A Cultural Military-Industrial Complex?

The 7/23/2008 edition of the Philadelphia Inquirer published an article by the ever sharp Peter Dobrin which revealed that former Philadelphia Orchestra President, Joe Kluger, continued to receive compensation from the organization after his departure. Although deferred compensation and severance pay are nothing new, Dobin noted that Kluger’s compensation focused more on consulting fees…

“After stepping down as president on Aug. 31, 2005, Kluger continued to draw a salary from the Philadelphia Orchestra Association, receiving $313,000 in compensation – $169,000 in the year immediately after his departure, and $144,000 the next year…even when first a temporary and then a permanent successor were in place and being paid.”

It is always heartening to see a major newspaper focus on issues of nonprofit executive compensation and Dobin’s article does exactly what good piece of unbiased reporting should do: present the known facts as best as possible and let readers formulate their own opinions. According to the article, Kluger provided some explanation behind the consulting connection to his compensation:

“My agreement with the orchestra provided that if I decided to leave, I would be available to them as a consultant for two years,” he said in an e-mail. “The reasoning behind this was that, given my central role there for 20 years, they would benefit during the transition period from my extensive knowledge and institutional memory.”

Kluger said he “provided advice on a variety of matters to musicians, board and staff. Although the amount of contact was obviously greater at the beginning, I have continued to receive requests since I left the orchestra three years ago.”

Granted, institutional knowledge certainly has a degree of value but by Kluger’s reasoning, the orchestra should be paying retired musicians at rates comparable to his recent compensation. This means former Philadelphia Orchestra principal tuba, Paul Kryzwicki, should be receiving a consulting contract in the mail anytime now requesting him to impart his 30+ years of institutional knowledge to his replacement, uber-tubist Carol Jantsch (don’t hold your breath Paul).

Certainly, it would be interesting to have some examples of the sort of institutional knowledge Kluger is referring and one would hope it is something profound as his replacement, Jim Undercofler, is a highly accomplished and connected arts executive who is credited for much of the success in bringing the Eastman School of Music back to the status of first tier music conservatories. Indeed, Undercofler has arguably more arts management experience than Kluger and one might find it difficult to imagine conditions where Undercofler would require
$313,000 worth of consulting services from the executive he replaced.

Ultimately, this issue is perhaps a representative example of a growing trend among orchestra executives who focus more on crafting post-employment compensation packages more toward validating consulting credentials and away from traditional severance payments (disclaimer: take that with a grain of salt as it is coming from an orchestra consultant).

When talking about this issue with some of the managers here at Area-51* one of the interns chirped up to say that the US orchestra business resembles the American Military-Industrial complex he learned about in college.

You have to appreciate the clarity of youth…

*the name I use for the location of my overseas work project.

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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1 thought on “A Cultural Military-Industrial Complex?”

  1. Great article, Drew.

    What you didn’t mention is that the costs of these new business models are borne by both ticket-holders and donors. The risks, of course, are shouldered by the orchestral musicians themselves, who are the ones who will suffer the most if these new executive compensation models result in shortfalls elsewhere on the balance sheet.

    Indeed, I’m an advocate of paying an executive what they worth based on results and not simply effort but the new trends in high expenditures directed toward former executives while a replacement is in place is something worth watching. ~ Drew McManus

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