Tensions Build In Philadelphia Orchestra Negotiations

One item we missed last week was an article about growing tensions in the Philadelphia Orchestra Association (POA) collective bargaining negotiations. Written by Peter Dobrin and published in the 9/8/2016 edition of the Philadelphia Inquirer, the article provides a glimpse of what’s happening at that orchestra’s bargaining table.

The article has a few items of note worth pointing out:

The Kaiser Report is an expensive dust collector.

The contract about to expire is an unusual one-year deal agreed to while arts consultant Michael M. Kaiser of the DeVos Institute of Arts Management at the University of Maryland was engaged, at the behest of the musicians, to develop a report on the orchestra’s operating difficulties and opportunities.

That report has not been adopted by the orchestra’s board, but its findings are being considered as part of a strategic plan that is being developed, said orchestra executive vice president for institutional advancement Matthew Loden.

It’s good to see Dobrin keep this item on the front-burner. The more transparency, the better as the organization’s leadership needs to address some of the reports more pressing observations related to fundraising performance.

Compensation double standards.

When questioned about the potential for the orchestra to remain competitive with the base musician salary compensation levels included in the association’s most recent offer, the article quotes POA executive vice president for orchestra advancement, Ryan Fleur, pivoting to a reply that questions the relevancy of international competitiveness.

Asked whether Philadelphia was still able to compete for the best players, Fleur said, “We’re very focused on the right solution for Philadelphia, and our benchmarks are very much about the relevance the Philadelphia Orchestra brings to Philadelphia. We are committed to the highest level of excellence for this ensemble. We are a destination orchestra, and we continue to be a destination orchestra.”

But what’s good for the goose is apparently toxic for the gander as the orchestra maintains very different standards for setting executive compensation. In that context, national competitive benchmarks are the foundation for establishing executive tier compensation.

According to the POA’s FY 2013 IRS return, the orchestra abides by the following policy for setting executive compensation (Explanation; Form 990, Part VI, Line 15).

The Philadelphia Orchestra association undertakes a thorough process to ensure that the executive compensation it pays to its top management officials and all of its officers and key employees of the Association is reasonable given the market in which the Association operates In relevant part, the Board of Directors has established a Human Resources Committee of independent persons that have no personal interest in the proposed compensation agreements With respect to the CEO, The H/R Committee Chair and several other independent members of the Board, including the Chair of the Board, contracted with a search firm to assist in the identification and selection of the CEO The outcome of this process, including comparable compensation data, gathered by members of the Committee was presented to the full Board Documents, emails and other writings created contemporaneously were used as the basis for the selection and compensation decisions With respect to hiring and compensation decisions for other key personnel, the CEO contracted with a search firm to assist in the identification and selection of the key personnel There is also a full-time Human Resources Department supporting this function and the Association receives regular compensation data in connection with its ongoing membership in The League of American Orchestra service organization The outcome of this process, including comparable compensation data, gathered by the CEO with the assistance of the search firm was described to the independent Chair of the Human Resources Committee Documents, emails and other writings created contemporaneously were used as the basis for the selection and compensation decisions.

The organization has a history of controversial executive compensation decisions, many of which have been examined by Dobrin over the years.

It will be interesting to see if the stakeholders manage to avoid a work stoppage. Time will tell.