Organizational Management: Utah Symphony Strengths
Organizational Management – Task 2
Utah Symphony Strengths
Financial
The Utah Symphony Orchestra (USO) has a long a deep history as an arts organization. This success directly related to the contributions of two major heads of the organization, Mr. Abravanel and the current music director Keith Lockhart. This long history has allowed them to grow their endowment to over $817,000 as of the end of 2001.
Part of the great success of the organization has also to do with the international notoriety of the organization. With that notoriety comes extra touring concerts as well as recording contracts to supplement income from local performances and fundraising efforts. Because of this long history and notoriety this allows them to be …show more content…
recognized as one of the top end Group II Orchestras in the country. With this recognition comes the best possible endowments, grants and donations from national and international arts and government organizations.
Even with a financial downturn in the economy the USO has done a very good job at balancing their budgets to always maintain a surplus, most recent year end being $116,000 surplus. This surplus number gives the board of directors hope when budgeting for upcoming years.
Long successful history
International reach for support, concerts and donations
Top end of Group II Orchestra in the USA
Well balanced budget for prior year, leaving $116k in surplus
Healthy endowment of $817k as of end of prior year, this gives a great safety cushion except for funds directly earmarked for specific projects
Leadership
Keith Lockhart has been the music director for the USO since 1998. His history with the organization has continued the passion for supporting his performers as was passed on by Mr. Abravanel. Mr. Lockhart is well known for going above and beyond maintain an organization whose appreciation and respect for the performers is always first class and a primary objective.
Mr. Lockhart brings with him a long and successful history with world-class organizations like the Boston Pops. With this history it carries certain access to media and organizations as well as respect from the performers, patrons and donors of the USO.
Utah Symphony Weaknesses
Financial
The USO has a number or looming financial difficulties. First and foremost is the union contract for the 83 full-time musicians. This contract, not only locks in the musicians to full-time salaries but is soon to offer them even larger salaries with raises of 12.9% and 6.8% over the next few years. This type of increase in overhead could be the downfall of an organization unless new revenue streams are discovered.
Additionally, we can watch funding sources in every realm drop. Most of this is due to pure economic circumstances, but it can also be presumed to be related to the lack of a current CEO. The CEO would be in charge of pulling together an organizational direction not related to the actual artistic output. So, this would mean fundraising, marketing, ticket sales, administrative support and other key functions within the organization.
The balance sheet for the prior year and projects for the current year show significant drops in every revenue source. All the while expenses either stay very close to the same or continue to rise. The current year surplus only shows a projected $2,042. One small mistake in revenue stream means this organization will be operating in the red and will need to rely heavily on their endowments to support their current and ongoing performance schedule. As it currently stands the organization is already withdrawing 5% of the endowment each year to enhance their operations.
Keith Lockhart is the music director. This is not a person you want at the helm to operate a business organization. Mr. Lockhart may be very good at his current position, but his focus has never been fundraising or running the business of the symphony. Without a CEO to direct the organization the financial future is dim.
Leadership
Lockhart is the music director at the USO and has little experience running an organization aside from an artist’s perspective. Without a CEO at the helm to work beside him, the direction of the organization is doomed. The music director needs to focus as much energy as possible to develop the music, the artists, recruiting talent and managing the personalities of the musicians. Adding on the responsibilities of running the business side of the organization is a key, missing component. This organization needs a CEO to work side by side with Mr. Lockhart in not only maintaining the leadership of the organization, but also maintaining and growing its national and international reputation.
Aside from Mr. Lockhart operating solo at the top tier of the organization we also see a unionized group of musicians with little faith in the leadership of the board of directors. The union has every right to be scared that the board of directors wishes to renegotiate their bargaining agreement, afterall the organization is financially floundering at best.
Steps for improvement at the Utah Symphony
To overcome some of the problems plaguing the USO, the board of directors needs a CEO. The current plan of the potential merger and thus making Ms. Ewers the new CEO is immediately needed. The board should consider negotiating with the Utah Opera to immediately increase Ms. Ewers’ salary and split the salary expense to address the needs of both organizations during the transition. As acting CEO of the Symphony, this would allow Ms. Ewers to develop a stronger relationship with Mr. Lockhart and show both boards of directors how dividing her energies between both organizations can synergize their output.
Beyond addressing the vacant CEO position, the president of the board of directors has to work with Mr. Lockhart and the union on opening up negotiations for their current contract. Although the current contract is still in force for two more years, after losing the CEO in February 2002, the organization is growing debt while dwindling revenue sources. Contract or not, the musicians are the largest overhead expense on record.
