GOVERNANCE NOTEBOOK: PERSPECTIVES ON CLUB LEADERSHIP
Editor’s Note: NCA’s Board Leadership Institute was created to focus on building governance resources to support highly effective club boards that are well prepared for their future. Institute initiatives will focus on knowledge building activities to expand both awareness of, and ways to use, effective guidance on club governance. The Institute will seek to improve understanding of what constitutes best practices in club governance and how to apply those concepts, with development of expanded resources and educational opportunities. This new Club Director feature will disseminate ideas, best practices, tips and tools for club governance.
At private clubs across the country, the partnership between club managers and boards continues to evolve as clubs adjust to a new “normal” within the club industry. For many clubs, gone are the days of long lists of members-in-waiting. At the majority of mid-tier clubs, it has become all too clear that both boards and club managers must work together to help clubs adapt to survive.
When adopting a strategic approach to best practices, club managers and their boards should consider the underlying philosophies behind the governance issues that they aim to address. There are many perspectives from which managers and board members can view a particular issue, but there are several key guiding philosophies to keep in mind in order to support policies that can help improve member satisfaction and retention. Here are some key governance perspectives clubs should consider to keep themselves on the road to success:
Strategic Planning
Strategic planning and preparing the club for the future is at the heart of a board’s governance duties. Having a strong strategic plan in place that prepares the club to uphold its mission and achieve its vision and goals is one of the most important factors in determining club success.
Working through a strategic planning process enables a club to address potential issues before they become crises. Strategic and long-range planning can better position a club to develop and maintain a facility that satisfies the needs of its members.
Strategic planning should be an ongoing process to support and ensure the continued health of the club. The board should regularly reevaluate the strategic plan and ensure that the club is on the right track to reach its objectives.
Updating the strategic plan can help the board take advantage of opportunities it might have otherwise missed if too much time is focused on day-to-day operations. By implementing a strategic planning process, the board can develop new skills that help improve club governance and create a framework in which the general manager can work to improve club operations.
Commitment to the Strategic Plan
Sticking with a strategy, especially when times are challenging, can be difficult. It requires commitment to the end goal, confidence in the club’s direction, and the conviction it is the right thing to do for the club. Certainly, the tactics used to achieve the goal may change as the occasion demands, but the club should remain focused on its overall objective.
A strategic plan helps club leaders to stay the course in order to meet club goals and objectives. consistently guide board policies and Strategic planning is tangibly tied to success, and using the strategic plan to consistently guide board policies and decisions can help keep the club on the right track. This is why it is helpful to have strong board leaders with a visionary approach and ability to lead when the occasion demands it. Focusing on board development is an important part of building competent leaders and developing club leadership skills. Emphasizing the board’s important role in club governance can help add significance to the way in which the board perceives their actions—making sure that they fully understand the value of working together to achieve the club’s goals.
Financial Policy Decisions
Lee Iacocca once said, “Never let a bean counter run your company.” Clubs should not be governed or managed by a spreadsheet alone. Though spreadsheets are great tools for examining things that have already taken place, they are less useful at measuring the impact of those activities on staff, club members and a club’s brand.
While spreadsheets can also be used to identify spending and usage patterns and predict future trends, they still can’t assign importance to certain club actions or expenditures or analyze their effects. Spreadsheets may still be good barometers of club activities, but a club is much more than a series of line items.
When making policy decisions that affect club operations, the board and general manager should work together to consider the other factors that might influence club success, such as member expectations and satisfaction, key services and offerings, and the club’s brand image.
Striking a Balance
A danger of relying too heavily on policies such as expense control is that member satisfaction can fall victim, resulting in member attrition and, in turn, more expense control. Taking stock of governance approaches and implementing best practices can help clubs improve member satisfaction while still controlling costs.
For example, offering free or discounted events for members can be good business. These events help to get members in the door, create camaraderie, generate good will, and provide opportunities to bring prospective members to the club. Such events are usually not intended as moneymakers, but as good will generators. When members are at the club, they generally spend money. Hosting complimentary events can encourage members to come to the club. Many will stay and enjoy an evening at the club—increasing club use and filling the club’s coffers.
