Since 1914, families in the San Francisco Bay Area have been drawn to Diablo Country Club (DCC) at the base of Mount Diablo, where the vistas of the Las Trampas Range are nothing short of stunning. The club is touted as the first to be uniquely family focused in the state of California, and generations of members have gathered there to enjoy sports and leisure activities in the company of like-minded folks.
As the club enters its second century of existence, DCC board members and management have banded together to transform the governance model and embrace a common strategic vision that will serve as a lasting legacy for generations to come.
“If you do not change direction, you may end up where you are heading.” – Lao Tzu
A rich heritage and unique culture have always been central to Diablo’s identity, but like many clubs with impressive pedigrees and triple-digit histories, complacency can get in the way of progress. In 2016, with the club’s centennial in the rearview mirror, the general consensus among members and leaders was that DCC was doing just fine. Some things could use improvement or updating, but there’s a certain charm in a well-worn chair or a creaky floorboard … right? Proud of their “pay as we go” philosophy, the club had no debt and they were not suffering from low membership numbers or decreasing member satisfaction.
Enter Frank Cordeiro, CCM, who arrived at Diablo in 2016 as general manager/COO. Cordeiro describes himself as “thrilled” to be at the helm of such a prestigious and storied club. After all, the DCC membership roster reads like a “Who’s Who” of San Francisco business and society, and the club’s golf course has the singular distinction of being designed by two of golf ’s renowned architects: Jack Neville designed the front nine before moving on to create Pebble Beach Golf Links and William Watson designed the second nine before going on to create the courses at The Olympic Club and Harding Park, among other notable courses.
As a seasoned club professional, Cordeiro was intentionally slow and deliberate in his approach to his new role, taking time to observe the operation, evaluate the club’s financial health and build a productive and friendly rapport with the club’s board and committees.
Fresh Eyes
Cordeiro could see that this club, like many others, had depreciating tangible assets that needed to be addressed—deferred maintenance on plumbing, HVAC and electrical systems, and overdue renovations to beloved, yet outdated facilities that would make club attractive to future members. Still, the new GM had more pressing issues.
Drawing on his knowledge of best practices, Cordeiro observed that the board, while well-intentioned, was mostly operational in their focus with a tendency to think annually or monthly at the expense of thoughtful long-term strategy and planning. The structure and systems in place encouraged micromanagement and there were process-related issues; board terms were too short and the meetings too frequent. The board wasn’t setting the agenda for the committees and the qualifications for service were not conducive to high-functioning, strategic leadership. He also noted that there was no measurable plan in place to improve facilities, replace or upgrade assets or build capital reserves—critical issues that would need to be addressed to ensure the health of the club for future generations.
Before he could tackle anything else, Cordeiro knew he was facing a challenging first step. The club would have to agree to a deconstruction of the existing governance model. Adopting a more efficient model was the surest way to achieve true strategic leadership, increase the board’s productivity and help them focus on their roles as stewards and owners of DCC’s history, mission, vision and brand.
“I was only 45 days into my new role,” Cordeiro recalled, “and although I knew it was a bit risky, I felt compelled to be transparent and clear in my assessment of the strategic direction of the club. Sure, we all know of clubs that have an archaic governance structure and a narrow focus that might be doing ok, or perhaps even thriving. But they are doing so not because of governance, but rather despite the governance structure. Shouldn’t the work and time of the board and committees support the mission of the club and maximize its potential rather than hinder it?” he asked. “I had infinite confidence in the club’s ability to thrive. I just had to clearly outline and articulate a path—objectively and without criticism—as to how we could get there.”
Cordeiro met with the board to lay out his vision for the first year, which included five initiatives:
1. Revamp the governance structure.
2. Attract and engage quality professionals in every department and replace those who would not meet the higher standards of performance.
3. Conduct a comprehensive fixed asset study to include funding and implementation of needed capital improvements.
4. Update the bylaws to reflect governance changes, ensure compliance and align with industry best practices.
5. Seek formal membership approval of bylaw changes and funding for the capital improvements.
First Things First: Restructuring the Governance Model
Private club management has changed significantly in recent years, due in large part to increased educational opportunities, a trend toward empowering the general manager as COO and access to third-party data platforms and metrics. Ray Cronin, founder of Club Benchmarking and a trusted advisor to DCC, doesn’t hide his passion for governance and leadership models. “Every club is unique, and the club’s culture dictates a lot about how it is run. There is not one “silver-bullet” governance model that works perfectly across the board, but there are certainly best practices for board governance. As with any model, there are some methods that are better than other methods,” Cronin explained.
