Within the first 15 minutes of my job interview, the park board president instructed me to “run it like a business.” Coming from the private sector, I wondered what the alternative was. That was more than a decade ago; today, I certainly understand the difficulty and uncertainty of running a government agency like a business. Government agencies have rules, procedures, laws, policies, resolutions, and ordinances to follow that work against many of the most basic business practices.
The reality is that, through leadership, best business practices can be implemented and innovations can be created to navigate the pitfalls and perils that face all agencies. By taking this approach, it is possible to provide better programs, increase an operational budget, and increase capital-project spending.
To be effective requires the willingness and desire to change the basic culture of a department and become an organization where staff is rewarded for success and encouraged to excel. A “We can’t” attitude must be transformed into a “How can we?” culture. It also requires an accountability of every staff member, not just for their actions, but their performance as well. And pay rather than longevity needs to be rewarded.
Cracking The Café Conundrum
In one example of navigating towards a more business-minded, decision-making operation, the Carmel Clay Parks Department in Carmel, Ind., converted a 3,300-square-foot café space within the community center to a multi-purpose room. The park board had been committed to the idea and concept of a café, as well as using an outside vendor to operate it. After two unsuccessful years of operation, however, the vendor bailed out. While the department searched for another merchant, the café sat vacant. After failing to find anyone to operate the café, the department analyzed the space to determine the maximum that could be generated per year as a café compared to the revenue that could be generated if the space was used as a multi-purpose room for recreational and fitness programs.
This information was shared with the park board, and after much discussion and consternation, the space was converted to a higher income-producing area. If the agency was truly operating as a business, it would have moved at a more rapid pace to generate the maximum dollars per square foot for the space. As a government agency, it still reached that point—albeit a little slower.
The conversion was financially successful; a good business practice was followed while staying inside of government practices. Calculating return on investment (ROI), projecting maximum potential along with expected return, and determining worst-case scenarios were all part of the process. Stakeholders did not initially recognize that simply leaving the space undisturbed was better than losing money as a café. But the most important lesson learned was by those involved in the original decision to include a café within the community center.
They focused on the café failure as a mistake, and insisted on proving that not to be the case. In business, one must move quickly once something has been found not to work. But with a mandate of 100-percent cost recovery for the community center, a solution that maximized cost recovery was needed. Moving from failure to success is the ability to innovate. Once everyone agreed the goal was to maximize the revenue potential of the space, the decision was easy. From that point forward, the park board, elected officials, and staff members had a framework on how to convert low or non-performing spaces to high-performance revenue generators.
Applying The ROI Formula
This same principle was applied to waterpark operations shortly after the café conversion. During the design of the original waterpark, some areas were intentionally left undeveloped so additional features could be added over the next 20 to 25 years. The park board was keenly aware of the importance of adding a new feature every few years and keeping the waterpark fresh in order to maintain attendance year after year. As part of a discussion on what feature should be added, one board member asked what feature provides the best ROI. This was a textbook example of a basic business practice becoming part of park board culture while supporting the department’s cost-recovery expectations.
The recreation and aquatic staff members busied themselves researching, ultimately recommending a surf-wave machine. One of the key differentiators of an ROI versus adding a new feature is to go beyond simple attendance figures and create new sources of revenue. Since a surfing feature is skill-based, people will return frequently to master the activity, which boosts attendance, while a feature like a slide may generate initial attendance but falls off over time. Individual and group lessons, private rental opportunities, and competition events can be offered. This activity could open prior to the traditional waterpark season and stay open after the season, extending its operating time by at least 3 months.
Recommendations along with projections were presented to the park board. Information more akin to an executive overview was then presented to both the city council and township board. Everyone involved was enthusiastic, with unanimous approval of a $2-million project that was designed, constructed, and open to the public less than 12 months after the first recommendation to the board. The surf-wave machine was the first installation of its type in the state, which was a marketing and promotion bonanza for a regional waterpark.
A Can-Do Attitude
Good business practices can easily be integrated into daily processes. Leadership is fundamental in creating a transformative change in culture to “How can we?” Through innovation, current and future problems can be resolved today. In an era of shrinking budgets and higher cost-recovery expectations, all agencies need to perform at a higher level. Increasingly, customers, citizens, stakeholders, and elected officials will expect us to “run it like a business.”
Mark Westermeier is the Director of Carmel Clay Parks & Recreation in Carmel, Ind. Reach him at email@example.com.