Since the musicians do not sound particularly happy about the proposed merger it may also motivate them to renegotiate the contracts early giving the USO some wiggle room to recover from the financial spiral in which they’ve found themselves.
Utah Opera Strengths
Financial
The Utah Opera Company (UOC) has built into their operations a much more flexible overhead having no full-time performers on payroll.
Instead only the administrative staff occupy the payroll. Under this model the organization can watch expenses fluctuate close to directly with revenue and performances.
Ms. Ewers has a long and successful history of fundraising for this and other organizations. This gives the board greater assurances that the financial well-being of the organization is being watched after closely for the current season and building into the future.
As we can see in the balance sheet the investment income is growing year over year, this is also a sign that sufficient cash is being held by the organization in order to earn interest and help fund the organization into the future, even if this growth is only slight.
The UOC maintains a much smaller budget than the USO, however the growth potential under Ms. Ewers current operating model may lead to a flip in those roles. The UOC records substantial surpluses from year to year, even though that surplus drops from 2001-2002. Because of the assets the UOC has, they have a great capacity for a secondary revenue stream of renting out their sets and costumes to other Opera houses and theatrical organizations, a growing source of income for the …show more content…
UOC.
Leadership
As an organizational leader Ewers has a long history of recovering not-so-well-off organizations from near destruction. This type of tenacity with recovering from financial pitfalls gives assurances to the board, the community and the staff of the organization that she can rebuild into the future.
Since the UOC has maintained no full-time performers this has shown a great amount of leadership in giving the organization flexibility to grow and shrink and adapt to many different financial situations. Maintaining this model also gives the audience much variety with future performers, leaning toward excitement over new stars being born at the UOC.
Utah Opera Weaknesses
Financial
The UOC is seeing a large drop in performance revenue year over year. This is concerning for the future of the organization. As stated previously, the UOC can cut or grow expenses pretty significantly by regulating the number of shows it performs and thus how much is being expensed to the performers. However, it would appear that from year 2001 to 2002 they may not be maintaining enough shows or performances to maintain the revenue stream.
Because the UOC is on a much smaller scale than the USO, the UOC must be vigilant about keeping overhead staff costs to a bare minimum. These staff expenses are spread over the number of shows and performances and if the number of shows and performances is dropping or holding the same, then the ratio of expense to revenue in this category will easily become upside-down and significantly unprofitable.
Leadership
It’s well known inside and outside the Opera that Ms. Ewers rules with an iron fist. Ms. Ewers makes many unilateral decisions without consulting many team members in doing so. Decision-making styles and leadership styles like this make an organization weak from several angles. Most importantly, the organization is weakened by not allowing other directors and managers within the organization to make decisions within their purview. By not allowing them to explore and assert their own leadership decisions it discourages them from taking risks and potentially influencing appropriate change within the organization. By taking away their decision-making it also can be demoralizing for those leaders. Without being able to make decisions, they are simply figure-heads.
Steps for improvement at the Utah Opera
More research should be dedicated to opening up the performance schedule and allowing for longer runs and more frequent shows at the UOC. More shows for the UOC means more revenue, but it also means building more community relationships by offering more depth of productions and opportunities for public relations.
It should also be investigated that perhaps a youth element be added to the mix in order to grow a following in that market segment.
Another important improvement opportunity would be for Ms. Ewers to delegate more leadership decisions to her subordinates. By doing so this empowers the other leaders in the organization to blossom also leaving Ms. Ewers more time to focus on the merger and the issues of the Symphony.
Balanced Scorecard Comparison
Utah Symphony Balanced Scorecard Analysis
Financial
This matrix is likely the furthest from an accurate portrayal of reality. The goal of becoming profitable with the measure being growing the surplus from $116k to $500k is wildly underperforming with the surplus in fact dropping to a mere $2,042.
It is assumed that because the CEO role is currently vacant the “Critical Success Factor” regarding fundraising is being overlooked and not universally being applied by the overall organization. Without this Critical Success Factor being implemented and maintained the measure will never be met successfully.
Customer
It’s quite evident from the various feedback we’ve seen through the merger talks that the patrons like where each organization is within its performance parameters. So much so that there is much fear being expressed about each organization losing their individual personality and identity. Culturally speaking I believe the USO has done and adequate job of portraying their goal and end result in this matrix.
Internal Process
I believe this goal and success factor and measure are all quite far off from reality. It might be desirable for the USO to have flexibility with expenses and want to attain that flexibility through the negotiating power of the union, but the facts don’t turn out in their favor, quite the opposite actually. However, if even the merger talks result in the union opening up the table to renegotiate, then perhaps this matrix isn’t completely lost! Perhaps knowing this was one of the goals led leadership to the prospect of the merger.
