I Answer Some Questions for Michael Henson

On 12 February, Minnesota Orchestra CEO Michael Henson testified before the Legacy Committee of the Minnesota House of Representatives. About 75% of his testimony was word-for-word identical to the one he gave at the 23 January hearing of the Commerce and Consumer Protection Committee on the effects of lockouts, so I’d like to mention I discussed that January testimony in-depth in this two-part essay, if you’re interested in reading that.

Henson’s January performance was by no means strong, but his February performance was disastrous. As soon as he was asked to answer questions off-the-cuff, he had great difficulty expressing himself. There was incredulous giggling in the audience, as well as spontaneous applause when Rep. Alice Hausman expressed her concerns. Several legislators were clearly unsatisfied by the answers that Mr. Henson gave, saying things such as “That doesn’t answer my question” and “so you’re not sure.” So I wanted to review the questions that were asked, remind everyone exactly what Mr. Henson said, and then discuss why certain of his answers were so problematic…and, when I can, answer the questions more fully.

Question 1

Rep. Phyllis Kahn (DFL) asked:

Did you give a dollar amount for the deficit?

Michael Henson responded:

It was six million dollars for last year’s operating budget.

My answer:

Yes, the deficit was six million dollars this year.

I think it’s worth mentioning that this came as a surprise to nobody in the organization. Mr. Henson knew there would be a large deficit this year…(wait for it)…in February 2009, eleven months before he testified in front of the state legislature about balanced budgets and facing the future “with stability.” From the few Minnesota Orchestral Association (MOA) minutes that have been released to the public:

If the deficit is between $3 million and $5 million in fiscal 2010, it will be of the same size range for the next two years of the musicians [sic] contract. – February 2009

In September 2009, the Minnesota Orchestral Association made a conscious decision to postpone their deficits until 2011 and 2012 so that they could fundraise more easily. In the words of the September 2009 minutes: “It would be more easy to manage two years of deficit spending than four years in our communications to the public and donors.” Graydon Royce wrote about this in the Star Tribune in November 2012.

Question 2

Rep. Mary Murphy (DFL) asked:

[Does] the six million dollars include the expenses of the lockout?

Michael Henson responded:

Um, the six million dollars referred – thank you, Representative, Madame Chair, Representative, for the question – uh, the six million dollars refers to the previous year before the lockout was instigated, so it’s last year’s full operating accounts, when we had a fully operating season.

My answer:

First off, let’s clarify the timeline a bit here. The MOA’s fiscal year runs from 1 September of one year to 31 August of the next. So the last fiscal year ran from September 2011 to August 2012. The lockout began on 1 October 2012.

Second, what exactly would you consider expenses of the lockout to be? Legal counsel? PR firms? Personal security for Mr. Henson? I’d need more clarification to be able to answer with any authority.

Question 3

Rep. Dean Urdahl (R) asked:

How much does [the lockout] cost the orchestra?

Michael Henson responded:

Uh, Madame Chair, Representative, thank you for the question. Um, we have three income streams which are, uh, contributed revenue, which we continue to fundraise for. Uh, we have earned revenue, which is box office revenue, which, uh, we quite clearly are not collecting at the moment, and we are refunding any tickets that we have sold. And we are still reliant on, ah, the investment income from, uh, the endowment. Um, first of all, I want to say that we want to get the orchestra back to work as soon as poss – we want to negotiate a contract that is sustainable for this community with its generosity, and I think the – it’s balanced on two equations, the money that we haven’t actually taken, so obviously box office, and then the money, uh, that we haven’t paid – unfortunately – because of the lockout. Uh, the reality is, uh, that we’re trying to scope the size of the organization to the amounts of generosity we have, and the unfortunate, um, uh, thing is, uh, that for each month we played beyond the old contract that we had, it would have cost us and we would have lost over $500,000 for each month we continued playing.

My answer:

Mr. Henson didn’t answer.

Independent industry analyst Drew McManus wrote on 14 February:

If there’s a better example of a non-answer retort, I have yet to find it (note the laughing toward the end). In case you missed it, Henson never actually answered the question and rest assured it isn’t due to ignorance. Instead, providing a figure would give the locked out employees an advantage by knowing roughly how long the organization can hold out before the revenue falloff becomes serious enough that the MOA would have to consider liquidating.

Personally, I’m not sure if Mr. Henson didn’t answer the question because he didn’t want to…or because he didn’t actually know the numbers offhand. But Mr. McManus has much more experience in the field than I do, so I’ll defer to his judgment.

Question 4

Rep. Dean Urdahl (R) asked:

Regarding negotiations, have you been having regular sessions? Has there been a time period now when you haven’t been meeting? What are the plans for future negotiations?

Michael Henson answered:

Um, um, we, um, had a meeting on the second of January, uh, where we, uh, presented to, um, uh, the negotiating committee from both sides our financial plans going forward for the following three years. Uh, we changed the mission statement, um, and, uh, we, uh, agreed to, uh, find common ground for joint financial analysis. Conversations have been going on for the last six or seven weeks in terms of how to reach agreement on that financial analysis, and so we are happy those conversations are going, we want to progress those as speedily as possible. Um, I feel the details of negotiations should probably be kept in the negotiating room, but we have every intent to try and move this forward as speedily as possible.

My answer:

In August 2012, the musicians asked for the financial analysis. Mr. Henson didn’t accept until January 2013. Since August, he has turned down requests by musicians to address the full board; he has refused binding arbitration; he turned down a couple offers to play-and-talk; and six weeks before the MOA agreed to it, MOA spokesperson Doug Kelley dismissed further financial analysis on Almanac as a mere “frolic and detour.” Despite everything he says, Mr. Henson is clearly not interested in “mov[ing] this forward as speedily as possible.” If he truly was interested in moving forward as speedily as possible, he would have done many things over the course of this lockout very differently. That’s a fact.

