Club industry leaders gathered April 29–30 in Boca Raton, Fla., for the National Club Association’s largest conference to date. In a jam-packed day and a half of education programs, conference participants heard from industry leaders, technology CEOs, leading governance experts and a Congressman on key topics affecting private clubs.
If you missed the 2013 National Club Conference, here are some of the main developments, tips and takeaways.
Top 10 Mega-Trends for Clubs
An exciting new project funded by the NCA Foundation is taking a detailed look at top trends affecting private clubs and how to respond to them. Frank Vain, president of McMahon Group, Inc., shared preliminary results of phase one of the Delphi Study that will help define the future of private clubs.
Interviews with industry experts centered around 10 topics and challenges. The list below summarizes the future outlook, based on the first phase of the study. The research will also include a statistical survey and interactive sharing of successful club responses to future trends.
1. Club Industry Makeup: With the industry down by 20 percent since 1990, clubs will experience further stratification, as top clubs thrive and middle and lower tier clubs continue to be challenged by oversupply and an unpredictable economy. Programming will take on greater significance for attracting and engaging members, and “connections” will remain the mainstay of club life.
2. Lifestyle & Membership Experience: Tensions have been rising over tradition vs. innovation and homogeneity vs. diversity. Members will seek things that endure: safety and security, recognition and friendship, fun and enjoyment. New amenities for affluent, family-focused members will include wellness as a strategic pillar.
3. Facilities: Quality will continue to sell when it comes to facilities that reflect a premium experience. Country clubs will offer a nontraditional golf experience that is less time consuming, and incorporates fitness and improved practice facilities. City clubs will align with the new urban landscape in which their members work and live. Facilities that appeal to all family members and incorporate technology and self-service offer value.
4. Technology: Clubs will continue to face a challenge with technology as their members increasingly visit online communities and use mobile devices. Opportunities for using technology in targeted marketing, operations and service delivery will continue to be difficult within clubs that are behind the curve in technology. The pace at which clubs adopt and apply new information and communications technology will increase.
5. Governance: Financial pressures, intergenerational differences and lack of strategic clarity will continue to undermine good governance for some. The biggest challenge will be finding the right club members to lead. The best clubs will have in-depth board training and will use strategic planning to focus on long-term goals—creating active and responsive boards, rather than bureaucratic ones.
6. Club Finances: Clubs will continue to search for balance between fiscal prudence and member service. Revenue, recruitment and value are buzzwords on which successful clubs will focus. New membership pools, professional member- ship directors and social members will all play key roles in club growth.
7. Legislation & Regulation: Hot button issues such as health care, immigration, taxes and environmental regulations will continue to be a focus. Tax-exempt status may be significantly restricted over the next 5-10 years. Efforts to unionize will likely increase.
8. Golf & Other Recreation: Golf will always be a signature offering but will continue to evolve to attract younger players. Clubs will need to embrace all types of activities to meet the demands of their members, including fitness training, wellness activities, youth programs and activities designed to enhance social relationships.
9. Food & Beverage: Dining will continue shifting from formal to casual in response to members’ desire for relaxed, faster, quality dining experiences. Chefs are becoming the new club celebrity, offering healthier plates and experiential dining. Members are looking for places to mingle—such as pubs or sports bars.
10. Club Workforce: Finding and keeping talent will require building teams and working with other hospitality groups in hotel, travel and recreational industries and universities. The best clubs will find ways to employ and retain the younger generation. Workforce composition will be diverse and clubs will make more use of technology to boost productivity.
Complying with the Affordable Care Act
NCA Vice President of Government Relations and General Counsel Brad D. Steele shared the roadmap for compliance with the Affordable Care Act (ACA). The ACA goes into effect on January 1, 2014. However, here are the key items that clubs should be addressing now:
1. Determine which staff are full-time employees in 2013 by tracking their hours. Full-time employees work on average at least 30 hours/week each month. Clubs may average the hours over a consecutive 6-month period or over the full 12-month period of 2013.
2. By October 1, 2013, clubs must disclose to employees information about the American Health Benefit Exchanges. HHS has model disclosure forms available at www.dol.gov/ebsa/healthreform.
3. Starting in 2014, Clubs with 100 or less employees may use the Small Business Health Options Program (SHOP) Exchange to purchase insurance for their employees. States may also allow clubs with more than 100 full-time employees into a SHOP Exchange in 2017.
4. Clubs with an average of 50 full-time employees per month across a year must offer insurance to full timers and their dependents—though clubs do not have to pay for dependent coverage. Clubs with 50 full-time employees that do not offer insurance will be fined $2,000 per full-timer, less the first 30, if one employee goes to the Exchange and receives a subsidy. Clubs with 50 full-time employees that offer insurance will be fined $3,000 per full-time employee who declines the club’s plan, goes to the Exchange and is entitled to receive a subsidy to buy insurance.
