Chapter 13
The Team
Introduction
This chapter reviews the internal and external players who are the operating and advisory teams of the production and development operations. It also presents the primary considerations related to planning the team, as well as evaluating, employing, or retaining, and setting compensation and fees for all the players.
The Complete Team
No producer would attempt principal photography without a whole production team, yet even production teams begin with only three or four key players, then add department heads and so on until the team is complete.
The same is true for a production holding company. It may begin with only the producer and an operations director. Between the two of them, they cover all chairs. When there are vacant areas of responsibilities, the producer should determine and assign what other positions each member of the team-on-hand are fulfilling. This allows for clear distribution of workflow, accountability for praise and counsel, and clarification for the most valuable skill-sets needed for new team member hires, until each position is filled.
Producers assign specific responsibilities to individual team members, so that all business demands are met.
Most production holding companies begin with an incomplete in-house team, supported with outside professionals that may include an attorney, an accountant, a producer’s sales representative, an international sales organization, a public relations (PR) firm, or an advertising agency. These may provide crucial services at a more reasonable cost than the producer would pay for comparable full-time in-house executives. Regardless of the source, producers should be able to perform all the functions necessary to run their business in a coordinated, efficient fashion. The organization charts in Figures 13.1 and 13.2 present the basic positions necessary to optimally operate an independent production holding company and its development (if they are separate entities) and single project operations/companies.
Company Structure
In the United States, the production organization and producing entity structures are recommended to be (and most of them are) limited liability companies (LLCs) or subchapter S corporations. These structures provide optimal legal protection for the members/shareholders and principals and are single taxation entities—as the entities are not taxed separately from the members/shareholders and they provide the optimal flexibility facilitating growth, mergers, acquisitions, and any other eventualities. The company legal structure used most often in the United States is the LLC. Always discuss the most beneficial legal structure with your attorney and accountant before determining it. Allow them to advise on all aspects of the organization, author the Operating Agreement and any partner/buy-sell/or other agreements, register the entity(ies), and conduct the organizing meeting(s).
Figure 13.1 The production company
These entities are owned by their members/shareholders, who approve the managers/board of directors who are responsible not only for establishing the company’s constitution, policies, and procedures, but also for appointing its officers responsible for operations.
Figure 13.1 The development company
In the production company chart in Figure 13.1, the members/board is shown in a separate box, as it is rarely involved in the day-to-day operations. Unless a special meeting is called, its members just meet per the Operating Agreement, typically annually, when they review annual reports and projections, and participate in the review of matters related to mergers, acquisitions, substantial capital restructuring, or significant changes in company policy and procedures.
The Production Holding Company’s Teams
The production holding company’s chart shows three tiers of the team. The first tier is composed of a six-member advisory team; the second tier is composed of an operating team with six key players who are the production holding company’s executive committee; and the final tier is composed of the executive committee’s staff.
The Advisory Team
The advisory team substantially benefits every production organization. The members of this team are entertainment industry professionals who are rarely available or affordable for executive positions within a production holding company. They are seasoned industry players, and their advice, counsel, relationships they have with other powerful people, and their deal influence amplify the production company’s industry position, broaden its reach, and sharpen its business and creative focus and performance. These typically are initially informal, perhaps nonpaid relationships. This team is especially important for newer production entities.
The most common members of production holding company advisory teams are as follows:
- An entertainment bank executive
- An entertainment attorney
- A brand-making professional who is most often an executive in a public relations firm or advertising agency
- A physical production specialist who is usually a line producer or unit production manager (UPM)
- A completion bond executive
- An entertainment accountant
- A distribution or international sales executive
Their primary function is to serve the company individually as mentors in addition to providing more customary paid professional services.
Most potential advisory team members have no natural business motivation to serve as a member of a production holding company’s advisory team except that they are mature in their professional duties and may be persuaded to guide producers and their organizations that need their help.
The keys for newer production companies to win the support of these powerful people are the ethics and achievement-commitment of the producer, the kind of projects the producer is committed to create, and the approach the producer is taking to produce and distribute these projects.
The production company may also retain the attorney, the physical production specialist, the PR specialist, the international sales maven, and the accountant. The services provided by and the process of selecting and engaging a relationship with a bank are reviewed in Chapter 6, completion bond executives are covered in Chapter 8, and entertainment attorneys are discussed in Chapter 9. Though certain loans may be too small or large for the bank with which the advisor is associated, usually legal and bonding services are provided through the organizations with whom the producer’s advisors are associated.