Also, Mr. Henson is straight-out lying when he says that he believes that “the details of negotiations should probably be kept in the negotiating room.” In September, weeks before the musicians’ contract expired, he authorized the Minnesota Orchestral Association to go public with the entirety of the new proposed contract without the musicians’ knowledge, saying, “We’ve had a lot of questions externally, and we’ve felt that with a month to go, without having received a counter-proposal from the musicians, that we should share this information.” I know it sounds unbelievable, given what he said to legislators, but his quote is there in the Star Tribune. Read it yourself.

I also think it’s worth saying something about the mission statement, since Mr. Henson brought it up. In November 2011, management changed the mission statement of the Minnesota Orchestral Association, and in the process, removed the word “orchestra” from it. Details here. After months of outcry, Mr. Henson finally said in January that the mission statement will revert back to the old one, plus a new clause calling for fiscal sustainability. However, it has been over six weeks and we’re still waiting on the official new wording.

Question 5

Rep. Dean Urdahl (R) asked:

How long has this been going on?

Mr. Henson responded:

Um. We locked out the orchestra on the first of October, so we are into the fifth month of this lockout. We realized this was going to be a complicated, um, negotiation, which is why we presented our first proposal on the twelfth of April, giving nearly six months for us to have conversations. Um, we are still waiting, um, to have our first counterproposal from the musicians. Um, we see by removing the barriers that are apparently were there in terms of what I say about the second of January but hopefully those removed and we can actually move to substantive negotiations as soon as possible.

My answer:

The lockout began on October first, as Mr. Henson says. The first proposal was indeed presented in April, but multiple conversations over six months were clearly unproductive, and I can assure you it wasn’t because musicians didn’t have anything to say. Here is a comparison of the few differences between the two contracts the Minnesota Orchestral Association offered, one in April, and the other in September. Between April and September there were conversations. Nothing kept the MOA from altering their proposal to reflect those conversations. Suffice it to say, the two contracts they offered are nearly identical; there are maybe ten minor changes in a massive contract dozens of pages long. Also keep in mind a counterproposal is not legally required for conversation. And also that Mr. Henson consistently refused a financial analysis that would answer the musicians’ questions in August, September, October, November, and December.

Question 6

Rep. Alice Hausman (DFL) asked:

It was a long time ago that you and I met, and I have lots of questions. Um, but the presentation still sounds very much the same after so much time, and, um, it sometimes feels to us as sort of a cold description of a balance sheet. And what I hear in the community and maybe what we represent, is this growing sense of urgency and loss and despair. This committee is about preservation of the arts, among other things, um, over and above what this community and this state usually did. That’s what people voted for when they voted for the amendment, and so those are the kinds of contributions we make. And I think this feels to so many in the community like the opposite of preservation of the arts, the destruction of the arts, by people who…who love the arts – by people who are devoted to it. But there is this sense of disbelief growing in the community as time passes by and nothing changes. The presentation doesn’t change. The words are still the same. And the one thing that haunts me in the words is as I think about this, the coincidence of timing of this lockout with the construction that feels sort of convenient. It’s a good time to have a lockout when there is construction. Especially when I heard you say we really save money with the lockout; if we were playing, we would be losing money every month. And so I think it’s – um, as we’ve heard these words, this troubling, troubling dimension to this – the timing of it, and we’ve heard some of the descriptions of, do we have a surplus that shows donors we are comfortable, or do we have a deficit that explains a lockout. So it’s this sense of loss and despair that the community feels – the sense of urgency – and yet it doesn’t feel as though that’s a shared feeling.

Michael Henson answered:

Madame Chair, Representatives. I thank you very much for the question. We are a performing arts company, a great orchestra. Uh, the board’s intent is to get the orchestra playing concerts, giving education work, um, as soon as possible, um, but we need to do that from a sustainable base. We’re 110 years old, and we have the duty to make sure that this orchestra continues for another 110 years. So we have a substantial financial challenge that needs to be overcome. We have to address that. But behind that is a passion for the arts, for music, that everybody on the board, everybody inside the company and the community feels that it’s in everybody’s interests to get the orchestra back onstage as soon as possible, but it has to be at a level that actually is sustainable, and it is at a level that this community is able to both afford and generously gives to.

My answer:

Until now, this has gone largely unsaid, but what the heck; I’ll be the first in the blogosphere to make a big deal about it. I don’t want to make this into a personal attack, but I think it’s relevant, so here goes: Wells Fargo Executive VP Jon Campbell, the chair of the Minnesota Orchestra board of directors, doesn’t go to Minnesota Orchestra concerts. I know some board members go to concerts, and I thank those individuals. But how can the powerful board members who never – or even rarely – go to see the Minnesota Orchestra have a passion for great orchestral music, or feel a personal sense of urgency to bring the orchestra back to the stage?

Also, may I submit that we simply don’t know what Minneapolis can and cannot afford, because we were never told the truth about the Orchestra’s finances…until it was too late. As recently as mid-2010 Mr. Henson was bragging about the fiscal condition of the Minnesota Orchestra to the international press. In fact, an article from Gig Magazine including the following passage was uploaded to their website in the summer of 2010:

The former Bournemouth Symphony head is strategising his way through the recession – and winning.