Learning and Growth
These goals and results all seem to be in-line as intended. The USO has successfully turned out a 200-performance year. We have no evidence that youth were in anyway involved in this growth effort however. It would be easy to presume that the jump in Performance Revenue from $3.8mm to $4.5mm was partly due to this initiative and by the sheer volume of performances.
Utah Opera Balanced Scorecard Analysis
Financial
The goals and results in the financial aspect of the analysis seem to be in line with how the organization operates. The UOC is very focused on controlling their stability through their flexible staffing model along with allowances of rental income to offset any downturn in economic factors. The fundraising goal was necessary since they knew the government grants would be falling off. And the UOC did very well at compensating for that loss in their fundraising efforts.
Customer
This item seems to be lacking in execution. Performance Revenues for the UOC have dropped significantly, revenue only being made up by donation contribution increases. And although there is talk of Ms. Ewers reaching across state lines for donations and fundraising, the notoriety of the UOC stops there.
Internal Process
This item has mixed results. The organization does have financial stability (although still in decline), however because performance revenue is dropping so significantly this would be an indicator that their goal of attracting top talent might be falling short.
Learning and Growth
The strategic goal of increasing the number of annual productions to “perhaps” five per year is a substantial and significant goal for the organization. As stated in the documentation, increasing the number of productions can significantly increase revenues since the bulk of the effort goes into the rehearsals and initial setup of the production, not the actual performances presented to the public.
The success factor and measurement would be perfectly inline for such a goal, seeing the effects matriculate through the endowment fund, ticket sales and revenue as well as enabling those increased revenues being diverted to assist with capital needs.
Unified Arts Cooperative Balanced Scorecard
The vision of the Unified Arts Cooperative is to advance public understanding of world-class performance art.
The business model is to maintain and improve production quality while showing a unified front as one well-rounded organization.
Financial
Strategic Goal: Growing healthy endowments for a joint organization through synergies between two power-houses in the arts.
Critical Success Factor: Finding overlaps in administrative and operational outputs to minimize duplicative staffing efforts and merging teams.
Measure: Having higher endowments in the greater organization.
Customer
Strategic Goal: To maintain a single world-renowned organization for both art forms producing sold out productions on each.
Critical Success Factor: Building an inclusive organization with joint performances showing the synergy of both organizations and how together they are better than their individual parts.
Measure: Monitor the world rankings of Operas and Symphonies to make sure neither drop in reputation and to receive positive reviews outside our local market as a unified organization.
Internal
Process
Strategic Goal: Maintain financially stable organization through year-round fundraising using cross-promotional campaigns.
Critical Success Factor: Excellent talent recruitment and maintenance of a symphony compensated at a level commensurate with their performance rankings.
Measure: Growing and maintaining profitability
Learning and Growth
Strategic Growth: Growing patronage through synergistic performances that are unique and inspiring to all audiences
Critical Success Factor: Receiving critical acclaim for reinventing a joint organization’s performance output quality and capability
Measure: Having higher season ticket holder revenues, more varied contributions outside the state and sold-out performances.
Unified Arts Cooperative Strengths
Financial
The Unified Arts Cooperative has a well-rounded revenue stream to sustain increased value to the patrons and artists. We see that the organization uses joint balance sheets only, but uses joint and sub income statements. This allows the organization as a whole to maintain and operate at every level to yield entire success.
Customer
The Unified Arts Cooperative will be offering many new opportunities for customers to be fulfilled and satisfied within the new organization. Many customers will have opportunities to experience joint performances for the first time, bringing an experience unparalleled by any other organization in the United States.
Internal Process
By diversifying staffing efforts across the new organization, the internal processes are significantly strengthened by cross-use of each of the previous organizations’ reputations and thus increasing the potential for high-end performer recruitment.
Also since we’ll be operating a combine administrative staff, we should see appropriate efficiencies produced from utilizing talents across divisions.
Learning and Growth
The new Unified Arts Cooperative’s approach to “synergistic” relationships between the divisions also means a great step forward for the sponsorship and annual subscription growth opportunities. Combining performances and themes across the divisions means a higher potential impact for the consumers of the talents and for the dollars being contributed from outside organizations because a joint performance and mutually agreed upon themes would gather more viewership over each performance schedule.
Unified Arts Cooperative Weaknesses
Financial
Economies of scale are not entirely true for this new organization. However, as technology advances the minimizing of staff and overlap can advance as well. As such, there will no longer be a “box office” for either organization. There will be kiosks for ticket purchases as well as a staffer at each location for customer service. Otherwise all financial activity will be operated via web technology.