On the other hand, standard cost-cutting measures often include reducing the labor force or cutting staff hours, limiting service offerings, reducing inventory, and eliminating member events—all of which can impact revenue generation. In the club environment, where providing member services and attractive social options for members is crucial to the club’s mission, reducing expenses also has the potential to decrease club use and ultimately reduce the club’s revenue—as well as its ability to fulfill the club’s mission.
Focusing on policies and initiatives that support club use and revenue-procuring activities should help to improve the club’s financial position and augment the financial impacts of limited cost-cutting measures, while helping to offset negative effects on member satisfaction.
Maintaining the Value of the Club’s Brand
Many members join clubs in order to have a place where they can spend time with their families and like-minded peers. Members look for a certain quality and caliber of experience in their club membership and generally do not begrudge investing in the club experience.
Though the quote “Price is what you pay; value is what you get,” has become overused in recent years, the reason is because it undeniably rings true. When setting policies that directly impact the value of the club’s brand and the quality of the club experience, club leaders should ensure that they maintain the experiential value in the club’s particular lifestyle and culture.
Capital Improvements
It is said that if you are not investing in capital improvements, you are dealing with facilities that are deteriorating.
Club governance should be diligent in addressing the club’s infrastructure needs and changing member expectations. Some boards may defer important projects in order toavoid being known as the board that saddled members with a capital improvement assessment. However, club leaders have an obligation to the club and their fellow members to address necessary improvements when they arise. Though this can involve tough decisions, it is critical to keep the club and its facilities relevant in these changing times.
Membership Value
Especially during the economic downturn, some clubs have held to the philosophy that encouraging club growth means attracting new members with deep discounts, rather than by upgrading the overall club product and experience. Some clubs have considered dropping initiation fees, reducing dues, excusing assessments, offering trial memberships, etc. On the surface, these steps may be viewed as the best way to ensure club survival in a difficult market. But, clubs that adopt these practices can risk undercutting their value in the market, damaging their brand, and, in some instances, creating a downward spiral from which they may never recover.
Club leaders should also carefully consider the impact that reduced membership or initiation fees might have on a club’s current members. Long-standing members who have been investing in the club’s growth for years may also feel that they are getting the short end of the stick—paying higher rates themselves so that others may take advantage of their loyalty and investment at discounted rates. Additionally, the club’s existing members may have joined the club not only because of the camaraderie of their preferred social circle, but also because of the prestige and recognition associated with being a member of a leading area club.
The new members that a club may attract by discounting club offerings may create a shift in the membership makeup that alters the club culture or social atmosphere. New members attracted by discounts to one club may also defect and join elsewhere if a better deal is offered. Thus, while discounts may seem successful in bolstering membership in the short term, it might only be giving clubs a false sense of security. Equally important, this is not likely to be a strategy that can sustain a club over a long period of time. And rebuilding the club’s brand may prove very difficult.
Club Services
Supporting initiatives that help build and maintain a club’s unique brand and value should involve defining quality standards that can be a significant step in ensuring successful club operations. Club management and boards should work together to ensure that the club has a well-planned, comprehensive, and well- orchestrated quality program that establishes standards for key club events and activities, so that they live up to and surpass member expectations.
A good quality program should not only deliver the level of services and amenities desired by the membership, but also be supported by club leaders with respect to the funding required to meet expectations.
Quality programs can contribute to higher member satisfaction and improved member retention. They can also help a club improve efficiency through better staff utilization; consistency in managing event expenses; fewer hours spent in planning and deployment; and eliminating the need for repetition of activities to “get it right.”
Within the club environment, where member expectations are high and member satisfaction is a club’s first priority, “good enough” should not be an acceptable quality standard. Ensuring that the club maintains a consistently high quality in all of its facilities, member services, programs, special events and offerings should be a key focus of the board’s governance duties.
The Club-Centric Perspective
For both club boards and general managers, it is important to look at the issues affecting club success from a club-focused perspective. What may seem like an obvious solution to a problem may have other implications for the health and longevity of the club, which club leaders should take into account before deciding on a course of action. Maintaining a focus on member satisfaction, the value of the club’s brand and adherence to a strong strategic plan, all help to lay the ground- work to help the club thrive.
David M. Pendy, CCM, is the general manager and chief operating officer of Sunset Country Club in St. Louis, Mo. Jim Healey is the club’s director of membership & marketing.