Arts Governance

People, Passion, Performance

Ruth Rentschler

• Publisher: Routledge
• Year: 2014
• ISBN:
  9781317815419
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Museumsverwaltung

Since the crisis in governance which led to a shortage of capable board members, recent years have seen the emergence of the enterprising arts organisation – a development which has led to the need for new types of board members who have a greater understanding of 'mission, money and merit' within a cultural construct.

This innovative book explores the world of the arts board member from the unique perspective of the cultural and creative industries. Using a wide range of research techniques including interviews with board members and stakeholders, board observations and case studies this book provides a rich and deep analysis from inside the boardroom. It provides in-depth insight into the changing pressures on arts boards after the financial crisis, and focuses uniquely on the role of passion on arts boards.

Part of the Routledge Research in Creative and Cultural Industries Management series, written specifically for people seeking to develop their careers in cultural and creative management, this book is also for people working in and with arts organisations, in government and non-profit arts organisations. It will also be of interest to academics and researchers working in the wider corporate governance field.

Part I

Arts governance

1 Arts governance experiences

Nowadays recruiting a board is a delicate and serious business. You need people who are leaders in their own fields, dedicated networkers with good political and corporate connections. They have to be … on tap to offer pro bono advice, be held responsible in the case of economic downturn, and to do all this for nothing.

(Bell 2006: 1)

What are the experiences of men and women on arts boards? On what journeys do their stories take us? Arts Governance: People, passion, performance is about governance, boards and board members in a globalised, changing world; it is based on the perspectives of people who know about boards from experience – men and women on arts boards and their stakeholders. They are like pilgrims on a journey of discovery. This book takes the reader on that journey, over time and to strange lands, with the purpose of finding out through other people’s experiences what arts governance is all about. As in all pilgrimages, there has to be an aspect of sacrifice; in this context it comes in the form of the mostly voluntary nature of the journey, in a domain subsumed by passion.

Governance entails a system in which organisational elements are directed, monitored and regulated. Effective governance is required for all components in the system to function, whether the organisations are charitable institutions, corporations, voluntary associations, venues, facilities, festivals, elite or community arts organisations. As John Bell states, recruiting the right board members is a first priority. Governance provides a framework for oversight and performance. It assures stakeholders that the organisation in which they have invested time, effort and money – as well as their reputations – has appropriate checks and balances and is empowered to make decisions that are in the best interests of stakeholders, the board and the organisation. Governance deals with matters of strategy and policy, as well as monitoring and control, so that organisational performance is enhanced and statutory and fiduciary compliance is undertaken (Hoye and Cuskelly 2007). As governance shifts and changes, with boards seeking to improve form and function, a chain of influence sees board members imitating one another over time, learning from one another and meeting external stakeholder needs as well as that of their own organisations. These changes are occurring across organisations of different types (Marginson and Considine 2000).

Nonetheless, a crisis in governance, described in Chapter 2, has led to a shortage of capable board members. The quotation at the beginning of this chapter demonstrates that people on arts boards need high level skills and experience. But rarely have they been asked about their role on an arts board. Hence, the book starts with a call for people of passion to serve on arts boards, to provide leadership to a sector that has been subjected to significant change over the last two decades in a number of countries including the UK, the USA, Australia, New Zealand, Canada and countries in Asia, such as China, Taiwan, Singapore and Hong Kong. Arts Governance: People, passion, performance describes the process of change that has seen arts boards reorganised, restructured and professionalised by passionate people concerned for the sustainability of those organisations. These changes have significant implications for the recruitment and selection, development, accountability, responsibility, strategic oversight and performance of arts boards.

This book is the result of a wide-ranging research project with men and women on arts boards. It is an appropriate resource for people in small, medium and large arts organisations, ministries, government departments and business people who are on arts boards or aspire to serve on arts boards, as well as students studying arts governance, a growing domain of graduate focus. It has relevance for people in other industry sectors who share the issues of accountability and responsibility in governance in a changing world. I share the passion observed by my study participants, having a longstanding interest in the visual arts from my student days and now as an academic in arts management. I also have a deep-seated interest in governance as a board member on arts and nonprofit organisation boards, as well as through my research.

Why arts governance?

The aim of this book – as of the research project on which it is based – is to capture and interpret the core features of a new type of governance that is emerging from the shadows in arts organisations. These arts organisations – for whom governance is of central importance – are established and emergent, but all are open to scrutiny and debate. Yet we know little about the people who serve so willingly on these nonprofit boards when boards are changing significantly. The people on them often have a high profile, meaning that media attention to the merest whiff of a scandal has increased. The book sets out to reveal what is happening in the board room, through discussions with individuals who are part of the governance process in the contemporary setting. I extend the story to the historical context around governance, to issues of similarity and difference, diversity, governance strategies and convergence within, between and on arts boards.