Even with the potential reductions through technology implementations, there still exists a very large economic factor. One difficult factor will be on whether to operate two separate stages/buildings or to order a capital campaign to erect a new unified building serving cross-purpose between all the organization’s various operations.
Another unforeseen financial dilemma is that there were several grants and endowments made to each of the two original organizations that now must be combine into one. In some cases the granting company may choose to reduce the amount since there is now one organization. Or perhaps not to support the Unified Arts Cooperative at all because the scope of the overall organization is now more broad beyond the mission of the donating organization.
There will also be the challenge of combining the endowments. Much of the time endowments are earmarked for specific projects or performances or to “enhance the public’s appreciation of the Opera” and other very specific stipulations. Each of the endowments will need to be re-evaluated to decide whether the endowment can be used by one division or by the organization as a whole and to ensure the terms of the endowment are accurately upheld.
Customer
The customer angle of a unified organization across the divisions becomes complicated because of measurement tools outside this organization. Although we anticipate the joint efforts to garner higher viewership and more outside recognition, it may in fact also dilute the impact of each division (symphony and opera) independently.
Relying on a synergy between these organizations to influence world-rankings will be significantly complicated by the organizations performing the ranking activities. Often times these ranking organizations rely on measurement tools to compare one organization to another. And if the Unified Arts Cooperative is anticipating the joint performances to increase their rankings that may provide unique challenges that were not anticipated. Although the customers may appreciate the synergistic relationship, the ranking systems in place may not be able to accurately reflect the impact those synergies have.
Internal Process
By using a cross promotional approach to production schedules and advertising this may increase overall ticket sales, however there also runs a risk of missed opportunities for one or both organizations. The “likes” of one division’s audience may not translate well into the “likes” of the other division’s audience. Thus those passionate about the opera may feel that a particular theme is off focus for the opera because it’s more focused on the symphony, or visa versa.
Learning and Growth
Although the intension of a unified organization is to attract cross-promotional opportunities and to simplify administrative overlaps thus growing local attention and national sponsorships and grants, this isn’t likely to be a purely measurable goal. On the local level we should be able to better measure season ticket holder growth now with a unified sales database and yes the appeal for season ticket holders to have access to both divisions’ performances may be enticing. The difficulties present as how sponsoring and granting organizations view the synergistic opportunities. Sponsors will see a higher potential viewership as a positive whereas a grant issuing organization may have difficultly issuing a grant to an organization with such varied performance acumen and disciplines as opera and symphony when their grant may be specific to only one or the other and perhaps NOT for both. Alternatively, these grants could be reduced because of a granting organization now only donating one grant to one organization instead of two separate grants to the previous two organizations.
Issues for the New Organization
There are several complexities for the United Arts Cooperative. First and foremost, getting everyone “onboard” internally, getting all the musicians, actors, staff and management, as well as boards of directors all focused on the same ultimate mission.
The next complexity has to do with reintroducing a unified organization to the public. It certainly won’t matter if the larger organization saves money if they lose the support of the community who pays to see them perform.
A third issue will be organizing, merging and mapping existing and future grants and endowments. As stated earlier, now that the larger organization has a broader scope it’s possible that they could lose focus on grants and endowments, which creates an entirely new financial challenge.
Mitigation Actions for the New Organization
To mitigate the first complexity of internal unification, it’s important to NOT focus on layoffs and merger moral killers immediately. It could likely take months to make sure the new entity can truly operate as ONE entity. There will be overlap time where all of the staff are technically working separately while perhaps cross training to learn all the ins and outs of day-to-day operations for the larger organization. Once those overlaps are mapped out and a consolidation plan can be put into place, it’s a delicate process to eliminate the waste between the organizations without creating internal fear. This can often be mitigated with severance packages, future job training allowances or even helping the overlapped staff discover a new way they can contribute to the organization that is in a different role than they currently operate.
It would take a couple months to generate unified messaging internally to ensure teamwork across the larger organization. Once internally people feel secure in their roles and that the organization isn’t going to completely collapse, it’s easier to present that face to the external public. Of course PR campaigns and community interaction would need to start immediately or even prior to the actual merger. This pre-entity activity would need to start with internal meetings helping everyone understand the new purpose of the organization, how the separate divisions will create new opportunities and to energize the creativity to help the staff and musicians feel they are partly responsible for the new entity and its future success.
This third challenge may require a consulting team and a collaboration between the internal departments that hand funding, grant writing and logistics of endowment accounting. It may also require lawyers to assist in renegotiating some of the grants or endowments.