The services provided by a physical production specialist are presented in Chapter 12. This person usually is selected by research and reputation. Producers most often become familiar with line producers and UPMs by their produced projects. Like most industry talent, these professionals are very busy but quite approachable. Producers should meet with the three to five strongest candidates, present their company’s purpose, explain the relationship desired, and express enthusiasm for the candidate’s advisory team participation.
The Executive Committee
The executive committee consists of the producer and key personnel. These are the people responsible for ensuring that the holding company’s objectives are fulfilled. They are responsible for all earnings and are accountable for all operating expenses. This committee typically meets once a week, when it reviews company progress and revises plans/projections.
The producer’s title is usually chief executive officer (CEO), president, or both, or Managing Director, and the department heads may be vice presidents. The producer is the team leader responsible for the ultimate creative and business bottom line of the company. The producer’s duties are presented more fully in Chapter 14. The producer may have a subordinate officer who is primarily responsible for directing the department heads. This person may also serve as the chairman of the executive committee and have the corporate title of chief operating officer (COO) or senior vice president.
The primary duties of the development vice president are to solicit, discover, and recommend stories. After the story has been greenlit, the vice president manages its development under the producer’s direction.
The global sales vice president is responsible for preparing the initial sales breakdown for each project that passes the scrutiny of an internal greenlight, as well as evaluating sales strategy, presales, and all initial and continuing rights sales of the company’s projects. This vice president may direct the activities of a staff, including an international sales manager and an ancillary sales manager, as well as the vice president’s assistant(s).
The advertising and public relations vice president is responsible for establishing and sustaining the production company’s brand to the entertainment global trade and global consumers, and for establishing each project’s initial brand with the global entertainment trade and global consumers. This person also manages the company’s brand in conjunction with the various global distributors, reviews and manages the producer’s remarks relative to the media plans and media buys before and during the theatrical, streaming/home entertainment releases, and audits media and public relations’ expenses fulfilled by distributors on behalf of the producer. This vice president also may direct the activities of a staff of one or two assistants, plus the activities performed by promotions/public relations firms, advertising agencies, and other related vendors.
The business affairs vice president typically has a law degree and directs the deal documentation preparation for development and production-related issues, along with sophisticated rights sales and distribution. This vice president closely correlates his/her work with the company’s attorney, directs an assistant, and usually participates in development and production negotiations.
The finance vice president manages the company’s cash flow, accounting, tax management, government agency reporting, management reports, and the company’s information systems. This VP also manages the relationship with the company’s entertainment accountant and manages the efforts of the operations director and department assistants, if there are any.
The international sales manager and ancillary sales manager assist the global sales VP in establishing each project-in-development’s global value, by territory and right; preparing promotional, publicity, and marketing materials; meeting with global media and distributors; negotiating and preselling some of these rights if this is part of the project’s production funding plan; and preparing all other rights for future sales. This team also manages all global project market activities. Some of the most critical sales relationships—for instance, those with U.S. studios—may be led and primarily carried out by the producer. But even for these, this team is responsible for ensuring they are planned and accomplished.
Typically, the production company’s operations director is responsible for keeping the development operation/company on task and holding the entire team accountable to sustain balance between the timing allocated for developing its motion projects and the budget the team has available to achieve this task. This person also fulfills all daily accounting functions, through to the delivery of trial balances to the finance VP for the purposes of this team member’s adjusting entries and preparing interim, monthly, and quarterly reports.
The Development Organization/Company’s Team
The development organization/company at a minimum should keep its own separate income and expense accounting. If it is a separate business entity from the production company, it has its own accounting records and government agency reporting. However, it is most commonly at least half-owned by the production company.
Regardless of whether development operations are performed as part of the production company, or in a separate entity, most, if not all of its members are the production company’s team, physically residing in the production company office.
Mirroring the production company, the development operation’s team has three tiers: Advisory, Executive Committee, and Staff.
After a development operation’s first project has successfully completed its internal greenlight, the producer focuses first development priority attention on assuring its development is kept to schedule and within budget. The development manager tracks all the producer’s time, as well as the time each other member of the production team spends on each project in development, and apportions their costs to each project. If the producer uses a separate development entity, this entity pays the producer and each of the production company team members that portion of their income, which otherwise would have been paid by the production company, for serving in their respective development positions.
At least initially, in many production companies, the producer is also the development organization’s development manager and is responsible for story search, evaluation, recommendation, and all aspects of each project’s creative development and preparation, in every respect, for physical production. The development manager uses the development operations and production company team as needed, expensing them per project.
