Sotheby’s
Putting Out the Fires
Of the Art World -Everyday
Sotheby’s: Day-to-Day Challenges
The difficulty in planning
for long-term success
for Sotheby’s and for
the entire auction
business is due to the
inherent nature of the
auction business –
UNPREDICTABILITY
The Three D’s and other Effects on
the Auction Business
• Death
• Divorce
• Debt
• Availability of
Property in the Market
• Stability of Global
Financial Markets
• Available Capital
• Savviness of Clients
Trying to Narrow It Down
to One Problem…
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To attract high-caliber property, the company is forced to dig deeper into its profitmargins by offering zero commissions, percentages of buyer’s premium and other
costly incentives.
Lot volumes have decreased dramatically and lot minimums have increased
dramatically – however company profits have not increased dramatically.
The success of each sale season depends on the number of estates and private
collections coming to market – a “dry” year has significant impact on company profits.
Several low-return departments have been eliminated, meaning the company
loses that market share to competitors and resulting in losses of potential
business from clients of those departments – without alternate sources to
make up that lost revenue.
On average, 30-35% of non-specialist employees leave the company each year,
resulting in client confusion and increased hiring/training costs and
departmental instability.
Catalogue-to-Print Process is cumbersome, very time-consuming and highly
stressful – and responsibility for overseeing is usually given to junior nonspecialist employees (who consequently leave their jobs after 2-3 years).
The Amount of Antiques in the
Global Auction Market is Finite –
Therefore...
We are continually
looking for new
auction market
opportunities, as well
as new buyers for our
“products.”
New Sources of Revenue?
• Create a retail business for antiques and
fine furnishings targeted to private
clients and decorating trades
• Provide additional rental space to
dealers for retail space (beyond current
Wine shop and Vendome Printing Press
spaces)
• Renew Car sales through Sotheby’s – to
compete with competitors’ annual sales
in excess of $30M
• Reach out to high net-worth Russian
private clients (see Faberge)
• Create “pitch-sheet” to send as
promotional package to potential clients,
i.e., top 1,000 Trust & Estate law firms,
or private banking portfolio managers.
Redefining Our Problem of
High Turnover
• Approximately 30-35% of non-specialist
employees leave the company each year,
resulting in missed deadlines for catalogues and
confusion for our clients. (3 Challenges listed)
• We should be able to retain more of our nonspecialist employees in their positions.
• What would it take for us to retain a higher
percentage of non-specialist employees in
their positions within the company?
+OSUE
Non-specialist employees remain at the company
longer, resulting in increased client familiarity
and efficient processing of property, decreased
HR expenses and training time, and
departmental stability. The overall client
experience will be raised with catalogue
deadlines being kept, departments maintaining
continuity of staff, and employee morale being
improved.
What do I need
in order to make changes?
• Why do non-specialist
employees leave after
such short tenures (other
than low salaries)?
• What is the average
tenure of non-specialist
employee's in their
departments?
• What, if anything, is the
company doing to
address the problem of
high turnover of nonspecialist employees?
Possible Solutions to Problem of
High-Turnover of Employees
• Create a new-employee training program
beginning on first day of employment, for
orientation around the building, training on
specific computer programs, and PeerMentoring
• Create a Senior-Executive-Mentoring program to
introduce junior staff to senior execs they might
not know or what they do
• Regular meetings with HR (i.e., end of probation
period, end-of-first-year) to discuss employee
career track and future growth opportunities
Time Management:
• The Catalogue-to-Press
Process is complicated,
inefficient, stressful, and
costs Sotheby’s both
money from its bottom
line and time better spent
on new business-getting.
• Sotheby’s currently
expends the same
amount of time and effort
– and sometimes more –
in selling a $100 object as
in selling a $1M object.
The $ and Human Cost Per Lot
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Operations:
Art Transport:
Security:
Photography:
Catalogue Production:
Risk Management:
Facilities:
TOTAL:
• Average times handled:
$287.00
$33.00
$103.00
$78.00
$97.00
$92.00
$437.00
$1.064.00
12-40 times
A Tale of Two Lots
• Picasso, Boy with
Pipe – sold for
$104,168,000
• Cizhou Style
Earthenware Vase
and Two Bowls – sold
for $1,200
Order out of Chaos
• Because we can never
forecast further than a
few months ahead, and
due to the challenges
already mentioned, it is
imperative for Sotheby’s
to have streamlined,
efficient and regular
processes in place, for
Sotheby’s to function
orderly and to produce
the best product with the
least financial cost.
Where our Average Process
Breaks Down…
• Waiting for the client’s decision: our business proposals can be
created for the client with a day’s notice, however he might not make
his decision to sell until the last minute before a sale deadline.
• The physical cataloguing and photography of sale property is very
prone to human-error and delays (registrars transpose receipting
numbers, union crew slow to assist moving property, specialists
working on other projects and not focusing on specific cataloguing
deadlines, photographer availability).
• Once catalogue lay-out turned in, the process of collecting missing
images, outstanding cataloguing and color-proofing each image
often prevents catalogues from going to press on time.
Yea or Nay…
• Because the first decision is in the hands of the client (whether or
not to consign to Sotheby’s), there is not much that can be done to
speed up that element of the process.
What can be done, is to have the consignment processing systems in
place with the assumption of a “Yea” by the client, eliminating any
delays in getting started on the consignment following the client’s
decision.
We have taken the first step, in our recent transfer to a worldwide SAP
inventory / payment / client data / sale system – now, all of our
computer systems are fully-integrated, whereas our previous
inventory and client data program did not work with accounting,
catalogue production, etc.
Cataloguing
• Beginning in 2005, the company is moving all its warehouse space
to its York Avenue offices, centralizing all storage and photography
studios on one floor
This will streamline the property movement process to cut down on
unnecessary delays, risk and security issues and inventory control
problems.
• We will send emails immediately upon property arrival alerting
departments that cataloguing process can begin, with specific
deadlines, cataloguing guidelines and specific sale information
This will provide specialists with all relevant deadlines and details,
enabling them to begin immediately the cataloguing and
photography process.
Photography
• To eliminate the human error and delays
associated with photography instructions, I will
lead a team to investigate the feasibility of
linking our inventory program and barcodes with
our web-imaging program.
The anticipated result will be minimal
misnumbered images and a simplified, faster
movement of property through the catalogue-topress process.
At the end of the day…