References
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Utah Symphony Strengths
Financial
The Utah Symphony Orchestra (USO) has a long a deep history as an arts organization. This success directly related to the contributions of two major heads of the organization, Mr. Abravanel and the current music director Keith Lockhart. This long history has allowed them to grow their endowment to over $817,000 as of the end of 2001.
Part of the great success of the organization has also to do with the international notoriety of the organization. With that notoriety comes extra touring concerts as well as recording contracts to supplement income from local performances and fundraising efforts. Because of this long history and notoriety this allows them to be …show more content…
recognized as one of the top end Group II Orchestras in the country. With this recognition comes the best possible endowments, grants and donations from national and international arts and government organizations.
Even with a financial downturn in the economy the USO has done a very good job at balancing their budgets to always maintain a surplus, most recent year end being $116,000 surplus. This surplus number gives the board of directors hope when budgeting for upcoming years.
Long successful history
International reach for support, concerts and donations
Top end of Group II Orchestra in the USA
Well balanced budget for prior year, leaving $116k in surplus
Healthy endowment of $817k as of end of prior year, this gives a great safety cushion except for funds directly earmarked for specific projects
Leadership
Keith Lockhart has been the music director for the USO since 1998. His history with the organization has continued the passion for supporting his performers as was passed on by Mr. Abravanel. Mr. Lockhart is well known for going above and beyond maintain an organization whose appreciation and respect for the performers is always first class and a primary objective.
Mr. Lockhart brings with him a long and successful history with world-class organizations like the Boston Pops. With this history it carries certain access to media and organizations as well as respect from the performers, patrons and donors of the USO.
Utah Symphony Weaknesses
Financial
The USO has a number or looming financial difficulties. First and foremost is the union contract for the 83 full-time musicians. This contract, not only locks in the musicians to full-time salaries but is soon to offer them even larger salaries with raises of 12.9% and 6.8% over the next few years. This type of increase in overhead could be the downfall of an organization unless new revenue streams are discovered.
Additionally, we can watch funding sources in every realm drop. Most of this is due to pure economic circumstances, but it can also be presumed to be related to the lack of a current CEO. The CEO would be in charge of pulling together an organizational direction not related to the actual artistic output. So, this would mean fundraising, marketing, ticket sales, administrative support and other key functions within the organization.
The balance sheet for the prior year and projects for the current year show significant drops in every revenue source. All the while expenses either stay very close to the same or continue to rise. The current year surplus only shows a projected $2,042. One small mistake in revenue stream means this organization will be operating in the red and will need to rely heavily on their endowments to support their current and ongoing performance schedule. As it currently stands the organization is already withdrawing 5% of the endowment each year to enhance their operations.
Keith Lockhart is the music director. This is not a person you want at the helm to operate a business organization. Mr. Lockhart may be very good at his current position, but his focus has never been fundraising or running the business of the symphony. Without a CEO to direct the organization the financial future is dim.
Leadership
Lockhart is the music director at the USO and has little experience running an organization aside from an artist’s perspective. Without a CEO at the helm to work beside him, the direction of the organization is doomed. The music director needs to focus as much energy as possible to develop the music, the artists, recruiting talent and managing the personalities of the musicians. Adding on the responsibilities of running the business side of the organization is a key, missing component. This organization needs a CEO to work side by side with Mr. Lockhart in not only maintaining the leadership of the organization, but also maintaining and growing its national and international reputation.
Aside from Mr. Lockhart operating solo at the top tier of the organization we also see a unionized group of musicians with little faith in the leadership of the board of directors. The union has every right to be scared that the board of directors wishes to renegotiate their bargaining agreement, afterall the organization is financially floundering at best.
Steps for improvement at the Utah Symphony
To overcome some of the problems plaguing the USO, the board of directors needs a CEO. The current plan of the potential merger and thus making Ms. Ewers the new CEO is immediately needed. The board should consider negotiating with the Utah Opera to immediately increase Ms. Ewers’ salary and split the salary expense to address the needs of both organizations during the transition. As acting CEO of the Symphony, this would allow Ms. Ewers to develop a stronger relationship with Mr. Lockhart and show both boards of directors how dividing her energies between both organizations can synergize their output.
Beyond addressing the vacant CEO position, the president of the board of directors has to work with Mr. Lockhart and the union on opening up negotiations for their current contract. Although the current contract is still in force for two more years, after losing the CEO in February 2002, the organization is growing debt while dwindling revenue sources. Contract or not, the musicians are the largest overhead expense on record.
