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APRIL 2004 CONTINGENT WORKFORCE STRATEGIES 19

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16 CONTINGENT WORKFORCE STRATEGIES JUNE 2006

Washington, Foster and Pacino are, ofcourse, Oscar-winning actors. McClendon is aformer corporate CFO who advises Silicon Valleystartups on financial issues. The link is they alldepend on contingent work to make a living.

The motion picture and television industries Hollywood, for short rely more heavily ontemporary employees than almost any other indus-try. Dominated until the late 1950s by studios thathad even the biggest stars on their payrolls, con-trolling their careers, Hollywood has evolved intoa business of hundreds of production companiesthat hire temps to create their products.

Who those temporary employees are, howcompanies find them and how much they are

paid offer insights of use to managers in otherindustries.

With so many different companies makingfilms, television programs and videos, there canbe no universal business model. But all of themuse contingent producers, directors, cinematogra-phers, actors and crews for the same reasonsother industries use temporary industrial, admin-istrative and even professionals.

The cost of making movies is so extraordi-narily high that in everything we do, and whenlooking at different models, we always think ofhow we can make it more cost-effective, saysMarjorie Randolph, SVP of human resourcesadministration for The Walt Disney Studios.ILL

USTRATIONBYCATHYHULL

What do Denzel Washington, Jody Foster, Al Pacin

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JUNE 2006 CONTINGENT WORKFORCE STRATEGIES 17

By Bill Bucy

and Merle McClendon have in common?

Its an industry

where everyone

is a contingent

employee

The average cost of making a live-actionmotion picture intended for theatrical release in2005 was $60 million, according to the MotionPicture Association of America, the trade groupthat rates films and lobbies on behalf of theindustry. Add in post-production and market-ing costs, and the total soars to almost $100million.

TH E BUS I N ES S MO D E L SA number of companies in a wide range of indus-tries are moving toward a business model inwhich regular employees focus on the core busi-ness processes and contingent workers smoothout the ebbs and flows created by spikes in prod-

uct demand or unusual occurrences. The use ofcontingent employees varies from company tocompany, but averages about 9 percent amonglarger employers, according to a report byStaffing Industry Analysts, Inc., the publisher ofthis magazine.

The entertainment industry, though, organizesits product creation into projects a movie or aTV series. In some cases, that means an umbrellacompany, such as Carsey-Werner Productions, willcreate and sell to networks and cable channels TVshows that are then produced by individual pro-duction teams.

Im freelance, our casting director is free-lance, everybody who works on stage director

OODLEAD

STHEWAY

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18 CONTINGENT WORKFORCE STRATEGIES JUNE 2006

Hollywood Leads the Way

down to the grip is freelance, says MelaniePatterson, producer and unit production managerfor That 70s Show. She says that even the corpo-

rate staffs of production companies she hasworked for are often contractors who work for amonth or a year. The reasoning is simple: Theykeep it flexible so that as projects change and getcanceled or new ones develop, they can keep justthe employees they need.

Disneys Randolph said large studios also usemultiple structures and which one is deployed forwhich product depends on a number of factors.Some might already be in place within Disney.Often, outside companies, such as JerryBruckheimer (Con Air, Remember the Titans),

will handle all theproduction ele-ments, includinghiring, while Disneytakes over market-ing and distribution.The efficiencygained makes itworthwhile. Live-action motion pic-tures are generally 8-to 12-month proj-ects once launched,

so basic businesseconomics demandthey be treated asprojects.

In some ways,this system is similarto the use of projectmanagers in otherindustries. Those

specialists offer instant access to skills that mightnot exist in-house or that would take too long todevelop. For instance, R&D organizations areincreasingly handing over projects to scientists andengineers with specialized expertise. That frees upregular employees to focus on the management ofprojects, sometimes several at a time.

The model is somewhat different for animatedfeature films such as those made by PixarAnimation Studios (Toy Story) and DreamWorksAnimation SKG (Shrek). For one thing, moderntechnology requires a larger capital investment inhigh-end computers, software and other technicalgear that, unlike cameras, lights and microphones,usually cant be rented. In addition, the mainte-

nance of the systems requires special knowledgethat cant always be handled by temporaryemployees. And the permanent staff must include

people who can match creativity with technicalknowledge.

