Sometimes, Surprises Are Good

I like waking up in the morning to a (pleasant) surprise and that’s precisely what happened when I went scrolling through the morning arts news (via Arts Journal music news, of course) yesterday and read an article by Peter Dobrin about the Philadelphia Orchestra’s decision to hire James Undercofler, the Dean of Eastman School of Music, as their new president & CEO…

Before I go any further, let me state now in the spirit of full disclosure that Jim Undercofler is a current board member for and a driving force behind the development of Polyphonic.org, the orchestra musician website which I currently serve as Senior Editor & Research Principal. Having said that I’m sure all of Adaptistration’s regular reader’s certainly realize that I’m the antithesis of a corporate shill and anything positive I have to say about Jim is unrelated to my professional relationship with him.

Given the Philadelphia Orchestra’s recent history of stupendously bad decisions and poor executive leadership, I can’t begin to express how encouraging it is to see Jim Undercofler take over the reigns of the venerable institution.

For one thing, Jim can certainly accept a lion’s share of credit for helping to pull the Eastman School of Music out of its academic malaise. He’s a proven fundraiser in a market that’s every bit as fierce as the orchestra world (if not more so) and has demonstrated that he’s forward thinking enough without actually crossing the line into reckless insanity.

Eastman’s Institute for Music Leadership is another one of Jim’s projects (more disclosure, I’ve been invited to lecture there on a multiple occasions). Serving as the first of its kind comprehensive program designed to prepare music students for the non-artistic realities of their career choice, the IML program has been the source of some really fine work (which I’ve written about on two separate occasions here and here).

As a matter of fact, I went digging around in the beginning of 2004 looking for music schools which prepared their students for the non-artistic realities of orchestra life. After contacting representatives from Juilliard, Eastman, Oberlin, Peabody, Indiana University, Curtis, Northwestern, Rice, University of Michigan, Cincinnati, and CIT to see if they offered any sort of comprehensive non-artistic training only Eastman offered something which fit the bill. I published an article about that process shortly thereafter in February, 2004.

Peter’s article in the Philadelphia Inquirer announcing Jim’s impending arrival at the Philadelphia Orchestra isn’t merely a puff piece (that’s not Peter’s style); instead, it does ponder the environment Jim will walk into when he officially takes over on August 1, 2006.

For example, the article points out that Jim has never dealt with negotiating a collective bargaining agreement (CBA); an event the Philadelphia Orchestra hasn’t had a great deal of success with in recent decades. The organization’s current CBA expires at the beginning of the 2007-2008 season and if the organization follows tradition, that means they should begin to negotiate somewhere between three and nine months after Jim’s arrival.

Nevertheless, given the act Jim has to follow, I can’t imagine that labor relations in Philadelphia could get much worse. One would have to posses Odyssean resolution to deliberately make labor relations much worse than they’ve been in recent years, and although I believe Jim is a determined individual, I sincerely doubt his ambitions lie in that direction.

At the same time, he will have to understand that his predecessor didn’t exactly make his job easy with regard to musician-management relations. Musicians aren’t known for casually offering up a clean slate for new managers to work from and they have long memories. The old adage “sins of the father” come to mind and any good executive leader walking into an ugly relationship will undoubtedly realize that there’s going to be some necessary reparation to pay, regardless if the perceived sins were on their watch.

Perhaps one of the most effective methods for creating a new, healthier relationship between the executive leadership and the musicians will involve directing institutional effort and resources toward programs where both parties retain control over how they communicate with each other. Ideally, creating a program outside of traditional province which clearly functions within the parameters of immutable labor and nonprofit law is a direction the new Philadelphia Orchestra would strongly consider.

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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10 thoughts on “Sometimes, Surprises Are Good”

  1. On the point of executive compensation, previous executive director Joe Kluger got grilled for taking a 3.6% pay raise to $285,000 in light of staff cuts in July, 2004.

    Drew, do you find it troubling at all that Jim will be entering with an estimated salary of $400,000 (as quoted in Peter’s article), or 40.4% above Joe’s $285,000?