Since the musicians do not sound particularly happy about the proposed merger it may also motivate them to renegotiate the contracts early giving the USO some wiggle room to recover from the financial spiral in which they’ve found themselves.
Utah Opera Strengths
Financial
The Utah Opera Company (UOC) has built into their operations a much more flexible overhead having no full-time performers on payroll.
Instead only the administrative staff occupy the payroll. Under this model the organization can watch expenses fluctuate close to directly with revenue and performances.
Ms. Ewers has a long and successful history of fundraising for this and other organizations. This gives the board greater assurances that the financial well-being of the organization is being watched after closely for the current season and building into the future.
As we can see in the balance sheet the investment income is growing year over year, this is also a sign that sufficient cash is being held by the organization in order to earn interest and help fund the organization into the future, even if this growth is only slight.
The UOC maintains a much smaller budget than the USO, however the growth potential under Ms. Ewers current operating model may lead to a flip in those roles. The UOC records substantial surpluses from year to year, even though that surplus drops from 2001-2002. Because of the assets the UOC has, they have a great capacity for a secondary revenue stream of renting out their sets and costumes to other Opera houses and theatrical organizations, a growing source of income for the …show more content…
UOC.
Leadership
As an organizational leader Ewers has a long history of recovering not-so-well-off organizations from near destruction. This type of tenacity with recovering from financial pitfalls gives assurances to the board, the community and the staff of the organization that she can rebuild into the future.
Since the UOC has maintained no full-time performers this has shown a great amount of leadership in giving the organization flexibility to grow and shrink and adapt to many different financial situations. Maintaining this model also gives the audience much variety with future performers, leaning toward excitement over new stars being born at the UOC.
Utah Opera Weaknesses
Financial
The UOC is seeing a large drop in performance revenue year over year. This is concerning for the future of the organization. As stated previously, the UOC can cut or grow expenses pretty significantly by regulating the number of shows it performs and thus how much is being expensed to the performers. However, it would appear that from year 2001 to 2002 they may not be maintaining enough shows or performances to maintain the revenue stream.
Because the UOC is on a much smaller scale than the USO, the UOC must be vigilant about keeping overhead staff costs to a bare minimum. These staff expenses are spread over the number of shows and performances and if the number of shows and performances is dropping or holding the same, then the ratio of expense to revenue in this category will easily become upside-down and significantly unprofitable.
Leadership
It’s well known inside and outside the Opera that Ms. Ewers rules with an iron fist. Ms. Ewers makes many unilateral decisions without consulting many team members in doing so. Decision-making styles and leadership styles like this make an organization weak from several angles. Most importantly, the organization is weakened by not allowing other directors and managers within the organization to make decisions within their purview. By not allowing them to explore and assert their own leadership decisions it discourages them from taking risks and potentially influencing appropriate change within the organization. By taking away their decision-making it also can be demoralizing for those leaders. Without being able to make decisions, they are simply figure-heads.
Steps for improvement at the Utah Opera
More research should be dedicated to opening up the performance schedule and allowing for longer runs and more frequent shows at the UOC. More shows for the UOC means more revenue, but it also means building more community relationships by offering more depth of productions and opportunities for public relations.
It should also be investigated that perhaps a youth element be added to the mix in order to grow a following in that market segment.
Another important improvement opportunity would be for Ms. Ewers to delegate more leadership decisions to her subordinates. By doing so this empowers the other leaders in the organization to blossom also leaving Ms. Ewers more time to focus on the merger and the issues of the Symphony.
Balanced Scorecard Comparison
Utah Symphony Balanced Scorecard Analysis
Financial
This matrix is likely the furthest from an accurate portrayal of reality. The goal of becoming profitable with the measure being growing the surplus from $116k to $500k is wildly underperforming with the surplus in fact dropping to a mere $2,042.
It is assumed that because the CEO role is currently vacant the “Critical Success Factor” regarding fundraising is being overlooked and not universally being applied by the overall organization. Without this Critical Success Factor being implemented and maintained the measure will never be met successfully.
Customer
It’s quite evident from the various feedback we’ve seen through the merger talks that the patrons like where each organization is within its performance parameters. So much so that there is much fear being expressed about each organization losing their individual personality and identity. Culturally speaking I believe the USO has done and adequate job of portraying their goal and end result in this matrix.
Internal Process
I believe this goal and success factor and measure are all quite far off from reality. It might be desirable for the USO to have flexibility with expenses and want to attain that flexibility through the negotiating power of the union, but the facts don’t turn out in their favor, quite the opposite actually. However, if even the merger talks result in the union opening up the table to renegotiate, then perhaps this matrix isn’t completely lost! Perhaps knowing this was one of the goals led leadership to the prospect of the merger.
