Do orchestra managers make too much?

Due largely to the appointment of Allison Vulgamore as President and CEO of the Philadelphia Orchestra, manager compensation is currently enjoying its 15 minutes of fame (although I doubt whether she is enjoying the spotlight on her current and future paystubs). The Philadelphia Inquirer has speculated on the subject, as has the New York Times, which quoted Drew McManus of Adaptistration on the subject:

Ms. Vulgamore was the fifth-highest-paid chief executive in the 2005-6 season, the latest in which complete figures were available, while the orchestra’s budget was the 12th biggest and its musicians ranked No. 15 in base pay, according to Mr. McManus’s figures.

“I think she was paid an extraordinarily large sum with an extraordinarily large increase,” he said. “I don’t think she should be paid more than the executive from Chicago.” Deborah R. Card, the president of the Chicago Symphony Orchestra, earned $425,000 for the 2007-8 season, according to tax forms.

…One arts consultant said Ms. Vulgamore should be held at least partly responsible for the failure [of a plan to build the Atlanta Symphony an expensive new home, designed by Santiago Calatrava].

“Ultimately it comes down to the executive and the committee that was responsible for the fund-raising,” said Drew McManus, the consultant, who runs a Web site about the orchestra business.

Ms. Vulgamore’s last reported salary — $598,000, up from $422,000 a year earlier — outstripped that of the last executive director in Philadelphia, James Undercofler. He earned $420,000, even though Philadelphia is considered a more elite orchestra.

Ms. Vulgamore was the fifth-highest-paid chief executive in the 2005-6 season, the latest in which complete figures were available, while the orchestra’s budget was the 12th biggest and its musicians ranked No. 15 in base pay, according to Mr. McManus’s figures.

Norman Lebrecht joined the discussion by taking a pot shot at the President and CEO of the New York Philharmonic over the canceled trip to Cuba:

If, on the other hand, it was just a publicity stunt, Philharmonic president, Zarin Mehta, should be hauled over coals for taking wealthy pals on a tax-free vacation in the middle of a world recession. Mehta is well paid to keep the orchestra in tune with the times (not just the Times). He took home $2.7 million last year, $800,000 in salary, the rest in ‘deferred compensation’. Mehta, brother of former music director Zubin, appears to have lost touch with New York city workers who want top-flight concerts and less political spin.

$2.7 million does seem like a lot of money for running an orchestra, although what $1.9 million in “deferred compensation” actually translates to in real dollars (and in what form, and over what time period) is probably impossible to determine from publicly-available documents.

Orchestra musicians typically believe that managers are over-paid. Unfortunately, there are no recognized norms that cross industries for determining what is “fair” compensation for these positions. By some measures (ratio of individual compensation to institutional size, for example), it may be that CEO salaries in our field are out of whack. Certainly most of our managers are paid a far higher chunk of the total budget than would be a college president, for example. But by comparison with the average salary paid workers in the institution, orchestra CEOs make relatively little.

Assuming, for example, that Zarin Mehta’s real salary was closer to the $800,000 reported, that means he’s making 5-6 time what most of his musicians are making. I suspect that’s a typical multiplier for a major orchestra, or perhaps a little higher than the norm. Deborah Rutter’s salary in Chicago is a much smaller multiple of base musician pay. Likely the greatest discrepancy between CEO pay and musician base is in the smaller orchestras, particularly per-service orchestras, where staffs are full-time but musicians aren’t.

So what should orchestra CEOs make? As Bill Clinton might say, it depends on what the meaning of “should” should be. In my perfect world, the highest-paid people would be special ed teachers, and corporate lawyers would make minimum wage (although, of course, with health insurance, pension, and good union protections). A saner discussion of CEO salaries, though, would focus on the difficulty of the jobs, the scarcity of people that can do them well, and the imbalance between upside and downside risk for those getting paid those salaries.

I think few orchestra musicians appreciate just how hard it is to be a successful orchestra manager. There are likely no organizations of similar size in American society that have the same kind of complex organizational dynamcs, for example.

Orchestra managers have to deal with boards, who are not only their nominal bosses but who generally have little knowledge about governance, orchestra management, or even the art form. They have to deal with orchestra musicians, a noisy, demanding, unforgiving, and fractious constituency hedged about with legal protections provided by a rather obscure niche of the law. They have to deal with donors, and are held responsible for any failures of their staffs and boards to adequately milk that constituency. As they run what is usually the premiere arts organization in town, they become the de-facto representative of that industry to the community at large. They have to deal with staffs, which are typically underpaid and even more under-resourced. And, of course, they have to deal with music directors, who can make all the other constituencies put together seem reasonable by comparison.

There are very few people who succeed at these jobs. Consider the number of orchestra managers of the generation just retired who had succeeded at running more than one orchestra successfully over the course of their careers, and thus proving that their success was due to their ability rather than inherited institutional strength. By my count, it’s fewer than the number of fingers available to a violist for vibrato.

And almost all successful orchestra CEOs come from within the field. Drew McManus made an interesting, although in my view incorrect, argument when discussing the Philadelphia situation in a post on September 21:

…rushing to fill the CEO vacancy with a less than capable executive to simply have someone in the position is a reckless course of action. It might seem like a Catch-22 scenario but the reality is the organization simply needs to expand its search parameters. If nothing else, the economic downturn has demonstrates that conventional wisdom is just as much of an oxymoron as ever so if your current search parameters aren’t producing the results you want, change them. Step one is simple: start talking with sources outside the usual suspects. After all, what does the Philadelphia Orchestra have to lose?

The problem with thinking outside of the box when hiring an orchestra CEO is that the box is there for a very good reason. It takes not only great executive and political skill to run an orchestra; it takes a kind of specialized knowledge and experience of the byways of our business that is virtually impossible to pick up on the fly. But “on the fly” is how someone parachuted into the corner officer of the BigCity Philharmonic will have to pick up much of what he or she needs to know to succeed.

Combine “hard job” with “very small pool of candidates likely to succeed,” small institutions, no job security (and  few available alternative employers in the event of failure), and the lack of any upside potential except continued employment even for exceptional managers, and what’s left is a seller’s market. That, I believe, is the explanation for orchestra CEO salaries that are, by some measures at least, definitely out of whack.