    You’ve said it many times that effective executive leaders are worth their weight in gold and then some, but is a 40.4% increase, leaving all “competitive compensation” arguments aside (which we add know you abhor), really fair for an unknown and intrinsically risky appointment?

  2. Thank you for the comment execcomp. I didn’t mention the $400,000 annual compensation figure reported in the Inquirer because it isn’t confirmed. Furthermore, Peter clearly mentions that the figure he reports is estimated, generic, and from unofficial sources.

    Fortunately, everyone will know soon enough what Jim’s annual compensation figure really is once the organization files the relevant IRS Form 990. As such, until then I won’t speculate on Jim’s salary any more than I speculated on Marin Alsop’s unofficially reported near seven figure salary: because it isn’t confirmed.

    Regardless, in both of those cases it will be painfully obvious whether or not the individuals in question are performing to a level which justifies their compensation.

    I would also argue that Jim’s appointment isn’t risky nor unknown in the way you imply. Compared to the current crop of orchestra executives, I think he clearly stands out as a good choice. In my opinion there were only two managers out there capable of the carrying out the necessary building work the Philadelphia Orchestra requires. Fortunately for their respective organizations, both of those individuals are smart enough to stay where they are (and where they are still needed).

    Jim’s nonprofit work record is well known and his philosophy is widely available through his published writings. His only relevant deficiency is a lack of experience dealing with orchestra CBA negotiations, which is covered in my article. If Jim follows some of the above advice then he (and the organization) should get along just fine and a new era will rise for the Philadelphia Orchestra.

  3. Sorry Drew, I feel as though you missed addressing the crux of my question on executive compensation.

    Regardless of if Jim’s compensation is $800,000, $400,000, or even $300,000; it will very likely be more than a 3.6% increase above Joe’s $285,000.

    Looking through the executive compensation goggles that you used to judge Joe, do you feel that this Jim’s salary will justified and if so, by what means (assuming, for now, that his salary will be greater than 3.6% above Joe’s)?

    How do you figure the POA’s board can accurately determine fair compensation for such an unconventional appointment?
    1. Make it relative to his salary at Eastman?
    2. Make it relative to his predecessor’s salary?
    3. Make it relative to similar positions in the field (Peter notes that $400,000 is “half of what some others make at top American orchestras”)? This route presumes use of the “competitive compensation” theory. If this is the case, will you, on principal, be as opposed to Jim’s salary (once we know what it is) as you have been with others in the past?
    4. Some other means?

    It seems to me that we have an excellent opportunity in light of these developments to reexamine the issue of executive compensation during or immediately after the decision process, as opposed to looking back far down the road.

    Can you simply call Jim and ask him what he and the POA have agreed to and take it from there?

  4. No need to apologize execcomp, as Jim Undercofler’s actual compensation figure is unknown the best anyone can do at this point is speculate. As such, having a sincere discussion about Jim’s salary and the process behind setting it is fairly unproductive for the time being. Once some verifiable figures become available, that discussion should be more fruitful.

    As to whether or not Jim decides to disclose his annual salary is entirely up to him. If I ever see the day where an organizational spokesperson releases the compensation figures for their administrative superior without that superior’s approval, then I’ll assume I’ve been cryogenically frozen and brought back to life a few thousand years from now.

    Nevertheless, back to your points, it isn’t reasonable to compare the salary Joe Kluger earned and the salary Jim Undercofler is assumed to earn simply because they haven’t done the same job yet (not to mention we don’t know the latter salary figure yet).

    In Joe’s case he accepted a raise when a large portion of remaining staffers were compelled to accept freezes or cuts and while he was simultaneously pushing for the players to accept major concessions. Add to that the fact that the organization was in serious financial trouble and it wasn’t difficult to see that Joe wasn’t apparently performing up to standard regardless of his pay. The fact that he accepted a pay raise at that particular time served to enhance the administrative shortcomings and misplaced board priorities during that same period.

