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Strategic Management tools for Art Museums

Final Report Summary - SMART MUSE (Strategic management tools for art museums)

The museum industry is characterised by a series of features that make it a challenging environment in which to operate and compete. One of these features is that, as most cultural industries, product performance must be viewed as multidimensional, because cultural goods have a twofold nature: they are at the same time artistic products and economic products. Moreover, quality evaluation in the museum industry is inherently difficult since products of the creative industries differ unpredictably in the quality levels that consumers, funding bodies and other relevant stakeholders see in them. As information is asymmetrical, practitioners in the museum sector take their decisions primarily relying on annual reports and / or administrative metrics. Often information from these sources is not timely, offers little analytical or predictive value and is hard to aggregate or synthesise to help improve services. At the same time, a convergence of forces, including increased government oversight, the call for greater accountability from various stakeholders, more professional non-profit management, and competition for funding is accelerating the need to overcome barriers to measurement. Using both a theoretical and empirical approach, the aims of this project were to develop a comprehensive strategy to significantly improve the performance of museums and define effective tools for tracking, benchmarking and improving performance in museum key activities.

To achieve the aim of developing a strategy to significantly improve the performance of museums a review of the academic literature in the areas of museum management, organisational performance measurement, marketing metrics and business planning has been undertaken. Meetings and discussions with museum executives have been instrumental in developing a museum Balanced Scorecard (BSC), which we adapted at the Benaki Museum in Greece.

The BSC proposed for art museums is an adaptation of Kaplan and Norton's non-profit BSC. It is designed across four dimensions based on the list of critical success factors identified from the interviews and include the artistic perspective, the public perspective, the learning and growth perspective and the governance and financial perspective.

Benaki's BSC addressed the museum's challenges in the context of the four dimensions of museum value and included specific metrics and targets in each dimension. In implementing the BSC approach, the Benaki museum has placed equal emphasis on the artistic perspective and the governance and financial perspective. This equal focus is based upon the necessity of the Benaki to carry out its primary mission for its visitors as well as the necessity to maintain financial stability within the museum. The emphasis on both of these perspectives has become a necessity in order for the Benaki to efficiently and effectively satisfy its stakeholders. While the use of the BSC in the long range planning process for the Benaki is relatively new, the process has been accepted by the management of the organisation. The challenge ahead is to continue to develop outcome measures for the individual departments within the Benaki and tie these outcome measures to the strategic objectives of the Benaki. It is felt this process will definitely enhance the efficiency and effectiveness of the Benaki in the long run. The BSC offered Benaki a workable approach because it provides clear targets to drive greater transparency and accountability; it also encourages greater entrepreneurship, creativity, and initiative among employees. The framework proposed can be implemented relatively easily and inexpensively. Any museum can begin to monitor and improve its performance by collecting data and choosing the metrics that are best suited to its strategy and its budget. Avenues for additional research include other types of institutions such as science museums, history museums and art galleries that present scholarly exhibitions but do not always maintain a collection, as well as other types of not-for-profit cultural institutions such as historic houses and performing arts organisations.

The second aim of this project was to advance discussion within the field regarding museum effectiveness and to gather reliable data on performance assessment. With this objective, we conducted a survey of more than 65 museum directors asking them to describe their approach to performance measurement.

In our research we found that almost all museum CEOs (92 %) report that they use financial and public measures to assess museums' performance, followed by measures of artistic and intellectual vitality and measures of employee satisfaction (78 %).

The most frequent reasons cited for doing so is to understand the external impact that can be attributed to the museum's work (84 %) and communicate performance externally (56 %).

Other frequently cited reasons are demonstrating accountability for the museum's use of resources (52 %), hold staff accountable (38 %) and fulfil board requirement (32 %). The museum achievements are mainly communicated in annual reports (80 %) and at board meetings (66 %), but other communication tools include newsletters (44 %) and press conferences (42 %). There is still little online communication, since only 20 % of respondents communicate the museum's achievements online with a dashboard.

We asked the respondents to assess the extent to which they were accountable to a given set of different stakeholder groups.

In terms of identifying the stakeholder groups that respondents felt accountable to, the results are split among three groups. The results show that general public is the primary stakeholder group to which the respondents felt they were accountable (88 %). The secondary group includes artists and the artistic community (62 %), along with groups such as funding bodies (60 %) and the board of directors (44 %). The third stakeholder group includes donors (22 %), artists (18) and volunteers (10). These results help us to understand performance measurement approaches. First, the fact that the respondents considered general public as the primary stakeholder group confirms the crucial role that the measures of public impact might play in assessing museums' performance.

Despite a central responsibility of a museum board is assessing the performance of the museum and the CEO, our research indicated that 58 % of directors signals some or no involvement by their boards in efforts to assess the museum's effectiveness. This result indicates that a major challenge in assessing performance will be to understand how to engage museum boards in ways that give museum chief executive officers (CEOs) greater confidence in the impact created by the museums for which they are responsible.