Determining A Bargaining Position At Eastman Part 1

On Thursday, 11/03/05, I once again had the pleasure of serving as a featured lecturer for Eastman’s Realities of Orchestral Life course. This year’s lecture focused on how the students (as orchestra musicians of tomorrow) should use observation, communication, and analysis to determine their value in the relentlessly changing orchestral environment…

The class consisted of 14 master’s degree students and upper level undergraduates and much like the previous year, the majority of the students appeared to be engaged by the lecture/exercise material. As the class progressed, participation increased once the students began to understand how the concepts being discussed applied to the examination material.

The class began with a brief discussion centered on what exactly is a bargaining position. Since the majority of orchestras utilize a 501c3 nonprofit model of governance, the legal authority for all institutional decisions are afforded solely to the board of directors. As such, the students learned that although a bargaining position via a collective bargaining negotiation is a list of demands, it’s also the only legally guaranteed method in which the musicians can directly influence the strategic and artistic direction of their orchestra.

The two hour class was constructed in binary form:

  • A lecture portion with a liberal amount of time devoted to explore questions as they arose.
  • An interactive exercise where the students had to analyze three years of institutional financial data for their fictional “SimOrcehstra” in order to determine a bargaining position for an upcoming collective bargaining negotiation.

Each student received a 10 page handout containing a copy of the PowerPoint presentation and a spreadsheet for three years worth of SimOrcehstra income and expenses. In order to ensure that everyone in the class possessed a similar frame-of-reference before the analysis exercise began, a portion of the lecture component covered what a collective bargaining agreement (CBA) is; its history, the parties involved with a CBA negotiation, how an orchestra administration is organized, and how/why musicians obtain organizational financial data.

Once everyone was on the same page it was time to introduce the class exercise which required students to examine line-item components from SimOrchestra’s income/expense reports and attempt to formulate a bargaining position. In order to better understand and interpret components of the financial spreadsheets, the students were provided with some background information for SimOrchestra:

  • SimOrchestra is an ensemble which employs 36 members who earn a minimum annual salary of $29,000 and 49 musicians on a per service basis, earning anywhere from $3,500 to $15,000 annually.
  • Salaried musicians are provided health insurance, per service musicians are not.
  • The concert season lasts 38 weeks.
  • The ensemble will be displaced from its 2,600-seat primary venue due to a planned renovation through no less than the 07-08 concert season. During that period it will perform in venues which seat no more than 966.
  • At the beginning of the 05-06 season, management informed the musicians that after the 06-07 season they will no longer receive $400,000 between two annual grants.
  • Additionally, due to their decision to partner with a newly created Arts Fund, they are no longer able to solicit some of their previous large donors.
  • The most recent contract negotiations resulted in a two year pay freeze across the board, a 15% reduction in health benefits, and the elimination of one salary and eight per service positions during the period away from their primary venue.
  • The organization has had three marketing directors over four years.
  • The average attendance for masterworks concerts is currently at 58%, a 13% reduction from three years ago.

Next, it was time to begin examining the financial spreadsheets. It was immediately obvious that this was the point where the students began to feel somewhat lost, but before anyone could mentally “check out” it was explained that even though it is unreasonable to assume that they can learn to analyze and interpret the full range of institutional data on an expert level, they can begin to see how trends in income and expenditures can allow them to shape a bargaining position. Armed with that overture, the majority of students began to review the spreadsheets with a certain degree of determination.

The income/expense spreadsheets contained line-item entries for 42 income subcategories and 18 expense subcategories for the 2002-2003, 2003-2004, and 2004-2005 concert seasons. In addition to those year-end figures, the spreadsheets also included the organization’s planned expenditure and revenue targets for each of the three seasons; a point which helped contribute to their understanding the information to a higher degree.

In addition to the spreadsheets, the students were also provided with 27 line graphs which plotted the target and actual figures for several key income and expense subcategories. As you will see in tomorrow’s conclusion, the graphs allowed many of the students to absorb and analyze the data at a much faster pace. Furthermore, you’ll read about how the students used that raw data to learn which questions to ask and begin shaping their bargaining position.

About Drew McManus

"I hear that every time you show up to work with an orchestra, people get fired." Those were the first words out of an executive's mouth after her board chair introduced us. That executive is now a dear colleague and friend but the day that consulting contract began with her orchestra, she was convinced I was a hatchet-man brought in by the board to clean house.

I understand where the trepidation comes from as a great deal of my consulting and technology provider work for arts organizations involves due diligence, separating fact from fiction, interpreting spin, as well as performance review and oversight. So yes, sometimes that work results in one or two individuals "aggressively embracing career change" but far more often than not, it reinforces and clarifies exactly what works and why.

In short, it doesn't matter if you know where all the bodies are buried if you can't keep your own clients out of the ground, and I'm fortunate enough to say that for more than 15 years, I've done exactly that for groups of all budget size from Qatar to Kathmandu.

For fun, I write a daily blog about the orchestra business, provide a platform for arts insiders to speak their mind, keep track of what people in this business get paid, help write a satirical cartoon about orchestra life, hack the arts, and love a good coffee drink.

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