Even though animated motion pictures leanon technology, cost efficiency still reigns supreme.Randolph notes that the Disney animation unit atits Burbank studio relies heavily on full-time staff,most of whom are unionized. While employeesmight flow from one project to another, they areon the payroll even during down times. That hascaused Disney to move toward what she calls arent a project deal with some artists, contract-ing with them for a single feature. They might

move to another if one is available later, but theagreement is always for a single project.Animated film production staffs will likely

become more contingent as companies seekgreater profits from their films. For instance,Shrek 2, which reportedly cost about $40 mil-lion to make, grossed $436 million worldwide.That made it the third highest-grossing film ofall time behind Titanic (1997) at $601 millionand Star Wars Episode IV: A New Hope (1977)at $461 million.

UN US UA L TE M P SWhile most in Hollywood might be contingentemployees, they arent quite the kind of people atypical company would seek from a staffing firm.

Take contingent employee Denzel Wash-ington. His agreeing to star in a motion picturecan prompt a studio or production company toapprove the project because they believe his pres-ence will ensure good box office results.According to Forbes magazine, Washingtons bot-tom line is $20 million per project, plus a per-centage of the gross receipts, merchandisingincome and more.

Washington reportedly earned only half thatmuch for starring in Inside Man (2006), but thatcould have been because director Spike Lee was apersonal friend and the project was scheduled tolast less than three months. Industry publicationsalso report Washington gets paid whether or nota movie is made. That happened when he wassigned to star in American Gangster, a projectcreated to reunite him with Antoine Fuqua, thedirector of Training Day (2001), for whichWashington won a best actor Oscar.

Its a bit different for most actors.

Hollywood

relies more on

temporary

employees than

almost any

other industry.

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JUNE 2006 CONTINGENT WORKFORCE STRATEGIES 19

For example, the Screen Actors Guild con-tract with the WB and UPN TV networks callsfor an actor with five lines or less to be paid$1,002.34 a day, which includes salary and a pay-ment for one rerun. Many temporary employeesin other industries would be happy to earn that

much in a week. However, most SAG membersearn less than $7,000 a year and the unionstrongly warns potential members that they prob-ably will have to work other kinds of jobs tomake a living.

The majority of actors, however, dontbelong to the Guild and are scattered throughoutthe United States. That means there might bemore opportunities to work perhaps in localTV and radio advertising but, for the mostpart, they are paid far less. The Bureau of LaborStatistics says the average hourly wage for thoseartists is $22.68 an hour.

At the same time, the factors that draw peo-ple to contingent work are often the same foractors, musicians, directors and producers as theyare for the growing number of people who haveadopted the temporary employee lifestyle: free-dom, variety, and the opportunity to learn.

Carl Bressler is a Hollywood veteran whohas worked as an actor (The Usual Suspects1995), producer, talent agent, company presidentand investor. He says the same factors are in playamong entertainment contingent workers as in

any other occupation. For instance, when a con-tingent worker settles down and has a family, heor she might seek a corporate job for the steadypaycheck and the benefits. After the family isgrown, it might be time to take a shot at being anentrepreneur or working for a social cause.

But, he notes, it still takes a certain personal-ity to rely on skills and drive for a living. If youare looking for stability, long-term work, loyaltyto a company for a long, long period, the enter-tainment business or these productions or short-term assignments are not for you, Bressler saidduring a panel discussion at the Staffing IndustryExecutive Forum held in March.

F I N DI N G TH E MThere are many ways to find good contingent tal-ent in Hollywood. But its a more subtle processthan in other industries, where an order can beplaced with a staffing company for someone witha specific skill set and level of experience. There aretoo many hard-to-measure qualities in the jobs.You are picking from a group of enormouslyqualified people so it comes down to things like doI like them? Can I work with them? Bressler says.Its not like they are going to bring some extraskill or something to the table.

