These changes may be defined as reducing cost, diminishing the break-even point, finding alternatives to present services, dealing with high unemployment and creating self-employment. All these are described in detail in the publications.
Reducing cost is an action most managers should be familiar with: it is based on the principle of determining the essential interfaces any organisation needs with outside factors; it should always be analysed from the bottom up. For example, an organisation may have a need for a training department; is it essential for it provided in-house or can it be sub-contracted and so converting fixed to variable costs?
- Evaluating the true cost of each activity with their associated assets.
- Determining the viability of each activity as whether it is essential to the organisation; this may be associated with regulations in which case this is a political problem that must be addressed.
- For the continuing activities, work out the essential costs needed to run them.
- For the disposed activities, consider the optimum means of disposal with minimum interruption to people.
Reducing the break-even point is essential if organisations are to be able to weather extreme economic downturns associated with reducing excessive debt. It is almost always associated with converting fixed to variable costs – as in the earlier example of training.
Finding alternatives for offering the same service is primarily a government need as the present bureaucratically-run services are now no longer affordable. How can they best be provided with minimum disturbance to the recipients?
- There are several examples of unwinding state education without the need for supervising bureaucracy. For example Sweden and several American states now use a system of vouchers whereby parents can chose which independent schools are suitable for their children.
- National health services suffer from excess bureaucracy, inflexibility and, like education, are heavily unionised. One solution is provided by Singapore which has independent hospitals and general practitioners but everyone is obliged to take out health insurance for in-patients and a tax-exempt ‘pool’ for paying for general practitioners.
- The state of Wisconsin has a welfare system that defines the needs of each category of claimant and determines a program for each person to bring them back into the working mainstream.
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