Analysis of Utah Symphony and Utah Opera’s Merger Proposal

To: Anne Ewers

From: Sally Yan

Date: December 21, 2015

Subject: Analysis of Utah Symphony and Utah Opera’s merger proposal

Executive summary

The purpose of this memo is to present to you my analysis and recommendations of the Utah Symphony and Utah Opera’s merger proposal. By briefly analyzing short term and long term challenges, I will provide corresponding recommendations to sustainability, strategy and organizational culture issues.

Overall, challenges are: how to gain more support to the merger proposal, how to mitigate the conflicts after the merger and how to develop appropriate the long-term strategies to operate the new organization. To solve these problems, my recommendations are mitigating the objectors by providing benefit related to them, including the employees in the decision-making process, reducing the conflict by encouraging more cooperative productions, cutting down the staff member and create a flat structure, using variable wage and provide bonus, building new organizational culture, expanding educational educational programs, attracting more world-class artists and improving the reputation of the organization.

Challenge Analysis

The merger of Utah Symphony and Utah Opera has been a point of contention since it went public. Different voices could be heard from both internal and external members. Short term challenges could be divided into two parts: how to solve the problems leading up the merger and mitigate predictable conflicts after the merger. Long-term challenges in sustainability are broader and general while strategy and organizational culture issues are pertinent.

Short term challenges:

1. Leading up the merger

The radically dissimilar of Utah Symphony and Utah Opera in scale and action will result in an obstacle to the merger. In the budget, the Symphony predominates and in fixed assets the Opera predominates. The Opera has no performing artists under continuing contract while the Symphony has an entire orchestra. They also have different performing season, and most important, different organizational cultures.

2. After the merger

In the field of music, there is a long tradition that opera is second to the symphony due to the different levels in difficulty in performance and the number of years of training. In fact, symphony members are too proud to treat opera players as real musicians. Since people generally tend to like others who are similar to them (Dobbin, Kalev, Kelly, pg. 2, 2007), the short-term conflicts between two parts are predictable. As the new CEO originally comes from the Opera, how to mitigate the dissatisfaction of the Symphony members becomes an important issue.

Long-term challenges:

1. Sustainability

The most significant problem in sustainability is financial management. U.S arts organizations have a relatively small portion of total income came from federal, state and municipal governments; whereas, the majority of income was generated through ticket sales and contributions. So the optimal way to generate more revenues are adding more performance because the incremental cost for an additional show is small once a performance has been rehearsed. However, the Utah symphony is already performing to a 52-week year-round schedule, which leaving very small space for new revenues. What’s more, the income statement suggests that even though Symphony owns almost $8,000,000 more than Opera, the high program expense offsets 80% of its assets. According to the projected income statement, both Symphony and Opera will lose about $100,000 of surplus next year.

2. Organizational culture

Culture is a system of shared values (defining what is important) and norms (defining appropriate attitudes and behaviors). Strong cultures enhance organizational performance in two ways. First, they improve performance by energizing employees—appealing to their higher ideals and values and rallying them around a set of meaningful, unified goals. Second, strong cultures boost performance by shaping and coordinating employees’ behavior. (Chatman, pp21)

However, Utah Symphony and Utah Opera have two different cultures due to their environments. The Symphony environment is staid and as a result, symphonies tend to be slow to change and not used to having things happen quickly. The Opera, in most communities, is second to the symphony, and in order to compete must always be looking for new ways of fundraising, marketing, reaching out the community, and communicating with the public, which has led opera companies to be much quicker to adapt to change.

3. Strategy

Symphony and Opera are using different strategies, each has its own pros and cons. Opera is flexible but unsustainable. It only has 23 permanent staff and artists are hired for a specific production. So if the artists are not available or have a time conflict with other performances, the show in Utah Opera is likely to be canceled. Opera is doing a good job in promoting broad public knowledge and appreciation of opera, which not only create opportunities for promising young artists to develop their talents but also increase the students’ appreciation of opera to ensure the future audience base.

Symphony is more sustainable but costly relatively to the Opera. It started as a part-time community ensemble, but now it is a renowned, world-class symphony. Symphony employed 33 full-time staff members and 83 musicians. The orchestra is performing to a 52-week year-round schedule, which brings in a lot of revenues. However, the large team also results in high cost of the program.

Recommendation

Recommendations to short-term challenges

1. Mitigate the objectors by providing benefit related to them: Many stakeholders vote for the merger because the merger would increase the new entity’s ability to attract world-class artists, maximize the efficiency of administration and planning, give donors a greater return on their investment and create new educational opportunities. These reasons should be detailed and expanded to persuade the objectors. Also, if the objectors could see a direct benefit related to themselves, they will be more willing to support the merger. For instance, the merger will reduce the administrative cost by 20% and increase the revenue by 30%, and the surplus could be used to raise salary, purchase new costumes, and improve the rehearsal environment and so on.