Continuing from Part 1 about my lecture to Eastman School of Music students on how they should use observation, communication, and analysis to determine a negotiation bargaining position, we’ll begin to examine how the students utilized an orchestra’s income/expense information to begin formulating a plan…
At the end of Part1, the students enrolled in Eastman’s Realities of Orchestral Life course had established the parameters of SimOrchestra, a fictional ensemble created especially for this exercise. It was now time to jump into the income/expense spreadsheets containing the planned and actual expenditure and revenue targets for SimOrchestra’s 42 income subcategories and 18 expense subcategories for the 2002-2003, 2003-2004, and 2004-2005 concert seasons.
To aid the students in their ability to understand the data, I included footnotes for several subcategories which served as an ad hoc glossary. For example, I didn’t expect the students to already know that indirect G&A expenditures include all expenses related to operating the orchestra that are not directly linked to artistic products or artists services; such as administrative salaries, rent and payments to utilities generally known as overhead.
Additionally, I took the time to go over the majority of all subcategories which didn’t contain descriptive footnotes to ensure everyone had a cursory understanding of how each income and expense functioned within the overall financial picture and which administrators and/or board members were connected to each subcategory.
Sink or Swim
Ideally, it would be useful to have several class sessions to educate students on how to interpret and analyze financial data, but we only had one hour. As such I engaged the students by asking them questions about what the data was telling them.
Although I would love to take the time to go over each income and expense subcategory discussion the class performed for this article, time dictates that I only focus on only one of the more pivotal discussion points. I had the students examine income numbers for Board Solicited Businesses and Board Solicited Individuals (overall, the students has similar charts for 27 different income and expense subcategories ).
When asked what these figures might indicate one student immediately chimed in with the answer I was hoping to hear; an answer most individuals unfamiliar with orchestra business would consider conventional wisdom,
“They must have discovered that there isn’t any money available.”
I saw a few students nod their heads in tacit agreement but I noticed some of them still had a perplexed look on their face.
“That’s one possible answer worth considering,” I said. “Can anyone think of another option?”
After a few seconds one of the other students muttered,
“I wonder when the board members decided to give up.”
Now the students were beginning to think from a dynamic perspective! Although several students snickered at that the sarcastically entertaining aspect of that comment, I encouraged the student to expand on what he meant. Although his answer may have sounded sarcastic, it actually contained a great deal of relevance in this situation.
“Well, it seems to me that the board members did worse every year trying to get money from businesses but they never change their goals very much,” he said. “But when it came to money raised from individuals, they simply started to set their goals by what they typically accomplished.”
At that point, another student added,
“But what’s wrong with that? Aren’t they just adjusting their goals to meet what they can actually accomplish?”
I told both students they could very well be correct. Perhaps the goals were ridiculously unrealistic or perhaps the board wasn’t giving the responsibilities their “A game”. Many of the students seemed displeased by that answer so I expanded on that issue by telling them that clear cut answers to issues as these are rarely immediately available.
>From a business perspective, the orchestra world is anything but static. Examining financial plans and the resulting goals may very well clarify a simplistic cause and effect viewpoint, but it doesn’t tell you why certain decisions were made which influenced those numbers. Nevertheless, the issues surrounding “why” are almost always at the crux of negotiation arguments (I did take the time to make sure the students understood that an argument doesn’t have to be a negative experience).
I gave them a few examples to help drive that point home. In Houston, the symphony there suffered a tremendous financial blow when one of their major corporate sponsors bounced a six figure donation check; that corporation was Enron. In all likelihood, no one in the orchestra would have been in a position to predict Enron was going to collapse as quickly as they did under such dubious conditions (not even the rest of the country could smell that corporate debacle blowing in the wind).
I countered that example with what has happened in Nashville over the past few decades. I told them Nashville is an orchestra which moved from bankruptcy to building a $120 million symphony center in a matter of 15 years. During the course of that time, the board consisted of many of the same members; nevertheless, the defining moment in their timeline appears to be centered on the arrival of an executive leader who was capable of helping the organization realize its true potential.
I them posed a couple of questions to the students: What if there is no clear cut outside influence to explain rapid declines in income? What if SimOrcehstra’s community actually had major corporations moving into their area while revenues were simultaneously declining? If so, would such steep declines in actual revenue along with lowered planned revenue targets be justified? One student immediately responded (in a very frustrated tone),
“But how are we supposed to tell someone raising money for the orchestra that we don’t think they’re doing a good job?”