“Some clubs aren’t aware they should even be discussing the leadership structure or that they have the power to change and improve it. The conversation just isn’t on their radar. But once they are educated and enlightened, the philosophical shift toward high-level thinking and forward thinking begins to make sense.”
Fortunately for Cordeiro, Diablo Country Club leadership was receptive to his plan. The board was an impressive assembly of prominent business leaders who had experience on corporate boards and the transition from a socially oriented board model to a strategic board produced a powerful shift in focus and unleashed the group’s collective knowledge and wisdom. They dubbed the new approach “The Diablo Corporate Hybrid Model.” It is a hybrid model because it modifies best practices from corporate governance for the club environment to ensure strategic decision making, transparency and fiduciary behavior in the best interests of the membership, the employees and all stakeholders.
What Changed?
Board Size: The board was reduced from nine to seven members.
Board Terms: Board terms were increased from three years to four years. The continuity is critical to successfully implementing and executing a strategic plan because it allows the board to maintain its dynamic and institutional knowledge.
Meeting Frequency: The number of board meetings was reduced to four per year.
Qualifications: The criteria for service was changed to require board and fiduciary experience as well as demonstrated ability to collaborate, think analytically, and provide leadership and relevant professional expertise. The club’s Nominating Committee is charged with vetting members based on qualifications rather than on their ubiquity at the club, tenure on club committees or any number of other “social” reasons.
Cordeiro explained that the change in structure is designed to empower the board to think strategically and move away from the age-old pitfall of micromanaging the operation. Board discussions no longer veer from strategy to rehash previous talking points and thought processes for the sake of new directors or to operational minutia and pointless conjecture about food and beverage. With a smaller, more focused and more qualified board that only meets four times a year and a clear agenda set in advance; strategy is the name of the game. In this mode, the GM/COO avoids operating in the background and ensures operational excellence. The board propels the club forward as the steward of the club’s mission, vision and strategy.
A Strategy for Success: Third-Party Experts, Data and Education Adoption of the Diablo Corporate Hybrid Model was a springboard for establishing a long-range plan that the board could advance together under the stewardship of Cordeiro as GM/COO. The next steps were to evaluate the club’s capital assets and create both a strategic and a master plan. Three months into his role at the club, Cordeiro reached out to Cronin to discuss the challenges and opportunities inherent in the club’s governance and business model. The two agreed that having third-party consultants conduct the necessary research and present the data and facts to the board would be the most effective approach.
Cordeiro engaged the services of Paul Mueller, a recognized expert in capital planning services, to inspect and document the club’s physical assets, identify the remaining service life and establish the cost and timeline for replacement. While the club had no significant debt, an asset study had not been conducted in many years. The club was in need of a new irrigation system and had $20-$25 million in deferred maintenance and asset replacement that required funding. Mueller detailed the assets and charted an action plan for maintenance and replacement throughout the club. With data on his side and third-party experts on hand to objectively interpret that data for the members, Cordeiro made a recommendation to the board that they approve an investment of $31 million toward the goal of achieving long-term health.
Club Resources Founder and President Bob Bodman was also brought in to provide insight into the strategic planning process. He conducted several 90-minute member focus groups, an extensive strategic needs survey and member satisfaction surveys. He designed relevant surveys, interpreted the results and identified club directives that would bridge the gap with member needs. Bodman is currently overseeing the club’s new membership marketing and sales to support Diablo Country Club’s Master Facilities Plan.
Cordeiro recruited Cronin, who helped inspire the Diablo Corporate Hybrid Model, to educate the board about club business models, explain the differences between the club business and other businesses, and to address what the board’s role should be in the greater scheme of things. Over several meetings, DCC learned the strengths, weaknesses and opportunities of its business model and to demonstrate how that model correlates to financial health, operational success, capital assets and the long-range plan.