There’s no single strategy to beating the downturn,’ Michael Henson asserts. ‘There has to be a whole series of strategies to maintain a focused approach. The priority is continuing the excellence in the artistic work.’ With orchestras across the US hard hit by the recession – and management strategies the number-one talking point at the League of American Orchestras’ conference in June – the Minnesota Orchestra stands out as a beacon institution among the bad news…

This remained on the Minnesota Orchestra’s website…until October, when I wrote about it. Then suddenly – mysteriously – it was taken down, with no explanation.

The public was never told that there was a crisis until after the board of directors had come up with a “solution” – in total secrecy – to gut musicians’ salaries and working conditions. Why is Mr. Henson qualified to say what we can and cannot afford? He never told us what was coming. Ever. He can’t say that we wouldn’t have stepped up to help. I think it’s pretty obvious that if we’d have been told the truth over the last few years, we would have.

Anyway. I agree, Rep. Hausman…the timing was convenient, wasn’t it? The Minnesota Orchestral Association not only saves millions on musician costs, but hundreds of thousands of dollars on rental for the Convention Center. Truth speaks louder than Henson.

Question 7

Rep. Mike Freiberg (DFL) asked:

I’m wondering what the lockout is costing the average musician in the orchestra?

Mr. Henson answered:

Um, the, um… Madame Chair, Representatives. Um, the current, um, average salary, uh, that we had in the previous contract was $119,000. The current average salary that we had before negotiating any further is $89,000, um, with $30,000 on average in benefits. So we’re no longer obviously paying that salary and those benefits. That is the cost to – to the musicians. We are very aware of that – uh, we want to resolve this as speedily as possible, in terms of how we can get everybody back to actually creating music.

My answer:

I think it’s most useful to look at base salary, as opposed to average, because the increased pay of principal players will skew the numbers. In August 2012, MPR placed the 2012 base salary of Minnesota Orchestra players at $111,500. That’s $2144.23 a week. The lockout has been going on for twenty weeks. The calculation is a simple one: a player earning base has so far lost roughly $42,884, plus their health insurance coverage. Of course others have lost more.

Despite this, Mr. Henson has said, multiple times, that he has “great empathy” for musicians.

Question 8

Rep. Jean Wagenius (DFL) asked:

Mr. Henson said that there was a substantial financial challenge…and I was wondering if he was aware of this challenge when he asked for bonding money, and if he was aware of it, did he share it with the bonding committee?

Mr. Henson said:

Um, Madame Chair, Representatives. Um, when we applied for the money, the economy was in a turbulent position. We were using the endowment to stabilize the organization. We undertook a strategic planning exercise after we received the money and no one at that stage realized how volatile the economy was going to be and whether it would return quickly or slowly. Unfortunately it turned much more slowly than we expected, um, and we began our strategic planning after we had received notification of the funding in January 2010.

Rep. Wagenius was unsatisfied with that answer:

That’s not answering my question.

Mr. Henson tried again:

We, um, explained to the bonding committee at that time that we were operating on a stable financial basis, that we had presented three years of operating, um, uh, balances – uh, we had done that, and in the short term we were operating from a stable basis. Part of that stability was how do we manage the five-year contract that we have with our musicians through to 2012.

My answer:

Of course the Minnesota Orchestral Association knew there was a substantial financial challenge in January 2010. What organization didn’t? Take a moment to read these seven pages of MOA minutes, and take special note of the following sentences:

Over the next several years we may need from $15 million to $20 million in cash. The question before us is whether to show operating losses or do special draws and achieve balance. – January 2009

If the deficit is between $3 million and $5 million in fiscal 2010, it will be of the same size range for the next two years of the musicians [sic] contract. This is a serious liquidity issue, and the MOA already has $11 million in debt. – February 2009

Balances in 2009 and 2010 would support our State bonding aspirations and Guaranty Fund and BFF Campaign fundraising, while the deficits in 2011 and 2012 would demonstrate the need to reset the business model. – September 2009

Of course they knew. Don’t over-think this.

No one at that stage realized how volatile the economy was going to be…

Really? No one in January 2010 knew that the economy would be volatile over the next few years? Please. If nobody in management at the MOA knew the economy would be volatile, then they were guilty of criminal incompetence, and they have no business working at a non-profit, let alone the greatest orchestra in America. End of story.

You may also be interested in the fact that Mr. Henson is lying about the “strategic planning” only occurring after January 2010. In September 2012, he wrote in an open letter to the community that said the strategic planning to solve the orchestra’s deep-rooted financial problems began sometime in 2009. He’s quite clear about it. My bold:

Over the past three years we met regularly with our musicians and others with a stake in our future to share the clarity of our financial challenges and the road map forward outlined in the strategic plan.

I haven’t a clue if Mr. Henson shared the fact they were seeing massive financial problems with the materials he shared with the bonding committee. I’m going to go out on a limb and say he didn’t.

Question 9

From Rep. Dean Urdahl (R):

What have ticket sales done?

Mr. Henson:

Um, ticket sales last season continued to show a slight decline in classical sales. Uh, pops sales remain very stable. Um, it’s also important to remember in terms of the number of concerts that we give, uh, that in terms of Summerfest we actually saw an increase in our ticket sales as well.

My answer:

You may be interested in reading local non-profit professional Mary Schaefle’s analysis of the Orchestra’s 990s: “What We Know About the Minnesota Orchestra’s Finances – And What We Don’t.” It’s a three-part series, but the portion in which she discusses ticket sales is part 2:

Management lists declining ticket sales as a significant financial challenge. It’s true ticket revenue declined 8.3% when you compare the season ending in 2009 with 2011 (990, page 9 available on Guidestar).

