When the housing bubble fueled economic downturn hit, we heard a great deal about the concept of shared sacrifice. This is where one group of stakeholders won’t be asked to make larger concessions than others.
While the concept was implemented with varying degrees of sincerity, groups that engaged in a meaningful approach to shared sacrifice tended to reap the benefits of improved relations and accelerated recovery.
As COVID-19 layoffs and furloughs accelerate, examining the why and how connected to those decisions is critical to understanding underlying strategic decision making.
It’s no secret that sudden shortfalls in earned income are causing cash flow problems. One of the first casualties from that cash crunch is payroll.
Let’s assume an orchestra has enough cash reserves to make the next three payroll periods, but only if everyone accepts 75 percent of their expected pay. Assuming union employees grant waivers, the most straightforward approach for implementing shared sacrifice is asking everyone to accept 25 percent less pay.
But what if there’s only enough cash to cover 15 percent of expected pay?
Employees earning $1000/week would only receive $150. In some states, the employee could earn more by drawing unemployment.
In that scenario, a better path toward shared sacrifice could include laying off a portion of the workforce that qualifies for those benefits. That leaves plenty of numbers to crunch in order to balance the equation but it’s worth keeping those scenarios in mind.
Having said that, questioning executive leaders unwilling to provide enough transparency to determine how cuts unfold is one of the best methods for safeguarding against any attempts to behave opportunistically.
In a positive sign, there are instances of stakeholder groups acting on their own to institute shared sacrifice.
Case in point, the Chicago Lyric Opera Orchestra Musicians issued a press statement on 3/19/2020 announcing a decision to forego full pay in order to reallocate those payroll funds toward extra musicians who were hired for the current Ring Cycle production, but were informed by the employer they would not be paid for cancelled dates.
Lyric Opera Orchestra Musicians Take Care of Their Own
Regular musicians vote to receive less than full pay so the savings can pay extras and stage band musicians
As COVID-19 began sweeping across the United States, the Lyric Opera of Chicago management made the heartbreaking but necessary decision to cancel Wagner’s epic Ring Cycle, scheduled to be performed three times this spring. Following the announcement, Lyric Opera management told musician representatives that the regular orchestra members would be paid for the remaining seven weeks of the season. Unfortunately, that generous offer could not be extended to the many extra musicians involved in the Ring Cycle.
In response, the musician representatives worked collaboratively with Lyric management on a solution in which the regular orchestra members would receive less than full pay, with the savings allocated to extra and stage band musicians. Yesterday, the regular members of the Orchestra unanimously voted to approve that solution, thus ensuring that all musicians will receive a weekly paycheck through the end of the previously scheduled Ring Cycle performances.
The Musicians of the Chicago Lyric Opera Orchestra consider the 43 extra Ring Cycle musicians to be a part of their family. Allowing the extra musicians to go without a paycheck was simply unacceptable to the orchestra. For the past four years, regular and extra musicians have worked side-by-side, painstakingly preparing and performing one opera from the Ring per season in order to present the massive four-opera Ring Cycle this spring.
For the Musicians of the Chicago Lyric Opera Orchestra, the choice was clear: they must care for their entire Ring orchestra family.
As of now, details regarding those negotiations and whether the ratio of cuts between regular and extra musicians is equal or not is unknown. Queries have been sent to stakeholder representatives and updates will be posted if information becomes available.