“Art washes away from the soul the dust of everyday life.” Pablo Picasso
The Banca Monte dei Paschi di Siena (BMPS) is believed to be the first company to develop a corporate art collection when it commissioned some artwork in 1472 to adorn its offices. BMPS is still in existence today – it is the world’s oldest surviving bank – and its art collection is now an important tourist attraction. According to BMPS’s website, the bank originally commissioned the art in order “to give lustre and fame to the institution.”
Lustre and fame. Those are still important motivations for companies buying art today. Art can indeed add lustre to a workplace, especially in today’s open-plan offices. And while art alone probably won’t make a company famous, the art a company displays in its lobbies and similar public spaces can send powerful messages about its unique style, spirit and character.
Creating more welcoming workplaces
“If I create from the heart, nearly everything works; if from the head, almost nothing.” Marc Chagall
Although fiscal discipline is certainly a virtue, a considerable body of research indicates that the physical surroundings have a marked impact on employees’ productivity, loyalty and creativity. The research also shows that investments in making employees feel more comfortable generally make sound financial sense.
According to a study sponsored by the British Council for Offices (BCO), “… a workplace should inspire and motivate the people who work within it but many contemporary offices, designed to maximize efficiency within a set budget, are in danger of losing sight of this. There is growing evidence to suggest that, as well as boosting staff morale, a conducive and appealing working environment can significantly up productivity.”(1)
Art can inspire … and appreciate in value
“Art enables us to find ourselves and lose ourselves at the same time.” Thomas Merton
The potential financial benefits of buying art can also be an important motivator for some companies, although this tends to increase or decrease based on the state of the economy. According to Jeremy Stone, founder of Business Matters in the Visual Arts, a San Francisco-based arts consultancy, “more and more corporations are starting to realize something collectors have understood for years; carefully selected artworks are likely to appreciate in value.”
Perhaps the most famous example is the case of the British Rail Pension Fund. Seeking to diversify its assets, the Fund started acquiring fine and decorative art in 1974, ultimately spending £40m. As prices started to rise in the late 1980s, the Fund began to sell. In the end, it is reported to have realized an annualized rate of return of about 10%.
Today, many companies are sitting on huge cash reserves. Faced with the option of parking the money somewhere and earning next to nothing, or investing in art – which can also add “lustre” to the workplace and perhaps bring some “fame” to the firm – it’s not surprising that buying art at least in part as an investment is an attractive option for some companies.
How good an investment is it? The consensus answer is “it depends,” especially with art from up-and-coming artists who have not yet established a reputation or sold many pieces. In general, a company buying art from newer artists can expect that most pieces won’t appreciate much if at all, while a few might increase in value significantly if not astronomically. In the end, quality will prevail.
The potential returns aside, buying art as an investment does present some particular challenges. Unlike investments in equities or start-ups, art doesn’t pay any dividends. It is also somewhat illiquid, even compared to real estate. And finally, commissions and transaction costs can be sizeable.
Jeremy Stone adds, “The ultimate rationale for buying a piece of art is because it resonates in a meaningful way. The fact that it might also be a good investment is certainly a consideration, but it shouldn’t be the main factor driving the decision.”
Selecting art for the workplace
"The world of reality has its limits; the world of imagination is boundless." Jean-Jacques Rousseau
If the company’s objectives are oriented more toward aesthetics and enhancing the work environment, the BCO reports that employee engagement can be a highly beneficial part of the process. “One effective approach is to put staff at the centre of the company art strategy, involving them in choosing, displaying or even creating workplace art. This kind of empowerment has been shown to have a very positive effect on staff morale and productivity.”(2)
This was our approach in Ireland after moving in 2014 into new offices in a historically significant building on St. Stephen’s Green. More details about this project are .
Another approach is to work with an independent art advisory service, especially if the company is interested in the art for investment purposes. An art advisor can help a company identify artworks that would be a good fit considering its corporate culture, financial risk tolerance, employee and customer profiles, and the physical spaces where the art will be displayed.
It's possible for a company to combine more than one of these approaches. For example, XL Catlin also devotes a small part of its investment portfolio to contemporary art, managed by a professional art curator.
Managing art in the workplace
Where and how art is displayed can make a significant difference on how people experience the art, and how it transforms a setting. Jeremy Stone says, “Where you place the art can make a big difference. It can make a room seem much bigger, or bring a window into a room that has no windows.”
In terms of risks, the majority of losses are from poorly packaged art that is damaged in transit. Smoke or water damage from fires can also be an issue. Theft is a less significant risk, although pieces, especially smaller pieces, do go missing on occasion.
For companies with sizeable art collections, Fine Art & Specie coverage from an established insurer with expertise in this class of business can provide important benefits. Although art can be covered by a company’s general Property policy, that approach could result in gaps in the event of a claim. Many times when an artwork is damaged, it still has value, even considerable value, but obviously not at the level it was previously. Most broad Property policies won’t provide compensation for this loss of value. Fine Art & Specie coverage from an experienced insurer will cover restoration as well as depreciation. They can also provide access to restoration specialists if necessary.
Companies should also re-appraise their artworks about every three-five years. “Values change, and just because a piece was one amount when it was purchased doesn’t mean that is its replacement value today,” says Jeremy Stone.
While people have been debating the meaning and purpose of art for millennia, it is certainly true that art can provoke an emotional response and provide a brief respite from the stresses of daily life. That is particularly relevant in a modern work setting designed in large part for efficiency and productivity. At the same time, art can be an attractive investment option for many companies, and perhaps even bring some measure of “lustre and fame.”Want to know more? You can reach Graham at: graham.hawkins@xlcatlin.com
1 Making Art Work in the Workplace, page 16, International Art Consultants in partnership with the British Council for Offices, 03 Sept 2012.
2 Ibid., p. 10.
Preserve & Protect: Challenge & Innovate
In January 2014, XL Catlin’s team in Ireland moved into new offices in a historically significant building that has housed Bishops, MPs and even a Chief Baron of the Exchequer. The building also had considerable wall space which got the employees thinking about how art could be incorporated into the working space. They were also keen to use this opportunity to engage with artists as well as the local community.
Under the title, “Preserve & Protect: Challenge & Innovate,” a team made up of employees from several functional areas sponsored a juried art exhibition in the new offices. The response to the open call was extremely positive: more than 200 Irish artists submitted more than 500 artworks. The panel that selected the works to be exhibited included two nationally renowned art gallery curators along with a diverse mix of XL Catlin employees.
The exhibition ran for several weeks. During that time, the offices were open to the public for guided tours, and several receptions were held, including one attended by the featured artists, representatives from the broader arts community and Minister Jimmy Deenihan, Ireland’s Minister of Arts Heritage
This initiative was a strong success. In the end, 23 artworks were purchased, mostly by XL Catlin but some by individual employees. The Irish art community warmly embraced this effort as it generated significant coverage for the artists involved, and helped expose their work to a broad range of people.
According to David Watson, Chief Executive, Reinsurance, Europe, Middle East and Africa and International Casualty: “We were extremely pleased with the volume and quality of submissions and feel that it’s a real endorsement of talent in Ireland today. We are also delighted to have purchased these artworks and look forward to placing them throughout the building, bringing enjoyment to our staff and visitors.”
