The Economic Challenge: Emotional Reactions Will Not Help Us
In last week's blog I shared some thoughts about the current economic turmoil that we are experiencing. And because this appears to be one of the most serious downturns that most of us have experienced, I think it is important enough to continue thinking about this week.
We cannot know the depth of the impact that this recession is going to have on orchestras. We don't even know the depth, or duration, of the recession. We do know that orchestras have historically survived recessions, and for the most part survived them better than many might have expected. But that absolutely does not mean we can be blasé about this one; it could be worse than many previous ones.
Last week I wrote about the need to approach budget revisions carefully. Willy-nilly cutting of expenses, without regard to its impact on revenues, can result in a lower operating budget but not necessarily a smaller deficit.
In this column I want to focus on the longer-term, and perhaps more major, decisions that orchestral organizations have to face in times like these. Sadly, I have seen emotions take over in times of financial pressures--emotions on all sides. Boards can have an immediate emotional reaction that "we simply have to downsize the orchestra." Musicians can have an equally emotional reaction that "we will not give up our hard-won gains." Management can sometimes feel caught in the middle of those forces. Historically, downsizing the orchestra has been shown to be usually an ineffective way of improving its financial condition. It often results in revenue losses that were unpredicted when the exercise was started. But please note that I said "usually." There are certainly exceptions--particularly where an orchestra may have gotten bigger than its community can support. One also has to note that "downsizing" has many variations and degrees. Yes, it is too often a simplistic and ineffective approach, but that does not mean that it might not hold an appropriate answer for a particular orchestra. Similarly, "holding on to those gains we fought so hard for" may sound like a great rallying cry, and one can understand it, but it is as simplistic a motto as "just cut the size of the orchestra." This is not going to be a time for simplistic solutions.
The healthy organization will be the one that is best equipped to deal calmly and rationally with the situation, and to plan for solutions that do the least damage to the cultural treasure that is the orchestra. Everyone needs to remember that whatever their role--board, management, musicians, volunteers--they are the custodians of a public trust, and their biggest responsibility is to turn it over to future generations in as healthy a condition as they can.
I have long been an advocate of serious, meaningful musician involvement in the governance of orchestras. The idea that it is the musicians' job to play the notes, and the board's and management's job to bring in the money, is, in my view, wrongheaded in the extreme. For one thing, there is the responsibility of determining how to spend the money--how to allocate resources. An organization with silos is simply going to have loud voices from each silo urging that the money be spent on enhancing their silo. An organization that has all of its stakeholders on the same bus (to use Jim Collins's analogy), in the right seats, and agreeing on the direction of the bus, will be an organization much better equipped to weather storms.
Depending on circumstances, some organizations may in fact have to face major change. Others will have to face change on perhaps a less severe level, and still others will weather the storm more easily. But the degree and nature of those changes is something that must be approached in a balanced, intelligent manner with input--meaningful and thoughtful input--from all quarters. Emotional, thoughtless budget cutting never works; it can scar the organization for life. Boards that take a simplistic "just cut 10 percent out of each department's budget" approach are being intellectually lazy, and probably fiscally irresponsible. When raising money is more difficult, making significant cuts in the development department's budget may possibly be the single worst thing one can do.
One of the difficulties we are going to face as we go through this economic storm is that there are no easy answers, no magic pills. Every orchestra's situation is different, every organization's internal culture is different, and every community is different. Catch-all answers and simplistic approaches simply are not going to work.
It is crucial to the sustainability of any orchestra that its organization approach these times with intellectual rigor; a willingness to examine all received wisdom and handed-down "truths"; emotional distance; and careful analysis of data. And the approach needs to be organization-wide. We are in these stormy seas together. And planning to stay afloat in them together, as a complete organization, is the most likely way to success.
Last week I wrote about the need to approach budget revisions carefully. Willy-nilly cutting of expenses, without regard to its impact on revenues, can result in a lower operating budget but not necessarily a smaller deficit.
In this column I want to focus on the longer-term, and perhaps more major, decisions that orchestral organizations have to face in times like these. Sadly, I have seen emotions take over in times of financial pressures--emotions on all sides. Boards can have an immediate emotional reaction that "we simply have to downsize the orchestra." Musicians can have an equally emotional reaction that "we will not give up our hard-won gains." Management can sometimes feel caught in the middle of those forces. Historically, downsizing the orchestra has been shown to be usually an ineffective way of improving its financial condition. It often results in revenue losses that were unpredicted when the exercise was started. But please note that I said "usually." There are certainly exceptions--particularly where an orchestra may have gotten bigger than its community can support. One also has to note that "downsizing" has many variations and degrees. Yes, it is too often a simplistic and ineffective approach, but that does not mean that it might not hold an appropriate answer for a particular orchestra. Similarly, "holding on to those gains we fought so hard for" may sound like a great rallying cry, and one can understand it, but it is as simplistic a motto as "just cut the size of the orchestra." This is not going to be a time for simplistic solutions.
The healthy organization will be the one that is best equipped to deal calmly and rationally with the situation, and to plan for solutions that do the least damage to the cultural treasure that is the orchestra. Everyone needs to remember that whatever their role--board, management, musicians, volunteers--they are the custodians of a public trust, and their biggest responsibility is to turn it over to future generations in as healthy a condition as they can.
I have long been an advocate of serious, meaningful musician involvement in the governance of orchestras. The idea that it is the musicians' job to play the notes, and the board's and management's job to bring in the money, is, in my view, wrongheaded in the extreme. For one thing, there is the responsibility of determining how to spend the money--how to allocate resources. An organization with silos is simply going to have loud voices from each silo urging that the money be spent on enhancing their silo. An organization that has all of its stakeholders on the same bus (to use Jim Collins's analogy), in the right seats, and agreeing on the direction of the bus, will be an organization much better equipped to weather storms.
Depending on circumstances, some organizations may in fact have to face major change. Others will have to face change on perhaps a less severe level, and still others will weather the storm more easily. But the degree and nature of those changes is something that must be approached in a balanced, intelligent manner with input--meaningful and thoughtful input--from all quarters. Emotional, thoughtless budget cutting never works; it can scar the organization for life. Boards that take a simplistic "just cut 10 percent out of each department's budget" approach are being intellectually lazy, and probably fiscally irresponsible. When raising money is more difficult, making significant cuts in the development department's budget may possibly be the single worst thing one can do.
One of the difficulties we are going to face as we go through this economic storm is that there are no easy answers, no magic pills. Every orchestra's situation is different, every organization's internal culture is different, and every community is different. Catch-all answers and simplistic approaches simply are not going to work.
It is crucial to the sustainability of any orchestra that its organization approach these times with intellectual rigor; a willingness to examine all received wisdom and handed-down "truths"; emotional distance; and careful analysis of data. And the approach needs to be organization-wide. We are in these stormy seas together. And planning to stay afloat in them together, as a complete organization, is the most likely way to success.
November 7, 2008 10:02 AM
| Permalink