Optimizing the Teams
There are as many production companies whose operating temperament is chaos separated by moments of sanity, as there are companies whose operating temperament is steady, progressive achievement. The difference is rarely the amount of work being done but rather the approach the teams take to accomplish the work.
Operating temperament is set more by the producer than by all the rest of the combined team. It is crucial that each producer embrace this responsibility. Producers set the pace. They establish the operating style. They determine the stability of the relationship dynamics within the team and with all the others with whom the producer’s team relates.
Among the highest achieving and happiest production company teams, there is one management principle observed more consistently than any other.
This is the observance by the producer, and subsequently by the rest of the executive team (and therefore the staff), that includes these three phases in almost everything they do:
- They plan through study and evaluation.
- They do what is planned.
- They evaluate what was done and then course-correct.
These phases are deeply interrelated. Employing all of them optimizes the producer’s capacity to accomplish every desired task, know why misses occur (when they inevitably do), and to naturally improve. It also sets a resilient, self-correcting standard upon which team members can rely.
Planning our work creates the greatest assurance that the work we do will accomplish our short-and long-term objectives. Working moves us forward to the achievement of our objectives. Evaluating and improving our work makes enlightened planning possible, and inspires more confident and satisfying work. Sacrifice any one of these three critical phases, and predictable achievement is crippled. Applying these principles is especially helpful when selecting new teams, reorganizing or reshaping existing production or development teams.
Planning has been emphasized throughout this text. Just as discovering a project we want to produce is only the beginning of planning how we are going to develop, produce, and distribute it, likewise preparing a mission statement that sets forward why we are in business is only the beginning of planning how we will achieve our objectives.
Part of each producer’s plan should be identifying the talents and capacities needed and desired in the individuals who will be the advisory, operating, and staff teams. The team members should embrace the production holding company’s mission statement, contribute to its clarity, and share the producer’s approach to doing business.
Discovering, Negotiating, and Compensating
Producers are best served by team members who are not just good at what they do but also have the attributes, character, and operating styles complementary to the producer and the rest of the team.
Discovering
For existing teams that have vacancies, the best approach to filling them is to write a description of the person sought, their duties, accountabilities, and compensation. This description should be circulated among the executive and advisory teams. Additionally, industry personnel agencies and advertising in the trade papers should be considered to allow fresh, vibrant talent the opportunity to join the team. Set a time for the decision.
Include those in the decision-making process who may share duties or parallel positions with the open post. Attempt to adhere to the time set, but never select someone less than the position demands. Team orientation and releasing someone are emotionally and financially expensive. It is usually better to wait for someone who appears sure.
Many new production companies start by bringing on their advisory team. These members are easy to spot, evaluate, and approach. Once they are in place, then use them as resources for the executive committee. After the executive committee is set, use each team’s members to recommend staff.
Negotiating and Compensation
Before negotiating, research the industry’s fair compensation for that position, then temper this amount to the company’s projected budget. Negotiate the best relationship possible with the person, below the pay budgeted, if possible. If you hire below the budget for this position, then, after the negotiation has concluded, let the person know that after their first three month you will meet with them again to review their achievements, with a possibility to give them a small pay increase. Then, if their first three month interview is positive, increase their pay to the budgeted amount. Beginning their experience on the team with both accountability and good will motivates a positive attitude and likely increased productivity.
Production companies are naturally rigorous environments. Participating in a winning production team demands everyone’s personal excellence. Driving successful projects is emotionally—and should also be financially—rewarding. It is very good business for producers to set a percentage of pretax profits aside (perhaps 3 to 10 percent) to create a profit pool from which all employees will annually participate. Some producers require new team members to vest (mature) in their relationship for 12 to 24 months before they qualify to participate. Sharing profits builds team spirit and loyalty, which fosters a happier and more profitable environment.
Chapter Postscript
New and existing producers are more grateful for, direct them more efficiently, and have happier teams, when they understand all the business and creative functions that must be done and the work that their production and development teams are accomplishing. These functions should be understood in terms of the producer’s advisory, operating, and staff tier teams. Even if some team members are sitting in multiple-responsibility chairs, producers should have complete teams to ensure the accomplishment of all the company’s “must-do” work.
The producer sets the operating style and performance of the team and should demonstrate these in ways that promote the team’s satisfied, sure, successful achievements.
There is an abundance of talented prospective team members. A good plan to discover them, patiently executed and use of team resources, will draw them in. Evaluating teams regularly and allowing team members to participate in the company’s rewards promote solidarity and mutual success.