Let’s turn to the words of Orchestra management to learn why that happened. In 2011, the change was “due primarily to a reduction in the number of concerts”. This refrain was repeated in the 2010 report, when a reduction in ticket revenue was attributed to “16 fewer concerts, a dropoff of 9 percent.” Mr. Henson went on to say decreasing the number of concerts was part of their financial strategy to control costs. Sure, decreasing the number of concerts means lower costs for ushers, box office staff, concession staff and many other things. But it also means lower revenue. If your financial strategy is to decrease costs through fewer concerts, but that same strategy also means decreasing revenue, do you really come out ahead?

Orchestra concerts are not the only events at Orchestra Hall. Decreases in other earned revenue, things like the Jazz series and hall rentals, were more than double the drop in classical tickets, by more than $1.3 million or 18%. We don’t know why those things decreased (interestingly, concessions showed an increase). But it makes me nervous that the new business strategy plans tobroaden “program offerings to respond to customer interest.” If the plan does rely on income that has been dropping more rapidly than concert sales, major revisions are required.

I think that was more the type of answer Rep. Urdahl was shooting for.

Question 10

Rep. John Ward (DFL) asked:

What percent of cuts and they suggested I ask you – what percent of cuts have you as a management level taken? I heard thirty, fifty percent from them. What have you taken percent-wise?

Mr. Henson answered:

Uh, Madame Chair, Representative. Um, first of all, we are in a stage of negotiations that whatever the cuts that we actually finally agree, we’ve not agreed, as part of that negotiation process with, uh, the musicians – uh, we uh, have effectively frozen salaries across the administration, uh, for the, uh, last five years while the musicians received a nineteen percent increase. We’ve cut pension contributions by forty percent; we’ve laid off twenty percent of, uh, of the management, and medical costs, uh, cost the staff twenty-five percent more than they currently cost the musicians.

Rep. Ward answered:

So you’re not sure. Okay, I’ll leave it at that.

My answer:

It is impossible to know without additional context what exactly has been cut on the administration side, and how. Keep in mind, there were some cuts in personnel that were related to the Orchestral Association leaving Orchestra Hall for the year. According to Ms. Schaefle, the biggest cuts recently were in touring costs, fees-for-service, and advertising and marketing, respectively.

However, if you’re asking specifically about Mr. Henson’s compensation, here are some numbers you may be interested in. (Numbers taken from publicly available 990s.) In 1998, the CEO of the Minnesota Orchestra received $265,000 in compensation…in 2002, $321,995…in 2006, $337,974…and in 2011, $389,861. And, lockout or no lockout, Michael Henson continues to make that. In fact, if his 2011 compensation is any indication (and we have heard nothing from the MOA it isn’t), Mr. Henson takes home roughly $1100 in compensation every single day the lockout goes on: roughly $150,000 in donors’ money so far. The Minnesota Orchestral Association has not presented a single concert since October, but Mr. Henson continues to be paid in full.

***

So. I hope that helps to clear up some things. The MOA is welcome to dispute any of the claims above. They’ve ignored me for months, but maybe now they’ll start paying attention.

I’m planning on writing all of the legislators who took part in this hearing to share my viewpoint with them. I hope you’ll consider doing the same, as it seems likely that there will be more hearings at which Mr. Henson will be asked more questions, and I think the lawmakers deserve to have as many facts as possible at their disposal as they decide how exactly they want to move forward.

You can contact the members of the Legacy Committee here – and the members of the Capital Investment Committee here.

18 Comments

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18 responses to “I Answer Some Questions for Michael Henson

  1. Amy

    There was a job posting on the Minnesota Orchestra website for a new position in the marketing department, related to coordinating the use of Orchestra Hall. The job is no longer posted, so I don’t know if it was filled…but I was struck at the time that there were already SEVENTEEN distinct members of the marketing department alone, and it seemed grossly out of place to expand an already large department DURING A LOCKOUT. Norman Lebrecht wrote a post about it:
    http://www.artsjournal.com/slippeddisc/2013/01/minnesota-orchestra-is-still-hiring-musicians-need-not-apply.html

  2. Edward Richardson

    Can I ask one small question?

    I’d like to think that I am a neutral observer of this dispute (I am not a resident of MN, I am using this dispute as a case study for a course a business school). I’m assuming management has a doomsday scenario for their position–i.e. every claim is specious and an arbiter gives the musicians $120, 000 base plus other stuff.

    Does anyone know what the musician’s may have for a doomsday scenario? Let’s say the analysis shows a loss exactly as stated, a feasibility study comes back with bad news that the community is tapped for donations, and a marketing study shows that classical concerts in the future are a diminishing return on investment. What do the musicians do then?

    The fact that both sides are refusing to come to the table–preemptive rebuttal, I know the musicians are waiting on the financial analysis amongst other reasons related to not being classified a strike and losing certain advantages–and are instead indulging state legislators over money that, at best, is a tiny part of the organization budget and is earmarked for a renovation disturbs me. And both sides are wasting time. Arbitration and pay for play is a non-starter for this management team continuing to beat on that drum isn’t going to work. The recent history of lockouts in this country shows that the public gets behind millionaires who make concessions, and maybe dropping base to $100,000 or at least floating that idea in the press might start to loosen entrenched management positions.

    To be honest, I find it hard to completely sympathize with people who make $111k base wanting more and not explaining why more is better other than a nebulous comment about artistic quality. I’m going to assume that these musicians were awesome at a lower salary and with a giveback with incentives are going to be awesome again an earn back money through recording, touring, and trading up on reputation.