“Ray brought clarity to our board like no one else could have,” Cordeiro said. “They had already embraced the new governance model, but now they clearly saw that we needed to move forward with a strategic plan and a master facilities plan. Ray illuminated the path such that the board felt ready to focus on important strategic decisions, beginning with a $31 million investment to implement a member-approved strategic plan and master facilities plan.”
Stewardship of the Governance Model and the Strategic Plan
Cordeiro is closely monitoring the new governance structure so that it functions as expected and holds steady as a solid precedent for future boards. He said the continuity, quality of leadership, and focus on fiduciary responsibility and strategic thinking have made implementing the club’s new strategic plan a much smoother process.
“The strategic plan identified 32 initiatives that fall naturally into the purview of individual committees or management teams,” Cordeiro explained. “At the beginning of the year, the board uses operational data and industry benchmarks to set goals that further the established initiatives. Those goals are then sent to the committees or management teams to work on throughout the year. The committees meet only as needed and they only work on the goals we have explicitly identified.”
Agendas for the four yearly board meetings are set in advance at a multi-day annual board retreat. Goals for the coming year and an update on progress are shared with the membership for transparency and accountability. The committees at Diablo Country Club can be chaired by members-at-large, which enables members who may not be qualified to serve on the board under the revamped nominating procedures to contribute to the club in a meaningful, even critical, way.
The Member Benefits of Strategic Governance and Planning
Reassured by the board’s data-driven approach to planning, members agreed to expedite funding for the entire transformation instead of stretching out improvements and enhancements incrementally over 25 years. As a result, DCC members will reap the benefits of fully renovated facilities and spectacular new amenities within the next three years.
Phase One – The Golf Course Restoration
Work on the golf course began in April 2019 and will be complete for the 2020 golf season. The $12 million course renovation will improve playability from end to end: Greens rebuilt to USGA specifications and seeded to bent grass; all bunkers rebuilt; addition of short-cut chipping areas; widening of fairways; improve and maximize practice areas and replacing manicured turf with drought-tolerant fescue grasslands in lesser-played areas as part of the club’s well-publicized plan to reduce water use.
Phase Two – Family Wellness and Activity Center
Construction on the new facility adjacent to the pool will begin in spring 2020 to provide a fitness and activity center for the entire family with massage rooms, group exercise classes, personal trainers, state-of-the-art equipment, locker rooms and a dedicated teen center with games and activities. Incorporated in the design are new full-length lighted bocce courts and outdoor seating areas complete with fire pits and comfortable lounge furniture, a casual restaurant with indoor and outdoor dining and bar, an exhibition kitchen and pizza oven, a grab-and-go deli and a childcare center. A new golf simulator building and lounge with roll up doors is being built next to the center where families can enjoy social events, league play, instruction and gaming. The building will also house the tennis office and lounge and a general store.
Phase Three – 1881 Historic Clubhouse Renovation
Construction will begin in spring 2021 to dramatically enhance the clubhouse entry, improve traffic flow, and update and modernize the decor. The members’ beloved Carriage Lounge will be revitalized to serve as a coffee lounge and cafe during the day and cocktail lounge in the evening, taking the best space in the club and making it the centerpiece of DCC’s historic and charming building. The main kitchen will be expanded for improved productivity, safety and capacity and a new casual dining space will feature a horseshoe bar and folding walls to open the indoors to outdoors. Cordeiro credits the members, saying the club’s quick acceptance of his effort to improve the governance structure and adopt a strategic data-driven approach to leadership made all the enhancements possible. In addition to elevating the member experience, the club is also realizing other benefits. Members approved a bylaw change permitting capital dues which will produce $500,000 annually to ensure adequate funding for future capital needs, and in April 2019, DCC began revealing the approved master plan to the public. Excitement is high and although the golf course will be closed for several more months, 46 new memberships have been sold across all categories since that campaign began. Cordeiro said proceeds from those sales exceed $1 million.
On the club’s website, you’ll find a simple mantra: “To leave Diablo better than we found it.” That statement sums up the sense of ownership and commitment that embodies this historic club as it enters its second century. Board, members and management have embraced strategic, data-driven leadership and their vision ensures a better Diablo for generations to come. That is the ultimate legacy.