Profile: Richard Huxtable, FD of the Royal Philharmonic Orchestra

Richard Huxtable, the finance director of the Royal Philharmonic Orchestra,
recently did something very unusual. He told his boss that the RPO, for which he
has worked for the past six years, ought to get rid of him.

‘Personal motivation is a strange thing,’ he says, by way of explanation. ‘I
am not sure I always understand my own motivation. If I felt that I had stayed
on for longer than the company required, I wouldn’t be happy.’

Huxtable had joined on a temporary basis, and still finds himself there six
years later, but it was never supposed to be a permanent job.

It was the imminent departure of his financial controller that set him
thinking about the position. ‘I thought if I just replace her then I am here
indefinitely. But I could ask: have we completed a chapter?’

That was the decision he reached, and he leaves the orchestra in good shape.
When he joined, it was in a financial mess. There was, he says, ‘little
confidence from key stakeholders and key directors in the financial information
we were putting out’.

There were regular discussions, he says, about whether the orchestra should
carry on trading or go into liquidation. Other orchestras were in difficulty
too, but the RPO also had its accounting issues.

‘When I came in, the company was keeping records suitable for statutory
accounts and VAT returns,’ he says. But the accounts for the company’s various
activities were kept individually by each department, making for a chaotic
system that collectively was not delivering clear or comprehensible information.

Since departments, legitimately would sometimes both claim the benefits from
the same initiatives, positive results from each department would not translate
into positive results for the orchestra as a whole.

A new reporting package was at the centre of a turnaround that is now seeing
results. Huxtable will later this year speak at the Softworld conference about
the company’s technology and its achievements.

Its business splits into three broad categories: concerts for hire, the major
moneyspinner; concerts for the quality music press, (‘If you sold all the
tickets in the hall we would still make a loss’); and charitable work relating
to its music.

The Royal Philharmonic Orchestra is one of four symphony orchestras in
London, a constant issue in that many ask why the capital needs so many. ‘Four
seems too many, three too few,’ Huxtable says.

As far as the finance function is concerned, there are various things that
Huxtable has had to focus on. The company’s revenue recognition and working
capital is a key issue, for instance. ‘The first transaction [for a concert for
hire] might happen two years ahead. Up to three months afterwards we might get
the last cost coming in. Collecting together those items is a challenge.’

Formed by Sir Thomas Beecham in 1946, the company has now turned the corner
in its late 1990s fight against bankruptcy. It has even moved into its own
London home for the first time, at Cadogan Hall.

It is a company limited by shares, quite unusual in that other orchestras are
limited by guarantee, Huxtable says. The board is made up of what Huxtable calls
‘playing’ and ‘non-playing’ directors. There are no ‘non-execs’ here, and the
musicians hold the majority on the board.

The company’s total income was just under £6m in 2005. Around 10% of its
funding comes from the Arts Council. Fees from its concerts around the country
are far and away its largest source of income, netting almost £5m last year.

Musicians are paid according to performances and according to what they
played and where in the orchestra. That creates a certain complication, Huxtable
says.

There have also been recent tax worries. HM Revenue & Customs earlier
this year considered changing the way in which players were treated for national
insurance purposes.

Musicians were treated as both employed for national insurance purposes and
as self-employed for tax purposes. HMRC was seeking to impose backdated national
insurance bills for the orchestras.

The result was an outcry. Figures of £35m were quoted, which would, people
argued, have entirely cancelled out a special Arts Council grant. HMRC
eventually backed down on the issue in order not to destroy the industry.

Those charges ‘would have bankrupted most orchestras in England,’ Huxtable
says.

Alternatively, it could have led to the Arts Council being forced to provide
greater subsidies, which would have been a somewhat ironic state of affairs. ‘I
think we would have looked to the Arts Council,’ he says.

You could say that Huxtable would be the man to know about the likelihood of
bankruptcy. He joined the RPO from PricewaterhouseCoopers, where he had worked
in insolvency, working with companies on the brink. He concentrated primarily on
business recovery as well as advising lenders. Having looked at the numbers, his
job was to tell them, how much money they’d be likely to get if the company went
bust.

Somewhat different from being the finance director of a major orchestra. His
expertise in struggling companies, of course, was obviously something the RPO
was seeking at the time. But there is another link, he says.

‘What appeals to me about both is making sense of complicated numbers, and
trying to explain it in a simple way.’ That’s a principle he sees as very
important in his career, something that he feels strongly about.

A key moment in his job at the Royal Philharmonic came when a musician on the
board responded to his presentation of the numbers by saying enthusiastically:
‘It’s like reading music off a stave.’

‘That gave me a real thrill,’ says Huxtable, obviously pleased at his
contribution. Comparing the accounts to a work of art is not a compliment that
most FDs can boast.

Thinking to the future, he is not clear what he would like to do next, saying
only that it may be not-for-profit given the way that recruitment agencies work.
He is not, at the moment at least, interested in chief executive roles.

For Huxtable, a key element of his job and of finance jobs is the human side,
he thinks, something that takes people by surprise.

‘It’s one thing in theory, but when you come to do something in practice
there’s a lot of time spent on the human side. When talking about the
[reorganisation of the RPO’s spreadsheets], not everyone is delighted about
that. There can be quite a bit of resistance.’

He doesn’t think that people necessarily need more training to deal with
that, just that they should be aware that in trying to push through big
accounting changes, dealing with the natural resistance of people can be a big
issue.

Among other interesting moments in his career, he pinpoints his time trying
to establish whether chief executives of failing companies were actually telling
him the truth.

‘During my time working in insolvency the most memorable things were when I
was talking to fraudsters. It hasn’t happened very often. I think I have spoken
to three.

‘It was very disturbing,’ he says, concerned that one’s sense of judgment can
be so wrong on occasion. ‘The thing about them is that they are able somehow to
bypass what’s going in your head, or to send it the wrong message. They couldn’t
have been nicer people, then you realise you have been told a pack of lies. It’s
very disturbing.’

How can you get past that? He doesn’t know. ‘Is the lesson: never trust
anybody? I don’t think it is. You can’t go through life thinking everyone could
be that fraudster.’

Striking a chord

Tomorrow the Royal Philharmonic Orchestra will celebrate its sixtieth
anniversary. The first concert was held on the 15 September 1946.

Exactly 60 years on, the RPO is set to perform at the Royal Albert Hall,
playing Mahler’s rarely performed Symphony No.8, Symphony of a Thousand. The
performance will include the vocal forces of five massed choirs (London Symphony
Chorus, London Philharmonic Choir, London Chorus, Brighton Festival Chorus, New
London Children’s Choir.

Given all of that, does it give Huxtable pause for thought about leaving his
role? It must be a shame to leave all that behind. Does he not get privileged
access to some of the best concerts and also get to meet the great and the good
at gala events?

He is not a musician himself and the particular music is something that he
has come to appreciate, he says, liking the ‘sense of drama’. He downplays the
access he gets. ‘I go to concerts where there are tickets unsold.’

? The accounting system is the engine room of any organisation so deciding to
change it is a major step, especially when faced with making this decision for
the first time. Huxtable found himself in this position when he joined the Royal
Philharmonic Orchestra. In a masterclass at the Softworld Accounting &
Finance Solutions event in October, he will give first-hand account of the
experience.

Softworld takes place at the NEC, Birmingham from 18–19 October. For more go
to www.softworld.co.uk/af