Learning and Growth
These goals and results all seem to be in-line as intended. The USO has successfully turned out a 200-performance year. We have no evidence that youth were in anyway involved in this growth effort however. It would be easy to presume that the jump in Performance Revenue from $3.8mm to $4.5mm was partly due to this initiative and by the sheer volume of performances.
Utah Opera Balanced Scorecard Analysis
Financial
The goals and results in the financial aspect of the analysis seem to be in line with how the organization operates. The UOC is very focused on controlling their stability through their flexible staffing model along with allowances of rental income to offset any downturn in economic factors. The fundraising goal was necessary since they knew the government grants would be falling off. And the UOC did very well at compensating for that loss in their fundraising efforts.
Customer
This item seems to be lacking in execution. Performance Revenues for the UOC have dropped significantly, revenue only being made up by donation contribution increases. And although there is talk of Ms. Ewers reaching across state lines for donations and fundraising, the notoriety of the UOC stops there.
Internal Process
This item has mixed results. The organization does have financial stability (although still in decline), however because performance revenue is dropping so significantly this would be an indicator that their goal of attracting top talent might be falling short.
Learning and Growth
The strategic goal of increasing the number of annual productions to “perhaps” five per year is a substantial and significant goal for the organization. As stated in the documentation, increasing the number of productions can significantly increase revenues since the bulk of the effort goes into the rehearsals and initial setup of the production, not the actual performances presented to the public.
The success factor and measurement would be perfectly inline for such a goal, seeing the effects matriculate through the endowment fund, ticket sales and revenue as well as enabling those increased revenues being diverted to assist with capital needs.
Unified Arts Cooperative Balanced Scorecard
The vision of the Unified Arts Cooperative is to advance public understanding of world-class performance art.
The business model is to maintain and improve production quality while showing a unified front as one well-rounded organization.
Financial
Strategic Goal: Growing healthy endowments for a joint organization through synergies between two power-houses in the arts.
Critical Success Factor: Finding overlaps in administrative and operational outputs to minimize duplicative staffing efforts and merging teams.
Measure: Having higher endowments in the greater organization.
Customer
Strategic Goal: To maintain a single world-renowned organization for both art forms producing sold out productions on each.
Critical Success Factor: Building an inclusive organization with joint performances showing the synergy of both organizations and how together they are better than their individual parts.
Measure: Monitor the world rankings of Operas and Symphonies to make sure neither drop in reputation and to receive positive reviews outside our local market as a unified organization.
Internal
Process
Strategic Goal: Maintain financially stable organization through year-round fundraising using cross-promotional campaigns.
Critical Success Factor: Excellent talent recruitment and maintenance of a symphony compensated at a level commensurate with their performance rankings.
Measure: Growing and maintaining profitability
Learning and Growth
Strategic Growth: Growing patronage through synergistic performances that are unique and inspiring to all audiences
Critical Success Factor: Receiving critical acclaim for reinventing a joint organization’s performance output quality and capability
Measure: Having higher season ticket holder revenues, more varied contributions outside the state and sold-out performances.
Unified Arts Cooperative Strengths
Financial
The Unified Arts Cooperative has a well-rounded revenue stream to sustain increased value to the patrons and artists. We see that the organization uses joint balance sheets only, but uses joint and sub income statements. This allows the organization as a whole to maintain and operate at every level to yield entire success.
Customer
The Unified Arts Cooperative will be offering many new opportunities for customers to be fulfilled and satisfied within the new organization. Many customers will have opportunities to experience joint performances for the first time, bringing an experience unparalleled by any other organization in the United States.
Internal Process
By diversifying staffing efforts across the new organization, the internal processes are significantly strengthened by cross-use of each of the previous organizations’ reputations and thus increasing the potential for high-end performer recruitment.
Also since we’ll be operating a combine administrative staff, we should see appropriate efficiencies produced from utilizing talents across divisions.
Learning and Growth
The new Unified Arts Cooperative’s approach to “synergistic” relationships between the divisions also means a great step forward for the sponsorship and annual subscription growth opportunities. Combining performances and themes across the divisions means a higher potential impact for the consumers of the talents and for the dollars being contributed from outside organizations because a joint performance and mutually agreed upon themes would gather more viewership over each performance schedule.
Unified Arts Cooperative Weaknesses
Financial
Economies of scale are not entirely true for this new organization. However, as technology advances the minimizing of staff and overlap can advance as well. As such, there will no longer be a “box office” for either organization. There will be kiosks for ticket purchases as well as a staffer at each location for customer service. Otherwise all financial activity will be operated via web technology.