    • I don’t know if the musicians have a “doomsday scenario.” If they do, I obviously don’t know about it. I do occasionally speculate about various things on this blog, but I know zero information on that particular topic, so…

      A HUGELY IMPORTANT clarification. EVERYONE reading, LISTEN UP. The money being discussed *at this particular hearing* WAS NOT marked for renovations! The funds discussed at the Legacy Committee meeting consist of roughly $1,000,000 directed, as I understand it, toward operating expenses at the Minnesota Orchestral Association ANNUALLY. Right now that money is not being used; according to the MOA, it is sitting sequestered. This money comes from the Legacy Amendment, a program unique to Minnesota. $1,000,000 annually may not sound like much, but as industry analyst Drew McManus writes, “Government sources…[are] rarely something a group would consider inconsequential, especially when earned income is entirely, or at least nearly, nonexistent.” http://www.adaptistration.com/blog/2013/02/14/legislative-action-in-minnesota/

      If this money is re-directed toward the expenses of musicians putting on concerts – a very real possibility – that not only squeezes the Minnesota Orchestral Association’s finances, it relieves the musicians and presumably will enable them to hold out longer, because right now they’ve been paying to mount their own shows. It also provides a psychological and emotional boost, to know that government officials are behind them. It’s hard to underestimate the impact of those. It may also affect discussions happening behind the scenes.

      The representatives haven’t said it outright, but I personally feel that they’re interested in this not only for what it is, but as an example to other non-profits (or maybe even for-profits!) seeking government funding. I’d think they’re wanting to send a message: don’t misrepresent your position to us, or it will come back to haunt you. Don’t take millions from us and then engage in actions that greatly harm the state of Minnesota.

      The $14 million in state money for the renovation has already gone out. I’m not sure if the MOA has received and spent it yet, but Rep. Kahn confirmed at the last hearing that they are not able to recall it. I don’t know what the status of it is.

      Last, remember that salary is clearly not the major sticking point here. It gets the most press, because it’s a concrete easily digested figure. But keep in mind that a major portion of this battle is over working conditions, and the internal culture of the Minnesota Orchestral Association’s management. If management had proven itself to be trustworthy in the past, I believe the musicians would have taken cuts, and very possibly major ones. Here’s an example of the stuff that are major, major sticking points. http://www.polyphonic.org/2012/10/18/the-rest-of-the-ugly/ Keep in mind that was written by someone within the industry who is independent of either side in the Minnesota conflict.

      Also keep in mind, if you didn’t know already…every single major orchestra in the United States is watching this conflict. The way these past two years shook out…if the Minnesota Orchestra musicians “cave”, managements at other major orchestras all across the United States will be very, very tempted to try many of these same tactics. Heck, they’re probably emboldened enough already. We’ll see. But if the Minnesota musicians don’t meet in the middle, and get *something* out of this, then…you can imagine.

      Are you coming at this conflict from a for-profit background? I think it would be best for you to look at this from a non-profit perspective, and even better, an orchestra business perspective. There are many many quirks unique to this industry. Conventional wisdom in the business world is not easily transferred over here, for a variety of reasons…

      *shrug*

      Just my two cents, as someone who has watched this conflict since August.

      Best, Emily

    • Oh oh oh, and by the way, Edward, do tell me what school you’re at? Are we being studied? Where? How? :)

    • Tamara

      Here’s my big problem with your comment and question, Edward Richardson. “. . .not explaining why more is better other than a *nebulous comment about artistic quality.*” (My emphasis)

      A “nebulous comment about artistic quality?” What is an orchestra FOR? It’s not for making money; it’s for making *music* and what is the point of doing that if it isn’t going to be terrific and of the highest quality? If you are making and selling tee-shirts, and you figure you can get away with making cheap ones because you’ll still be able to sell them for lots of money, and hooray, that’s more profit for you, then okay. Go ahead. (I’m not saying I’ll have any respect for you in the morning, but whatever.) But the reason the orchestra exists is to perform great music that speaks to our souls because we (let’s define “we” as “the people who want an orchestra,” and there are plenty of them in Minnesota) believe that this heritage of orchestra music is worth preserving and passing on, that it is good for society, that it is valuable in a way that has nothing to do with money.

      You want to bring the community together to mourn after a tragedy (for example)? I recommend an impassioned performance of Elgar’s “Nimrod” Variation. You play it out of tune, or with ugly sound, or just. . .boringly. . .and it’s not going to have the same cathartic, healing effect for everyone. It’ll just sound bad. You don’t have to know anything about music, or know why a piece of music would have a strange name like “Nimrod,” to get the difference between a great performance and a blah, boring performance. You’ll feel it in your gut. The great one will move you to tears and the blah one will leave you cold.

      So anything that erodes the artistic quality of an orchestra is eroding the very reason for the orchestra’s existence. There IS nothing else, for an orchestra. If you don’t understand that, then you’re missing the most basic fact about the whole situation.

    • Sarah

      Who exactly are these “millionaires”? The banksters and lawyers on the Board prattling on about “reset business model” and “fiscal responsibility?

      And how about CEOs and managers who were “awesome” at a lower salary? Why do they deserve a raise for trashing a company?

      No wonder the economy of this country is in the toilet.

  3. Edward Richardson

    In answer to you question Emily, this case is part of a study several mba/jd students are doing at my school. I’d rather not say publicly as we’re submitting our eventual study to some academic journals for consideration. On the off chance we’re published, I’ll let you know.

    As to your response, thanks for the info. Part of our study–at least my portion is reviewing public reaction to labor strife as a way of adding the “human element” to an otherwise dry and number specific type of paper. It is interesting to see effects of a lockout on a public that is not related to your standard sports lockout or blue collar union strike/lockout. And since management–no matter the situation–is silent in these situations public reaction plays as an interesting counter to dry press releases.