Changes in arts governance are well under way. There is an evolution, if not a revolution, of sorts going on in arts governance. Forms of arts governance that have survived previous government and environmental assaults are being modified significantly. Those that have survived in the old form are feeling the pressures of a new way of working; new structures of governance, management and leadership are putting pressure on their old ways of serving the organisation. Certainly, the post-World War II agreement of a cosy form of governance as a clubby arrangement for the few has been broken open by new players, a new insistence on democracy and diversity in decision-making and selection. Men and women on arts boards have more power but less room to move in a compliancedominated environment, characterised by shorter terms of office and increased demand for additional performance and strategy from those dependent on them.

Increasingly, there are independent forms of executive control from paid managers replacing the volunteer culture of old. The title chosen for this book reflects the new types of people on arts boards who are passionate, but must perform in a governance framework. I assert that the emergence of the arts board member whose passion is harnessed by significant changes, provides a new means of governing. It is this story that is told in the following pages. Arts governance, then, is undergoing crucial changes. These changes include:

• Arts organisations are being led by strong, executive, paid managers working in partnership with (mostly) volunteer board members whose role has become professionalised.
• Arts organisation missions remain aesthetic in focus; however, the strategies and plans that underpin them reflect a new corporate agenda¹ but with board dynamics and processes in some senses remaining distinctive.
• Arts boards are becoming dominated more and more by men and women with ‘business’ backgrounds, who reflect the new dynamics in arts organisations, but who recognise the importance of the art form for organisational success.²
• Arts organisations often still work within a dual structure of artistic and management roles, both reporting to the board.
• Changes are driven by an external environment³ where funding from govern-ment does not match the strategic needs of the arts organisation, forcing a diversity of funding sources to occur, thus changing player behaviour.
• Some aspects of the nonprofit arts organisation overseen by its board are driven by an entrepreneurial spirit, such as for major events, cafés and restaurants, parking lots, ticketing and merchandising.
• The product is quality and is created, developed and delivered within a dual framework of nonprofit and entrepreneurial behaviour fighting for relevance, where one or the other may be a dominant organisational force.
• These dualities present paradoxes of performance for men and women on arts boards where the organisation is open to diverse funding needs and competition in a process of isomorphism whereby arts organisations with different histories and traditions seek to find a way forward because of new commercial realities.

In order to describe these phenomena, I use the term ‘culture of directorship’. This term encapsulates the dualities of arts governance in a nonprofit environment, where the arts organisation is multidimensional and not restricted to a profit motive. It recognises the organisational difference in many arts organisations where there is often a dual management structure which sees the artistic director and CEO both reporting to the board as well as serving on the board (Reid and Karambayya 2009). It captures the aesthetic and corporate dimensions and the manner in which art and business coalesce in a state of dynamic tension. The fine balancing act between art and business enables performance to occur in a strategic framework, underpinned by passion, but harnessed for best results. It is a precarious task with potential for things to fall apart. The mission of the arts organisation is not about money; it is always about something more fundamental in an aesthetic sense. It is linked to the support that board members provide to artists, as the artistic product is key to its purpose. But money enables the aesthetic mission to be achieved through the realisation of the art form within a governance relationship with the executive and staff and the external environment. Nonetheless, board members operate under financial constraints where productivity cannot be increased due to fixed seating in venues or set seasons in performances limiting financial gain. Therefore, money is central to what happens on the board, although the product is quality (DiMaggio 1985).

What I found is that governance is more than going to board meetings and behaving in a manner that imitates a corporate board. Board members are struggling to find a new way of working that marries their aesthetic selves with the corporate need for money to meet the needs of the mission. Over and again I found that people were not fixed on outside norms of governance but were seeking their own solutions to problems that were pertinent to the arts. One argument presented in this book is that passion needs to be harnessed for optimum performance of the arts board. Men and women on arts boards need to pay heed to the aesthetic mission of the organisation and its art form, but not too much so. Governance sits between government – that establishes policy and provides funds for a significant part of the arts – and management – that executes the strategies of the board. Men and women on arts boards mediate between the external forces of government and other stakeholders and the internal dimensions of the arts organisation in its art form. In other words, governance straddles the external and internal worlds in seeking to make appropriate decisions in the best interests of the arts organisation. Some of the tensions that I saw on arts boards are between those who believe that arts boards have sold out to corporate interests in the way the board operates and those who do not. There are differences in values and beliefs that men and women on arts boards hold that cause tensions and see passion boil over from time to time.

This is the case in any organisation undergoing dynamic change. Some arts organisations and their boards are in this category. Some men and women on arts boards hold onto their traditions like a lifeline, hoping their old ways will save them from the rising tide. The destabilisation that is occurring in arts organisations, and which affects the operation of their boards, is caused by a range of factors, not the least of which is the global nature of the arts as industry.