Even with the potential reductions through technology implementations, there still exists a very large economic factor. One difficult factor will be on whether to operate two separate stages/buildings or to order a capital campaign to erect a new unified building serving cross-purpose between all the organization’s various operations.
Another unforeseen financial dilemma is that there were several grants and endowments made to each of the two original organizations that now must be combine into one. In some cases the granting company may choose to reduce the amount since there is now one organization. Or perhaps not to support the Unified Arts Cooperative at all because the scope of the overall organization is now more broad beyond the mission of the donating organization.
There will also be the challenge of combining the endowments. Much of the time endowments are earmarked for specific projects or performances or to “enhance the public’s appreciation of the Opera” and other very specific stipulations. Each of the endowments will need to be re-evaluated to decide whether the endowment can be used by one division or by the organization as a whole and to ensure the terms of the endowment are accurately upheld.
Customer
The customer angle of a unified organization across the divisions becomes complicated because of measurement tools outside this organization. Although we anticipate the joint efforts to garner higher viewership and more outside recognition, it may in fact also dilute the impact of each division (symphony and opera) independently.
Relying on a synergy between these organizations to influence world-rankings will be significantly complicated by the organizations performing the ranking activities. Often times these ranking organizations rely on measurement tools to compare one organization to another. And if the Unified Arts Cooperative is anticipating the joint performances to increase their rankings that may provide unique challenges that were not anticipated. Although the customers may appreciate the synergistic relationship, the ranking systems in place may not be able to accurately reflect the impact those synergies have.
Internal Process
By using a cross promotional approach to production schedules and advertising this may increase overall ticket sales, however there also runs a risk of missed opportunities for one or both organizations. The “likes” of one division’s audience may not translate well into the “likes” of the other division’s audience. Thus those passionate about the opera may feel that a particular theme is off focus for the opera because it’s more focused on the symphony, or visa versa.
Learning and Growth
Although the intension of a unified organization is to attract cross-promotional opportunities and to simplify administrative overlaps thus growing local attention and national sponsorships and grants, this isn’t likely to be a purely measurable goal. On the local level we should be able to better measure season ticket holder growth now with a unified sales database and yes the appeal for season ticket holders to have access to both divisions’ performances may be enticing. The difficulties present as how sponsoring and granting organizations view the synergistic opportunities. Sponsors will see a higher potential viewership as a positive whereas a grant issuing organization may have difficultly issuing a grant to an organization with such varied performance acumen and disciplines as opera and symphony when their grant may be specific to only one or the other and perhaps NOT for both. Alternatively, these grants could be reduced because of a granting organization now only donating one grant to one organization instead of two separate grants to the previous two organizations.
Issues for the New Organization
There are several complexities for the United Arts Cooperative. First and foremost, getting everyone “onboard” internally, getting all the musicians, actors, staff and management, as well as boards of directors all focused on the same ultimate mission.
The next complexity has to do with reintroducing a unified organization to the public. It certainly won’t matter if the larger organization saves money if they lose the support of the community who pays to see them perform.
A third issue will be organizing, merging and mapping existing and future grants and endowments. As stated earlier, now that the larger organization has a broader scope it’s possible that they could lose focus on grants and endowments, which creates an entirely new financial challenge.
Mitigation Actions for the New Organization
To mitigate the first complexity of internal unification, it’s important to NOT focus on layoffs and merger moral killers immediately. It could likely take months to make sure the new entity can truly operate as ONE entity. There will be overlap time where all of the staff are technically working separately while perhaps cross training to learn all the ins and outs of day-to-day operations for the larger organization. Once those overlaps are mapped out and a consolidation plan can be put into place, it’s a delicate process to eliminate the waste between the organizations without creating internal fear. This can often be mitigated with severance packages, future job training allowances or even helping the overlapped staff discover a new way they can contribute to the organization that is in a different role than they currently operate.
It would take a couple months to generate unified messaging internally to ensure teamwork across the larger organization. Once internally people feel secure in their roles and that the organization isn’t going to completely collapse, it’s easier to present that face to the external public. Of course PR campaigns and community interaction would need to start immediately or even prior to the actual merger. This pre-entity activity would need to start with internal meetings helping everyone understand the new purpose of the organization, how the separate divisions will create new opportunities and to energize the creativity to help the staff and musicians feel they are partly responsible for the new entity and its future success.
This third challenge may require a consulting team and a collaboration between the internal departments that hand funding, grant writing and logistics of endowment accounting. It may also require lawyers to assist in renegotiating some of the grants or endowments.
References
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