    And to Tamara: I understand artistic quality and the passion with which you defend it. I hope you understand that artistic quality is also based on opinion. Current opinion rates your orchestra as one of the best. If you can tell me exactly why they earned that distinction, the factors that lead to this orchestra being the best I’m happy to hear them and better understand the situation. As it stands, what is stopping the Orchestra management from hypothetically crushing the musicians, taking the savings, and dumping $10 million on Michael Tilson Thomas or the Venzuelan guy in LA to make the orchestra “better?” Sorry for being flippant about my hypothetical but I’m at a loss as to how spending a large sum on an excellent conductor/music director isn’t the best route to expanding the quality of an orchestra? The way I see it with my cold business eyes is that it is remarkably more efficient to spend the money on an excellent conductor then it is to spend on musicians. The MN orchestra’s own history shows that when the current conductor used his obvious immense talent to spot, acquire, and train this crop of musicians magic happened. As a wannabe manager that is a remarkably efficient use of time, money, and talent that appears to be repeatable. And I think that may be the biggest gap in understanding between the two sides: one wants the magic to last because it may be fleeting and one thinks the magic is repeatable.

    • John

      Edward,

      To be clear, this dispute is not about wanting more –

      Mr. Henson made clear in his MPR interview that even meeting in the middle between the management’s offer and the musician’s present contract is not acceptable. This leaves only the ability to bargain the severity of the cuts you are going to take- and that really isn’t good faith bargaining. As a “wannabe manager” I would urge you not to use this as an effective model.

      It doesn’t sound like there are any “incentives” that you mention that will allow the orchestra to remain a top tier orchestra in the current proposal. The MOA is only interested in running a hall with a back up band for pops acts. Please read some of Emily’s earlier posts for a clear picture of what is really going on.

      As to your second point about spending money on music directors that will somehow miraculously transform an orchestra- you obviously have not had any experience with how an orchestra functions. Part of what has made the Minnesota Orchestra of 2013 great are the musicians hired by Skrowaczewski, Marriner, de Waart and Oue as well as Vanska. The musicians themselves also have a great deal of say about who is hired into their orchestra. Vanska inherited an fantastic orchestra that was ready to give it’s all, and that collaboration led to the artistic success the orchestra has enjoyed in the past 10 years.
      You could put the greatest conductor in front of a group of students or amateurs and it will never sound like the Minnesota Orchestra. The “magic” here wasn’t fleeting- it is being intentionally destroyed.

      At this point I doubt whether any conductor with a world class reputation would want to having anything to do with this organization regardless of the amount of money that would be thrown at him or her.

      Unfortunately, the board leadership and management of the Minnesota Orchestra don’t understand these points either.

    • PAK

      No offense to the BBC Scottish Symphony, which I heard and enjoyed in a fine concert at the Troy [New York] Savings Bank Music Hall, but nobody ever suggested that they sounded like the greatest orchestra in the world, even after years of Vänskä’s spotting, acquiring, and training.

    • Anon

      A conductor builds his team of players and conducts them. Musicians play. It’s takes both (and more) working together to make an orchestra, and all of them playing at the top of their game to make something worth paying money to go see.

      To put it another way. A manager organizes the workforce to meet time and funding obligations and constraints. Workers work. It takes both managers and workers working together to make a business viable, but it takes all working at the top of their game towards being successful to make that business actually successful.

      You show a shocking lack of understanding of business with regards to managing a workforce, considering your future MBA and you only compound that by applying your understanding of it to the MO. I don’t mean any disrespect, it’s just stunning to me that your point of view is so extraordinarily limited that you don’t get that other people’s talent can bring out and enhance your own, innate, talent and that to be the best manager or conductor you can possibly be, you have to be able to understand that people are not simply cogs in a clockwork or players in a fantasy league sports team, but much, *much* more.

      I hope you can come to understand that some day. I truly and honestly do, for your sake and not mine. (And my apologies if the above comes off as some huge rant.) :)

  4. Elizabeth Erickosn

    To Edward Glad you are looking into this situation.
    From my perspective, a big part of the problem has to do with a board full of bankers, MBA and JD types; who kind of like the orchestra and going to the annual ball, but don’t have the slightest idea about how artistic excellence is developed or maintained. There are many assumptions you make that need to be addressed. But I will focus on one of them. ” The MN orchestra’s own history shows that when the current conductor used his obvious immense talent to spot, acquire, and train this crop of musicians–magic happened” It’s difficult to know where to start with this statement. Osmo is an immense talent. But your statement sounds like you think he came here to turn a bunch of rag muffins into a world class orchestra. I could not give you the exact numbers but the VAST;majority of musicians of the orchestra were here before Osmo came. Many of the principal players, who stand to lose the most in this insanity, have been here for over 20 years. This was a very good orchestra before Osmo came on board or he would have never come here. “…to train this crop of musicians” As a musician, this statement is unbelievably offensive. A considerable number of musicians were “trained” 30 years ago at Julliard, Indiana, Eastman etc.etc. but there is no one in the MN orchestra who is “IN TRAINING”. Osmo accurately saw the potential of a very good orchestra that was already solid from years of playing together and has worked tirelessly for 10 years, along with the musicians, to become a world class orchestra. This orchestra has been painstakingly build over decades; one player at a time. There is no such thing as “a crop” of musicians unless you are referring to a middle school orchestra. So it ain’t really magic if it takes 30 years of hard work to achieve this incredibly cohesive and brilliant level of playing. The thought that this “magic” can be replicated in less than 10 years if management gets their way (bringing in cheap labor) is absolutely absurd.

