As a general manager, chief financial officer or department head, it is imperative to embrace and own the story of your club or department—the intersection of its experiences, culture and where it is heading. An effective story supports the club’s mission and values and the role of each department and staff within it. When crafted and communicated effectively, it creates buy-in and unifies the members, board and staff.
It’s not enough to work hard and generate great outcomes.
One must also: Know the story. Own the story. Tell the story. Sell the story. Defend the story. Enjoy the glory of the story.
In most clubs, board members come and go rapidly in blocks (by design) and such high turnover results in the story being forgotten, reimagined and changed without the consent of the owner.
It is not enough to deliver accurate, timely and useful information to the board of directors. Such valuable deliverables typically have a very short shelf life. Like a golf course, the story will no longer serve its intended purpose if it is not nurtured and maintained.
Pairing the operational story with the financial story puts the entire management team in position to enjoy success and eliminates potential misinterpretation of results.
In order to create a strong story, understand your purpose and values at the club and how it fits into the purpose and values of the entire management team. A general manager (GM) or department head is like an entrepreneur running a business backed by investors/members. The entrepreneur owns it and runs it. It’s yours to show and tell. Entrepreneurs tend to be successful operators, but they make the mistake of assuming their story tells and sells itself, and if operations are going well then desired financial results will follow.
GM-CFO Relationship
When the strengths and weaknesses of a club’s business operators (GMs and department heads) compliment those of the chief financial officer (CFO), the result is a synergy that combines the strengths of both and diminishes the weaknesses of both. It is incumbent upon the CFO with the support of the GM to build an environment conducive to this type of union. The CFO should lead this endeavor because story telling through factual information is a natural strength (or should be) of a CFO.
The club’s CFO is also the CFO for the GM and each department head. This business relationship empowers the entire management team because there is a tremendous transfer of knowledge between operations and finance. The club’s business environment should have informational accuracy and transparency that allows for course corrections in a timely and deliberate manner and eliminates month-end surprises. This keeps management in charge of the story and provides the board with the information it needs. The CFO works closely with the GM and department heads, helping to bridge gaps between:
- Financial reporting and financial presentation.
- Being in charge of accounting and leading the charge of accounting.
- Empowering yourself and empowering others.
Financial Reporting and Presentation
To succeed, clubs should bridge the gap between financial reporting and financial presentation. This bridge is built with the collective operational and financial knowledge of the entire senior management team resulting in a unified and clear story to the board of directors. The board will have confidence in a story when it is accurate, appropriate and easy to comprehend—and then used to make critical strategic decisions. A board of directors that makes strategic decisions based on vital information provided by the senior management team creates a leadership environment conducive for informed decisions made in the best interest of the club.
Bridge building requires a strong team effort involving the entire senior management team. The team effort also extends to front line associates but this article’s focus is on senior management. However, the bridge is not complete until all associates understand and participate in its construction and maintenance.
The CFO serves as the architect and engineer of the bridge, the GM is the general contractor, and the department heads are subcontractors. In this analogy, a sturdy bridge is comprised of multiple layers of information in the form of financial statements, financial tables, graphs, charts and executive style summary commentary. If the bridge is properly constructed, the executive summary may result in a very short and successful financial discussion at each board meeting. On those occasions when financial issues arise at a board meeting, the bridge should connect to the issue and provide clarity for the matter under discussion. Transparency leads to better decisions and resolutions.
While this board review seems extensive and burdensome to issue on a monthly basis, it is actually a byproduct of what an accounting department should typically review each month. All of the information in a financial review package must be owned by the department heads and feed into the accounting department in a routine and accurate manner. The department heads own this information and use these metrics to monitor their business.
Leading the Accounting Charge Being in charge of accounting means owning the responsibility that all club transactions are properly accounted for in an agreed upon manner and system, resulting in the issuance of proper, accurate and timely financial statements with related supporting schedules and analyses.
In addition, the CFO also extracts the value to drive the business forward by converting accounting information into actionable information to allow for course corrections.
Information sharing at all levels allows for operational and financial adjustments while maintaining perspective. To ensure the bridge between accounting and action is built properly, the accounting department (not just the CFO) must maintain excellent working relationships and open lines of communication with each department. Each department (not just department head) must understand and respect the expectations of the accounting department and the accounting department must understand and respect the expectations of each department. Build effective and synergistic relationships between and among each department on both the team and individual level. Relationship building is a byproduct of empowerment. So as empowerment permeates throughout an organization, more powerful and effective relationships are developed. It’s a self-perpetuating rise to the top once this process is energized.
The CFO should lead the budget process at a meeting with the GM and department heads to establish the budget philosophy and strategy. The philosophy describes the budget process and presentation that leads to the establishment of a budget that conveys pride and ownership of club operations and financial results. Once this bridge is crossed the journey through the year is deliberate, predictable and successful.
The budget strategy should position each department head to own an assumption/zero-based department budget, and be proud and excited to present to the board of directors. The CFO supports and directs the strategy with analyses and reporting tools to facilitate the conversion of operational knowledge into financial presentation and the department head interprets and delivers his or her story.
Telling the story is a great opportunity for management to shine their light. Too often, department heads and even GMs and CFOs do not take advantage of this opportunity and view board or committee inquiries more as a nuisance or inherent evil of the job. In reality, when the board or a committee makes inquiries, they are teeing up the opportunity for management to shine.
The budget presentation to the board can take many forms. One format has each department head present their budgets live (no more than one hour per department). The CFO acts as the moderator to keep the process on track and assist in the presentation as deemed necessary. In order to manage this process efficiently, all information would be presented on a large screen. The presentation would not be an overwhelming data overload, but rather a professional and polished demonstration of management’s ownership of the budget. The by-product is a high level of board confidence in management.
The same metrics used in the budget process should be carefully monitored on a daily, weekly, monthly and annual basis. Adjustments/course corrections are made in accordance with strategic business needs from daily to annual. Metrics under constant review to ensure success include, but are not limited to, the following: Meal covers, golf rounds, labor costs, FTEs, accounts receivable, COS percentage, inventory turnover, fitness and tennis member usage/training classes, home/ membership sales and many others.
This conversation doesn’t end here but rather it’s just the beginning.
Geoffrey Fisher is director of finance at BallenIsles Country Club in Palm Beach Gardens, Fla. He can be reached at [email protected].