Traditionally, boards of directors are formed to represent the interests of the shareholders. Arts companies, being generally not-for-profit organisations, have a multiplicity of stakeholders - owners (such as gallery owners), government, the artists whom they employ, their audience and the public at large – to which the board is responsible.
The role is similar to the stewardship of a for-profit organisation
in that an arts board is responsible for governance, strategy and financial
management. The key difference is that arts organisations cannot raise capital
by selling or issuing shares and therefore rely on government funding to ensure
their sustainability.
The priority of the board of an arts organisation, then, is
to balance financial risk with artistic programming; artistic vision with box
office reality.
The composition of an arts board increasingly reflects both
the business and artistic imprimatur of the organisation. It is common for an
arts board to be chaired by a prominent business person,
and to be populated with other well-known people from business and professional
services circles. Depending on the organisation, these boards often also
comprise members with a background in the arts; others look more like the board
of a listed company.
One characteristic which is common to all these boards is that the directors have the ability to “open doors”. While the organisation is no doubt served admirably by a skilled and experienced philanthropic management team, an introduction from a well-known member of the Board will make all the difference to the success of a proposal for corporate funding or philanthropic engagement.
The Holy Trinity: Chairman, Chief Executive and Artistic Director
One role in which arts organisations are similar to public and private companies is that the boards are primarily responsible for the recruitment – and perhaps also the dismissal – of the chief executive officer. And while the artistic director doesn’t always report to the board, he or she is at least equally integral to the organisation’s purpose, mission and often, its success. It is little wonder that artistic directors, rather than general managers, feel the greater weight of their boards.
One of the key differences between a corporate board and the board of an arts organisation is the need to manage the inevitable tension between artistic vision and financial sustainability. This frisson is never better illustrated than in the nexus of power that lies at the top of an arts organisation between the chairman, the chief executive or general manager and the artistic director.
Arts companies each manage this triumvirate differently. In most cases the artistic director reports to the chief executive who in turn reports to the Board; the chief executive may also be a director of the board. In other cases the general manager is also the artistic director. Asked whether the chairman of an arts company might occasionally feel like a “third wheel” in the triad of power between the chairman, general manager and artistic director, one chairman replied candidly: “I’m pretty clear about where I sit in the firmament. The artistic director is responsible for programming and the board and general manager work out how to fund it. As chairman, I get involved in the financial security of the company and high level strategy. I have a say in the areas where I think I should have a say, and everywhere else I try and facilitate the best result.”
The artistic director (or equivalent) can be especially
powerful due to their reputation for visionary excellence and the respect they
build through their audiences and the public at large.
Managing the artistic director’s programming ambitions is a
matter of balancing the purpose of the organisation, (do the performances,
exhibitions or repertoire challenge audiences?), the mix of “crowd pleasers”
combined with new work, and the ability to fund the program and perhaps even to
make a profit.
If the artistic director has a falling out with the board it
is usually over the same issue: their artistic vision is too expensive to
produce.
Media coverage is rarely congenial to the arts
board that executes the dismissal of a popular artistic director, and public
condemnation swiftly follows. Such a reaction is never desired by an arts
organisation; it is seen as poor governance to have let it come to that.
Somehow the board lost touch with the dramas of personal ambition that can play
out within arts organisations like a Wagnerian opera and the chairman is often
blamed for the very public assault on the board’s reputation.
This article is reflects preliminary findings from an ongoing research project by this author into the governance of arts organisations in Australia. It is in part based on a continuing series of interviews with chairmen, board members, chief executives, artistic directors, artists, arts administrators and bureaucrats, corporate sponsors and private donors who participated in off-the-record interviews between March and August this year.
It is an extract of a article that was first published in the September issue of Keeping Good Companies, the journal of Chartered Secretaries Australia.
Another extract, discussing how arts organisations define and mange risk, will be published shortly.
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