    In Jim’s previous work experience, he has demonstrated a tremendous amount of success in environments which were every bit as financial tenuous as the POA’s in recent history. As such, I would be surprised if he didn’t experience as much success in this new endeavor. I would also be surprised if finding himself in a similar situation as Joe in 2004, Jim would accept a pay raise while simultaneously attempting to force the musicians into concessions. Let’s all hope that behavior will become extinct in 2006.

  5. Re the supposed $400K compensation: We have just received the annual “Wage and Conditions of the Symphony Orchestra” published by ICSOM. This is the first year that I recall that MD and ED salaries are included. Relevent to the present conversation, on average (discounting the Met and NY City Opera), the compensation for ED is 4.75 X Scale. The orchestra which falls at the midway point of the table (not all orchestras made ED compensation available) is Nashville, whose ED is compensated at $150,000, or 3.8 X Nashville Scale. If you apply the same formula to Philadelphia, the $400,000 (again, speculating) would be well justified, and even below where it might be (which is, according to the table 4.75 X $109,200) at $518,700. The discussion of ED compensation obviously has no end, I just thought I might present some of my numbers here which are, again, just my own casual calculations. The other “biggies”:
    NY Phil: 7 X Scale = $750,000;
    Cleveland: 6.2 X Scale = $655,836;
    LA Phil: 7.6 X = $852,940;
    Chicago: 3.7 X = $391,667 (MD is at 18.4 X Scale!).

    Drew’s point about the raise with Kluger is how horribly timed it was in light of what was going on elsewhere with the organization. I couldn’t agree more – nothing hurts an orchestral musician’s self-esteem and beliefs in the organization itself than when you hear of situations like this.

  6. As a reminder to folks that may not be regular readers: you can find a detailed annual compensation report for ICSOM & ROPA ensembles here at Adaptistration. Just do a search for “2005 Compensation Report” and you shoudl find direct links to all of the articles.

  7. Today’s entry has been occupying my thoughts a bit – I have been doing some investigating on ED compensation. For the record, I don’t have a problem with high compensation for great EDs. It occured to me that Jim might be underpaid. Of interest to me was something that came up in the old interview with Kruger that you had a link to: the somewhat disturbing practice of CEOs who say “Yes, I make X, but I give a lot of it back every year.” Drew, I’m wondering if you have written anything on the subject previously? The other question I have is whether EDs of orchestras ever have a contract tht is incentive-based, and what kind of incentives might make it into a contract – or does that not exist in the music world?

  8. Those are all good questions Martin. I have touched on those subjects a bit within the context of other articles but I honestly can’t remember if I’ve written an article dedicated to the issue (one of the features I would like to include one day at Adaptistration is a category based archive).

    Nevertheless, ED contracts vary greatly from one individual to the next. I think people would be surprised and intrigued to learn about the sort of clauses some of those contracts contain. On the surface, some of the terms seem quire silly, not unlike certain clauses in musician CBA’s. But once you know the background story, they make complete sense.

    For example, I’ve known more than a few ED’s who require that their contracts contain language that provides for an escape clause if the board attempts to make them downsize the organization (either in part or to a set figure). I would consider that a good clause although many boards don’t look at it too kindly.

    Incentive based contracts are quite common; the trick (of course) is what sorts of incentives are offered and what basis is used to determine success or failure.

    I’ll definitely put this issue higher up on the (seemingly endless) to-do list for future Adaptistration articles.

  9. So isn’t Prof Undercofler also accepting 2 jobs, CEO & President, which is the first time that the jobs will be held by the same person? That should justify a significant increase in pay given the responsibility….and should be a savings overall than having 2 people….

  10. NOLAnwGOLD: Actually, quite a few orchestras have converted the position of Executive Director to President & CEO. Although there are some organizations that have experimented with having separate individuals fill each of the billets of president & CEO respectively, it isn’t a common practice.

    Are you perhaps thinking of COO or CFO positions?

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