  5. Performing Artist52

    Mr. Edward,
    To my knowledge the musicians have NEVER asked for more when it comes to salary. I do not know where you are getting that information. A big part of the picture also has to do with the working condition changes the MOA is proposing. When Mr. Henson and the managerial/administrative staff agree to a 30-50% pay cut then perhaps they might be taken seriously as to their intentions to “save” the orchestra.
    Thank you Emily, Elizabeth, John and Tamara for your honest and knowledgeable responses.

  6. Vipunen

    Edward,

    Interesting questions. You mention your background is in business, not arts (or non-profit) management, so let me put this into a parallel framework–a major league sports franchise. Per your analysis, it would do the owner more good to not hire good players, but to throw all available resources into a top-notch coach. Would that work? Would the Vikings succeed by spending all their money on a coach, and fielding college players who work for less? A coach can only do so much. Like an orchestra, success for a sports team has to be achieved with everyone playing a part, and *doing* their part as they all work in tandem toward a shared end. Of course, there are many ways to define success for the sports team–most obviously, winning the Super Bowl, but also winning the division, or a host of other metrics. To push the analogy further, it would be like the owner defining success entirely on revenue raised at the stadium, and ripping out “normal” seats in favor of expensive boxes, placing surcharges on food or drinks, or putting games on pay-per-view. Their definition of success would work for them, but obviously raise hackles in the community at large, which could impact public funding, ticket sales, advertising, and such.

    For your exercise, it might be useful to look at how successful orchestra have measured success. Or other industry leaders… by it’s very definition a non-profit won’t be exclusively measured by financial success, even though all want to be financially sound.

  7. Edward Richardson

    I’d like to respond to several of you, but first can I say that you are all being very considerate with your responses. I know my remarks can be taken as inflammatory–I don’t think that they are written in that spirit at all, but I can also see that this is a sensitive issue for everyone here so I can understand if my comments rub people the wrong way. I’d like to thank everyone for making this is painless as possible for me, all things considered.

    Now for a somewhat measured response to some of the comments:

    I’d like to clarify my point earlier about the efficient use of funds. I still am under the belief that the best way to use funding for an orchestra is to spend the bulk of the money on the Music Director. As Elizabeth mentioned above, the vast majority of your musicians were present before your current Music Director was hired. Where I think my communication went awry was that the Music Director unlocked something–through hard work, selection of musical works, auditioning musicians for open slots to build depth in the orchestra, moving people in chairs (I know a ranking system exists in orchestras, but not how it works outside of the naive “chair” system from my high school music class), and working with the musicians. Whatever that something was–intrinsic to this set of musicians or not–created an orchestra with a sound that critics judge to be “world class.” That is an awesome accomplishment. From a business perspective though, it seems that the Music Director was the key component to push the talent over the top.

    To extend an analogy that an anonymous comment began, if I think of this like a sports team, aren’t I just arguing that the coach is more important than the players? My response is that the Music Director is not a coach, he is more like the General Manager of a sports team who happens to coach. This person selects, works with, and aids in the improvement of the talented players (musicians) assembled on the team. I think spending the most money possible on the best possible Music Director is an almost solid guarantee of remarkable things. Which is why I’m going to assume that your Music Director is–by far–the highest paid employee on the management team of the orchestra (Emily please feel free to correct that assumption). If he isn’t, I’ll at least privately join the vociferous complaints about salary for management because I believe that is the one position that any orchestra simply cannot skimp on.

    In general, I search for efficiency. One of the things that drew my group to this particular lockout–among many, many different labor disputes around the country, was the fact that it involved artists. There is a historical divide between artists and management. Artists view art as something that they produce that enhances the human experience. I think that is a fair way to look at art–whether I like the piece of art in question or not. Art is meant to advance/explain/comment/exist the human experience–that is the utility of art. But from the cold management perspective, the production of art lacks efficiency and a clear understanding of patronage in the traditional sense. We have no more Medicis running around Florence funding artists, no Steins running around funding Picassos, no Carnegies running around building libraries and music halls, no one of great wealth really pushing for art to be produced. Whether right or wrong, donors of all sorts provide more funding to arts than ticket buyers. And donors have limited funds to give creating a need for efficiency. I firmly believe that this is the unspoken central issue of this lockout, something that all of us in our small group are exploring–how do you most efficiently use the limited dollars of the donors with a reasonable management of existing funds to produce the highest quality art?

    Framed as a search for efficiency, you can see how all the MBAs, JDs, and management types on the board are being pig headed, stubborn, obstinate, donkey-like people. And you can see the palpable exasperation of the musicians who just want to get back to producing art being thwarted by the stubborn attitudes of the management. But the thing is, the thing that all labor disputes never realize until the end–you eventually will settle and have to go back to work with each other. Bashing the board chair is going to feel good if you are for the musicians, bashing the musicians’ lead negotiator is going to feel good if you are for the management, and bashing both sides is going to feel good if you are neutral and angry. But at the end of this painfully protracted process the management that some people so despise is going to open the doors to the venue and welcome ticket holders who so despise the musicians they will applaud after a wonderful performance.

    Just remember this…when its all over, Misters Henson & Campbell, and the rest of the board will still be sitting there because unfortunately, they are the new Medicis, Steins, Gettys, Carnegies, Mellons, and Rockefellers.

    • Terry

      There is no chance in you-know-where that the tragi-comedy known as Henson/Campbell/Davis will still be there, not if they expect to sell any tickets, ever again, to any event of any kind at Orchestra Hall. Yes, they have burned their bridges that badly with the public.