5. Full-time employees are those who are employed on average at least 30 hours/week during a month. The IRS will treat 130 hours of work in a calendar month as equal to 30 hours/week.
6. Part-time employees are counted when determining whether your club has an average of 50 full-time employees over the previous year. Take the total hours worked by part-timers in a month (not more than 120 hours/part-timer) and divide by 120 to determine the club’s full-time equivalents (FTEs). If the total of FTEs and full-timers is 50 or more for the year, then your club falls under the law. Though FTEs are counted to determine if you meet the threshold number, you do not need to offer them insurance.
7. Look-Back Measurement Periods can be used to determine whether ongoing employees must be offered insurance. A Standard Measurement Period (SMP), which can be from 3 to 12 months, is used to determine whether an employee worked an average of 30 hours/week during the months under review. The Stability Period, during which time the club must provide insurance if the SMP period shows the employee to be full time, can be no shorter than the SMP. For a new, variable hour employee, an Initial Measurement Period (IMP) can be used to determine whether insurance must be offered. It must start the first day of employment or the first day of the first month after an employee’s start date, and it functions like the SMP.
8. Seasonal workers employed exclusively for certain periods of time throughout the year also impact a club’s “50” threshold. If they are on property for more than 120 days, then they must be counted to determine if the club averages 50 or more full-time/FTEs per year. If they are there for 120 or less days, they are not counted. Clubs are afforded the same safe harbor available to new variable hour employees with their new seasonal employees—they may use the IMP. Clubs will likely not have to offer insurance to seasonal employees (though they certainly work more than 30 hours per week) because they are not on property year round.
9. “New Employees” are those who have not worked for the club for 26 or more consecutive weeks. Or, a returning worker can be considered “new” if he or she has been gone from the club longer than previously employed, with a minimum of four weeks gone. This rule applies to the rehiring of seasonal employees, too.
10. The IRS’ Administrative Period allows employers 90 days between the SMP and the Stability Period for ongoing employees before offering insurance; and, an Administrative Period before and after the IMP for new employees. The IMP and the Administrative Period cannot extend beyond the last day of the first month after an employee’s one-year anniversary.
Trends in Benchmarking for Clubs
Ray Cronin, president of Club Benchmarking and Phil Newman, CPA, partner at McGladrey, LLP, demonstrated how clubs can bring a business-focused approach to decision making by using benchmarking data. Some takeaways from this presentation are:
1. Benchmarking data helps clubs elevate fact over opinion, aligns expectations between staff and board, educates boards about club “norms,” and validates good performance.
2. Benchmarking data can highlight the financial outlook in the following areas: financial, operational and functional, strategic, best practices, and compensation and benefits.
3. Don’t benchmark reactively, “one data point” at a time.
4. Benchmarking has helped clubs in distress through strategically, systematically and proactively measuring data to make decisions and improve performance.
5. Assure context in benchmarking— compare “apples to apples.”
6. Successful benchmarking not only requires openness to new ideas and understanding of the data, but also a willingness to make decisions, change and adapt.
7. The club industry is evolving from a reactive/tactical approach to one that is proactive and strategic.
8. Clubs must have budgets that support their mission. The main driver of a club’s budget is its “dues engine.”
9. Despite contrary beliefs, bench-marking data is similar throughout the industry—no one club is “unique,” and regional differences are not significant.
10. Boards should understand the club business model and allocate resources from an operating view vs. a capital view.
Employment Law Issues for Private Clubs
Robin Baker and Brian McPherson, Gunster Law Firm and Robyn Stowell, Stinson Morrison Hecker, LLP addressed significant areas of potential liability, including an overview of laws and statutes with which private clubs must comply. Is your club prepared to tackle these issues?
1. Overtime Claims. The leading category of employment claims is overtime, based on the Fair Labor Standards Act. The club and GM have a responsibility to recognize which employees are nonexempt for overtime—it’s a myth that salaried employees are not eligible. Be diligent in having employees clock in and out and let them know that they can’t work “off the clock.”
2. Social Media. Be sure the club retains control of any account set up by an employee for the club (Facebook, Twitter). Also, each club should have an employee usage policy for social media.
3. Family Medical & Leave Act. Recent expansion of the law regarding what constitutes a family and what qualifies as an illness creates opportunities for misinterpretations of this law.
4. Private Status. Private clubs are exempt from Title VII of the Civil Rights Act of 1964 and the employment law provisions of the American Disabilities Act, but still must be mindful of harassment in the workplace regarding minority status or disability. There are a record number of claims today based on discrimination. Should new employees prove to be problematic, the best time to dismiss them is during the probationary period to avoid complications of a termination.