The second factor affecting the governance of arts organisations is the reduction in government funding that requires arts boards to seek other funding sources to fill the gap left by government withdrawing. This change has seen a more entrepreneurial arts board member develop, more in keeping with the US model of fundraiser. Nonetheless, Australian arts boards are not like US arts boards. Australian arts boards are small, with 8–14 board members bringing a variety of skills to the board room. They are there for a variety of regulatory and legal reasons, not mainly to fundraise as is the case in the US system. Fundraising takes place at a number of levels in the Australian arts organisation. In well-resourced arts organisations, it is the role of the fundraising team of management. In less well-resourced arts organisations, it is undertaken by the CEO and each functional head in the arts organisation. Certainly, board members facilitate fundraising, opening doors, creating opportunities and working with management, but there are no large boards whose primary role is to provide significant funds each year.

A third factor is the rise of what Peter Drucker called the knowledge economy, where e-services dominate the means of doing business. Of course this factor has been part of the reason for the rise of the global village. Arts organisations are part of the services sector and are responding to the knowledge economy in myriad ways, but in essence they are being required to adjust to a new world order. Where solutions to this confluence of changes are to be found, governance is at the centre of the need to find answers. Governance is a means of determining the distinctiveness and identity of each arts organisation, where it fits in the pantheon and how it straddles the internal–external nexus. While governance done blandly is just another form of corporate compliance, governance done well can remake the arts organisation so that it is innovative, distinctive and different – essential elements in a competitive, global marketplace.

Across arts boards

While research on nonprofit governance has grown over three decades, providing insights on boards, the literature almost has been silent on the roots of governance and experiences of individual directors. Many books and articles have gathered their material from publicly available documents, such as annual reports, databases or proxies for board members themselves. I was not interested in replicating such studies. This book is all about the workings inside the board room, as told by the board members and their stakeholders themselves. Therefore, there is little in this story on board composition, independence of the chair, inside and outside board members or the committee structure of the board. Taking arts governance as the focus of study, I move from the historical and growing significance of the sector, to its increasing professionalism and its openness to outside scrutiny in an age of accountability and responsibility for effective performance.

The focus of this book is on individual board members governing; however, there are changes occurring that are common to all the board members and their stakeholders to whom I spoke. Boards are being restructured. Then as a result, the new board restructures the arts organisation. Boards are increasingly comprised of more people from a corporate background rather than people from the arts. This is not to say that there are no arts people on arts boards, but it is now less common to see an arts board comprised mostly of artists. There is recognition that something more and something different in skill sets is needed. Changes are happening in different ways, in different time frames and at different paces. But they are happening across all arts boards. Change is necessary in order to ensure that arts boards reflect the dynamics between men and women on the board and the paid executive. It is also necessary to reflect the new environmental reality of a knowledge economy, in an international world of competitive organisations moving onto local turf. Overall, I witnessed a government-driven and board member-led change process converging at board level, with challenges faced about financial goals and aesthetic needs.

Other researchers have focused on the organisational level of the board. Some have researched the system of governance used by government, which is political-level governance. While the latter type of governance is outside the scope of this book, it underpins the context in which men and women on arts boards operate and establishes the framework for many of the changes to the ways in which these people oversee their boards. It includes the audit, reporting, regulatory, relational and funding requirements of nonprofit arts board members. It also includes the people who interact with the board members, such as stakeholders outside the organisation. Regulatory requirements on nonprofit organisations may vary depending on their organisational type, jurisdiction or legal framework. This book opens up scope for listening to the board members, so that we can learn from their experiences. The approach allows a broader sweep of governance to be undertaken that may uncover new insights.

Against this changing and evolving background, governance theories alone seemed deficient for research into the people, the men and women on arts boards, their passion and their performance. This book therefore has firm foundations in governance theory and builds upon these with an exploration into the hearts and minds of individual board members from an historical and contemporary perspective, and by an examination of their stakeholders. It provides a chapter that revisits the base; however, draws on a wider range of theories to examine these issues.

Passion is a new and innovative perspective from which to examine nonprofit boards. Within the discipline of psychology however, passion has been the subject of research for a number of years. Researchers in that domain have identified several theoretical perspectives on passion that may be applicable to men and women on arts boards. From psychology, theories have been extended into consumer behaviour and into the careers literature. Yet psychology has rarely been used to interpret arts governance – or governance at all for that matter – although the arts provide a link to a vital part of our psychology. The study of performance is a more developed body of literature on governance, less so when strategy as a performance mechanism is concerned. The main focus of performance research has been on boards, their roles and responsibilities, composition and effectiveness (Cornforth and Brown 2014). These several perspectives also underpin this book.

Governance context

While arts board members are varied, many arts organisations possess similar attributes. Arts or...