Talent agents actively seek work for theirclients, who are above the line, such as better-known actors and directors. They also negotiate

Follow Hollywood's ModelWhile the Hollywood business model emphasizes flexibility, it still requires careful manage-

ment to be effective. Here are some tools that can apply to other industries.

Get a casting director. Consider giving someone full-time responsibility for the overall man-agement of staffing agencies and other contingent talent sources. Vendor management sys-tems could be an important technology to make the person more productive.

Value the role of agents. Staffing firms are the equivalent of talent agents. They know if theydont offer top-notch talent, their clients wont work and they wont prosper. You can lever-age that to seek the highest level of quality.

Develop your network. Dont rely solely on your staffing firms for information and talent.Build a network and a reputation as a great employer and more people will reach out to you

for contingent work.Understand the talent. Dealing with Denzel Washington is completely different from manag-

ing assistant directors and set designers. Tailor the way you manage people to what theyoffer the organization.

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the deals. Some, like Bressler when he owned hisagency, also represent what he calls the high endof the below the line people, such as cine-

matographers, production designers and filmeditors.

Unions and everyone seeking work with themajor studios and production companies belongsto one keep lists and directories of members whoare available for work and their rates. They alsoprovide their members a number of services, such ashealth insurance and negotiating minimum pay-ments with studios for categories of employees. Butthey dont advocate on behalf of individual mem-

bers. For those peo-ple you dont know,

that you dont hearabout, who arehappy to go to workat any rate, thatswhat the unionsdoing, says Bressler,a critic of entertain-ment industry laborunions.

Carsey WernerPatterson illustratesthe complex web ofHollywood contin-

gent hiring. In herjob she negotiateswith agents for thecreative services sheneeds. She alsobelongs to theDirectors Guild and

has an agent. And that means she has to playmany different roles at various times. I mightknow the writers of a show, or some executiveswho might want me, she says. But when Iwork, I have to serve both the show were mak-ing as well as the company so I have to makesure everyone is comfortable with me. Thatsuggests managers in other industries might wantto consider using someone in different roles atdifferent times manager for one project, teammember for another.

In general, though, how much someoneworks and how they are paid in Hollywoodhinges on relationships. That includes takingmeetings and doing lunch just like in themovies about the movies. And that can extend toother industries.

Steve Pfrenzinger, president of the CarreraAgency, which finds IT consultants for compa-nies, had worked in HR and staffing firms before

setting out on his own. He says one of his goalswas to avoid the drawbacks he confronted in hisprevious jobs. We made a great effort to special-ize and do things really better. And [still] ourclients would say, Its all margin; get in line.

Pfrenzinger adopted portions of theHollywood talent model to his business, whichemphasizes developing long-term relationshipswith both clients and the talent pool. For the con-sultants, that includes informational newsletters,skills training seminars and marketing of individ-uals anything beyond calling them with a job

order from time to time. He tries to emphasizethat by calling Carrera a talent managementagency. Corporate clients are assigned a talentagent who gets to know the companys needs andsearches for the best fit from the inside. In themovie business, thats called packaging.

THE OPPORTUNITIESMost companies would find it difficult to emulatethe Hollywood model for acquiring and usingtemporary workers. While a material handlerneeds to understand instructions and safety rules,an actor whose sole job is to sit at a caf table

reading a book has probably spent thousands ofdollars learning his craft. Neither is essential tothe overall success of the company or project, buttheir skill levels vary widely.

Corporate purchasing managers and HRpeople are accustomed to working within a formalsystem to find contingent workers. They mightcontract with multiple suppliers that deliverpeople with specialized skills, but they probablywould not care to pay attention to such things asbonus pay when a temporary employee misses ameal break or personal perquisites negotiatedindividually.

Decision makers should look closely at thegeneral business model, which stresses extremeflexibility of operation at all levels, project-basedhiring and product manufacturing, and the needto constantly focus on cost-effectiveness in allaspects of their operations. If they learn the les-sons of Hollywood, they might get a star on theiroffice door.