5. Employee Discipline. Always handle employee discipline separately from performance management. The immediate supervisor has the responsibility to document employee discipline; however, the HR representative should manage the timeline and accountability.
6. Probationary Periods. The club employee handbook should outline the provisions for probationary employees, such as eligibility for benefits. State law may impact rules regarding retaliation claims and “whistleblower” charges.
7. Drug-Free Workplace. A drug testing policy should take employee privacy issues into consideration. In cases of onsite accidents, automatic drug testing should be in place. It is important to have a clearly communicated policy and treat all employees the same.
8. Member Discipline. Club policies should empower staff to address problems that pose safety issues. A club official should be involved in all cases of member discipline. Member discipline involving the harassment of a club employee should always include a club attorney as well.
9. Violence in the Workplace. To protect employees and members, a club should have a workplace violence plan and should restrict access to the club grounds by unaccompanied visitors.
10. Safety Rules. If a club has safety rules, it should follow them. Review rules annually and check with your insurance broker regarding risk management.
Trends in Board Development
Former BoardSource CEO Linda Crompton presented ideas for sustained board leadership related to top under-performance issues:
1. Board members don’t understand their roles: Clarify roles
2. The wrong people are at the table: Design a recruitment process
3. Too much homogeneity on the board: Encourage diversity of views
4. Members are not sufficiently invested/engaged: Utilize the skills around the table more effectively
5. Poor meeting management: Manage through agendas that are more strategic and less administrative
6. Weak committee structure: Review/evaluate the committees/members
7. Conflicts of interest: Regularly review policy and resolution methods
8. No strategic focus: Align attention to the club’s mission and gain buy-in through board involvement
9. Not a partnership: Encourage and foster mutual trust and support, division of labor and constant feedback.
10. Lack of responsibility: Hold individuals accountable, commit to a common goal and regularly reflect, communicate and assess.
Crisis Communications
Lisette Mondello of Spaeth Communications provided guidance on how to prepare for a communications crisis, including strategies for dealing with negative media coverage in a world of viral communications and 24/7 news coverage.
1. In order to effectively handle a situation, club officials must influence “memory.” In other words, influence what people hear, believe and remember.
2. The most common mistake in all communication, especially when dealing with media, is to repeat and deny a negative word.
3. Use “positive” words to reinforce your message, such as family-focused, retreat, social, wellness, etc. Avoid “bad” words that give negative reactions, such as expensive, elite, restrictive, etc.
4. In situations where members or the media are asking about an incident that occurred on club grounds, use good bridge words and include a sentence to the effect that you are looking into the issue.
5. Avoid providing too much information to the media—don’t offer the reporter too many choices of what to quote.
6. Filter messages to address your audience.
7. If necessary, say “no comment,” but do so in a way that doesn’t validate a negative charge.
8. Monitor social media and be prepared to respond and participate based on a policy decision established in advance.
9. When responding to a reporter, take a moment to check out the allegations first. Avoid committing to a phone call, let alone a live interview, instead ask for an e-mail or phone number to get back to him.”
10. A desirable response is a short sentence anchored by a key “good word.” It should be followed by a commitment to look into the situation and, if appropriate, a commitment to provide additional information at a later time.
Exceptional Board Practices
Club Board Presidents Marshall Dean, Country Club of Naples; Nelson Grumney, St. Louis Country Club; Robert James, Westchester Country Club; and Dan Condon, Condon O’Meara McGinty & Donnelly spoke on a panel moderated by Dan Denehy, Denehy Club Thinking Partners. Covering a diverse range of topics, here’s a list of some of the best practices for board leaders:
1. Choose board members wisely. Service on a committee as a prerequisite for board service filters out those only interested in the status, and not the work, of a board member.
2. Use a strategic plan to give board members a goal. Work with management and club committees, and review and update the plan regularly.
3. Focus on succession planning to keep a steady supply of quality board prospects in the pipeline.
4. A common term for board service is three years.
5. Provide new board members with an orientation process that not only includes an overview of how the club works— including discussions with key staff—but also their board responsibilities.
6. Control board meetings with a set agenda and only focus on strategic issues. Keep operational discussions “offline.”
7. Establish and use key governance documents and procedures. Conflict of interest statements should be signed by each board member annually.
8. Inclusiveness helps the board stay focused on member-driven strategic plans. Keep committees and members informed of progress toward goals.
9. Focus on the needs of the membership in decision-making. Surveys can be an ideal way to address member priorities.
10. Transparency is important to club members in regard to financial oversight and protecting and growing the club’s assets.
Cindy Vizza is NCA’s Publisher and Senior Director of Knowledge Management and Editor of Club Director.