      The new Medicis, by the way, are the people of the community who love classical music, some of whom are quite wealthy and can contribute substantial amounts of money. The board just needs to come down off their throne and learn how to encourage the rest of the public to become sustaining “members” of the orchestra (see, for example, the successful Minnesota Public Radio and Minnesota Public Television fundraising activities).

  8. PAK

    Drew McManus writes about music-director compensation every year, see, for example, http://www.adaptistration.com/blog/2012/07/03/2012-compensation-reports-music-directors/ . When reading the figures there, please remember that a music director typically spends a third of the year or less with his (or her) orchestra.

    Clearly music directors are better paid than any player, although they don’t make more than ALL of the players put together.

    The right music director is not going to be an alchemist who turns random collections of professional musicians into world-class orchestras. Still, several world-renowned and well-endowed American orchestras have had difficulties filling the position. Chicago went for four years without one. Boston will be entering their third year without one (and a decade ago they had another few years without, as well). Philadelphia went for four years without one. Note, there has never been any doubt that these orchestras enjoy the luxury of waiting without suffering a permanent loss of reputation, so long as their musicians are committed to upholding standards and Orchestra Associations are willing to pay.

    The long-term leadership provided by a music director is important to an orchestra (also for its marketing and fundraising). But while “world class” qualities may be cultivated by conductors, the essence of what is “world class” in an orchestra is embodied within and among the players.

    What are we to make of the suggestion that “spending the most money possible on the best possible Music Director is an almost solid guarantee of remarkable things”? I don’t think that orchestra associations (in general) are going to doubt that a particular manager can be more valuable to the institution as a whole than any particular player is, but people in those positions are already expected to be better paid. A more precise question is how far to increase the proportion paid to music directors, managers, etc., at the expense of players, especially if you want “remarkable things” to result.

  9. Hi Edward,

    I’d like to address your preference for efficiency, both in business and in nonprofit terms. As part of the “training” you receive in school, efficiency is a golden calf. Wall Street reinforces the value of efficiency, as it drives up profits, trims losses, etc. However, efficiency is a short-term metric. Effectiveness is the goal of most nonprofits, and many long-term stable companies.

    Effectiveness is the measure of how well the organization is meeting its goal. For a business, the “mission” is to make a profit, so efficiency is a key number. For a nonprofit like an orchestra whose mission is art or some sort of social good, efficiency loses meaning. Imagine going to an orchestra concert where they removed the seats and all patrons had to stand. Perhaps the orchestra was able to crowd an extra 100 people into the show and raised their earned income in the process. But in doing so they did not add to the quality of the experience for the audience. If something like this were to actually happen in fact, the orchestra would probably risk losing the financial support of its older (and generally wealthier) patrons.

    This isn’t a matter of keeping the “blue hairs” happy, but a matter of participating in a tradition and an experience. The orchestra strives to deliver that experience, and must balance costs to do it. Think of it like a start-up: rather than saying “Here’s how much money we have, what can we do?” the orchestra/start-up is saying, “Here’s what we want to do, how do we get funding?” With that sort of mission and dedication to effectiveness, funding will appear.

    With regard to the Music Director, they generally do make more money than any individual player, but it’s not for their business skills, it’s for their musical leadership. They work with the orchestra and the community to develop long term goals: what to be effective AT. They partner with the orchestra, community and management to meet those goals.

    Great music directors don’t want to work with sub-par players, and great players are truly rare. Because music directors were often players themselves in their younger days, a great music director is even more rare. But what is most rare is an entire group of talented players with an effective music director at the helm. When this special combination appears, the whole is greater than the sum of its parts, and people notice.

    The idea of gutting an orchestra’s core membership to be replaced with cheaper ready-made virtuosos from the greatest conservatories only has merit if you subscribe to Efficiency as your orchestra model. One thing that has not been brought up is the chemistry within an ensemble. An orchestra, like a business, has a workplace culture. People either get along or they don’t, play well together or not. The person sitting 2nd horn might be a strong player but not good at that particular job. The person who was hired as a section viola might have that personality spark that makes the whole section shimmer in ways they didn’t before. It’s complicated and messy, and takes decades to get right. It’s certainly not an efficiency exercise. Musicians, despite whatever “training” they get in their formative years, are not interchangeable parts, and never can be.

    Back to the example of the start-up: you and some friends put together a website that helps people share widgets, and things are going pretty well, you have an IT staff that is strange but good at what they do, a design staff that is stranger still but make really great looking stuff… your marketing team, all of it has taken shape. Now imagine you replaced one of your senior managers, and he decides that outsourcing is the way to go. The IT staff is canned, and all the programming work is now done off-shore somewhere, the bottom line grows that quarter, and investors cheer. But if your brand was based on the personality and quirkiness of the people who built it, IE the guys who wrote the website, you’ve lost a core component of the brand. Moreover, you lost a huge body of knowledge and a functional, effective unit of the business. Perhaps customers won’t notice, but let’s be honest, we usually do.

    The Minnesota Orchestra, and most metropolitan and regional orchestra have buy-in from the community in large part because the people in the orchestra are OF the community and have been around in a recognizable way for a long time. Go to enough concerts and you see the same faces, you can meet the musicians after the concert, go have a beer with them (usually the trombones, before, during intermission, and after the concert), read their bios. It’s really about the people. Why do you think cereal boxes have have characters on the front? So we can connect with something other than a cardboard box full of sugar. Nom.

    Anyway, that’s long-winded, but I hope it helps shape your perception of the orchestra management conversation.

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