV (+3 per cent) increased in 2010, as did the expenses of CBC News Network (+13 per cent), ARTV (+7 per cent), bold (+16 per cent) and the Documentary Channel (+4 per cent). Reseau de l’Information had a modest decline of 3 per cent but CBC radio decreased expenses by 9 per cent or by almost $35 million, meaning that radio services took a major financial hit in 2010 and appear to have been singled out, inadvertently or not, to bear the brunt of CBC cost cutting.  The result was noticeable on air as mid-day local programming was reduced by half and many daytime time slots consisted of repeat programming.
• Just weeks ago CBC filed limited 2011 financial data with CRTC and it shows CBC radio suffered an additional $30 million dollar reduction (-10 per cent) in 2011.  Both CBC English and French TV services increased their expenses in 2011, meaning that radio has been sacrificed to fund CBC TV.  Does anyone at CBC other than the VP in charge of the books realize this?

The CBC has been through a tumultuous period and it is going to get more challenging. The CRTC financial data on the state of CBC indicate that the CBC’s planning and basic budgeting tools are not up to the task of the changes and priorities the CBC must choose from as it enters a period of reduced government funding.

© Toronto Star