Good question. I told them that it may not be the board members fault; perhaps they aren’t being motivated by the executive managers. I went on to explain that those are the sort of issues every orchestra will need to examine on their own since they will undoubtedly contain answers unique to their particular situation. Regardless of where the problems may fall, if the musicians don’t find a way to encourage board members and managers to help the organization realize its potential, then no one will.
The point of this exercise was to show the students that determining a bargaining position encompasses all of the above ancillary issues. In order to establish bargaining demands, orchestra musicians will be forced to address the very same issues these students were beginning to discover.
Much like at the conclusion of last year’s lecture, many of the students seemed frustrated that the experience only created questions as opposed to providing clear cut answers to exposed problems. However, they now understand much of what lies at the heart of non-artistic issues which cause many orchestra musicians a great deal of anxiety and stress. For some, it even drives them out of the business altogether.
Fortunately, these issues don’t have to result in such high levels of negative outcomes. With proper training and continuing development, musicians can learn to deal with these issues in a productive method which fosters persistent communication and even positive conflict among the majority of players (once again, I took a moment to reinforce that conflict and arguments are not always inherently negative events).
By the end of the class, the students discovered that they never created a bargaining position at all; at least from the traditional standpoint of generating a list of demands. Instead, they were left with a quite a few questions, and that’s precisely where they should have ended up.
If time permitted further exploration of these issues, the students would have discovered that those questions would eventually lead to even more questions. Ultimately, those questions would allow them to come to grips with several key components regarding the current state of their orchestra, not the least of which is whether or not the organization is moving in a direction they feel is justified.
Once those points are determined, then the students would be in a position to learn about how they, as orchestra musicians of the future, can justify their support or opposition to where the organization is proceeding. In effect, they’ll discover that establishing a strong bargaining position supported by quantifiable and comparative statistics is one of the most effective means to influence the strategic and artistic direction of the organization.
Recalling that one of the best portions from the lecture last year included a “surprise”, I decided to incorporate a similar event for this year’s lecture. Somewhere toward the beginning of the analysis, I told the students that the financial data for SimOrchestra was created especially for this lecture. Observing this point, several students anticipated that the information was designed to easily reveal critical information but wouldn’t necessarily be representative of what they would encounter in the real world.
In order to dispel that assumption and drive home the gravity of this exercise, I waited until the end of the class to reveal that the financial information wasn’t fictional at all. Spreadsheets contained real financial data from a real orchestra, perhaps one they may audition for in the foreseeable future. Furthermore, I declined requests from the students for the orchestra’s name and even took the precaution of changing the names for some of the line-item income/expense subcategories in order to prevent them from figuring it out.
Undeniably, once these students begin winning auditions, the likelihood that they’ll become a member of an ensemble such as this will be quite probable. Consequently, their few hours of work from this class will allow them to better understand that the dynamics of the world they hope to enter go far beyond the confines of the stage.
Knowledge truly is power; and the better equipped musicians are with a solid understanding on how to obtain and evaluate institutional financial data, the better prepared they will become at creating a bargaining position which will be a positive influence on the course of their respective orchestra.
Eastman is providing their students with an invaluable service via courses such as Realities of Orchestral Life. During the “surprise” portion of the lecture, the facial expressions among several of the students conveyed that this lecture was suddenly much more than an intriguing academic exercise; instead, it was a very real look into their future as orchestra musicians.
Postscript: I wanted to take a moment to express my gratitude to the administrators and faculty at the Eastman School of Music. The students of this conservatory are privileged to have such forward-thinking leaders who understand the importance behind developing and allocating the resources to offer such unique courses. Bravo Eastman!
At the onset of the class exercise, I informed the students the depth and quantity of the financial information presented for their benefit is more than most orchestras collect in preparation for their collective bargaining negotiations. Furthermore, the amount of discussions surrounding the questions related to developing a bargaining position is an exercise which isn’t explored by professional musicians nearly enough.
As such, this lecture can serve as an invaluable tool for professional orchestras in the here and now. Professional development and training doesn’t need to be limited to the students at the Eastman School of Music, any orchestra constituency interested in bringing me to their organization to conduct a similar program for the musicians are encouraged to contact me for more details.
Furthermore, any other conservatory or school of music interested in offering this lecture for their students can also feel free to contact me . The entire lecture and presentation material are prepared and ready to go on short notice.