This issue of Club Business addresses the human aspect of club leadership and the mindsets that lead to positive or negative outcomes in clubs. It’s about the people involved, how we think and how that thinking affects governance and outcomes in private clubs. In large part, effective governance comes down to humility and embracing the reality that no one person ever has all the answers. Ultimately, it’s about how willing we are as leaders to elevate fact over opinion in the interest of strategic leadership.
From a statistical standpoint, true benchmarking requires a certain volume of data. Data from just one, two or 10 clubs simply does not deliver meaningful benchmarks or insight. With that in mind, consider that people who become volunteer leaders in their club are likely to study only one club: their own. They don’t have the opportunity to gain insight derived from studying enough clubs to have a statistically significant view.
Unfortunately, some volunteer leaders (board, committee and members at large) cling to the belief that despite their limited perspective, they know better—better than the data and better than the experienced professionals who manage their club. Whatever their role—volunteer leader or vocal member—the “I Know Better” folks (IKBs) can throw sand in the gears of even the most finely tuned machine.
Naturally, it is not unusual for data, analysis and experience to conflict with pre-existing notions held by some of the volunteer board or committee members we meet. The two most common points of conflict are around food & beverage profitability and the cost of belonging.
The reaction of IKB volunteer leaders to a conflict between their opinion and the facts can vary. Typical reactions include “your data must be wrong,” “I don’t believe your data,” or “our club is unique.” In contrast, there are objective volunteers who react very differently to new informa- tion, even when it contradicts their own preconceived notions. Those responses are typically a version of, “I had a different view on that issue. I am not sure how I formed my opinion, but I am happy to see the data and my view has changed.”
Table 1 on the next page summarizes the friction between facts and the IKB mindset that exists to some extent in every club. One column presents the facts based on intensive analysis of club industry data, and the other presents what the IKB crowd believes, data be damned.
| What the Data Shows | “I Know Better” |
| F&B is an amenity, not a profit center. Clubs subsidizing the F&B experience with dues are financially stronger than clubs that do not. | We shouldn’t lose money in F&B. |
| F&B results are related to choices; number of venues, number of hours, quality of service, quality of food and beverage. | F&B results are a result of efficiency or lack thereof. |
| Proper, continuous reinvestment in the club’s assets is central to maintaining a compelling member experience. | We don’t need to spend that money—we will price ourselves out of the market. |
| Clubs compete on the experience they offer, not the price they charge. Clubs with higher dues and initiation fees have the most members; clubs with lower dues and initiation fees have the least members. | We need to cut expenses. Our manager doesn’t know what she/he is doing. We are wasting money. |
| Clubs are high fixed-cost businesses. On average, efficiency impacts 10% or less of operational spending. Choices made regarding breadth of services and amenities, scale of the club’s footprint, quality and volume of service are what drives operating expenses. Clubs with higher operating expenses are healthier financially than clubs with lower operating expenses. | Inefficiency and waste are the issue. |
The IKB crowd is an anchor on progress across the industry. In clubs that are failing, (labeled “red bucket clubs” and representing about 25% of the industry) the IKB crowd is typically larger than the members who get it. Our experience makes it clear that, as in any organization, culture forms over time and red bucket clubs tend to have poor culture. In those clubs, the IKB crowd has congealed a cost-first culture. Thus, over time the club does not have the money necessary to reinvest (on the capital ledger) or the money to provide a compelling member experience (on the operating ledger). The IKB crowd gets exactly what they want, which is a relatively low cost of belonging. Of course, the consequence for the club, affirmed through benchmarking, is massive amounts of deferred maintenance, a marginal member experience, constant staff turnover and high member churn.
While the IKBs also exist in healthy, green bucket clubs, they are far less likely to influence the board or the staff. They chatter constantly but they do not prevail. Green bucket clubs are led and managed by excellent professional GMs and department heads, the staff has the support of the board and committees, and they are focused as a team on ensuring consistent delivery of a compelling member experience.
The Hard Truth
Take for example a residential community club that went in the wrong direction for years. The data was clear: changes were necessary. The member experience was, at best, weak. For years, the club was all about golf only and all that mattered for the rest of the experience was to keep the dues low. The club’s net worth was declining and its KPI dashboard was a sea of red and yellow.
The club hired a tremendous new manager who was hard working, great with the staff and members, focused, disciplined and visionary. The new manager was passionately devoted to leading the board and membership forward. The manager was focused on turning the ship around and allowing the residents to experience all that could be.
Concurrently, a new president took the reins. That president was smart, focused, considerate and data-driven. He believed in involving the membership and keeping them abreast of the evolving vision and plan. He worked on getting the members excited and began the process of real- izing a cycle of judicious reinvestments in the club. He and the manager enlisted outside professionals to help steer the club forward.
Lying in the weeds and involved in the club’s governance was the king of the IKB crowd. He argued with everyone about everything. He didn’t believe the data and in a curmudgeonly manner, clung hard to the notion of not asking residents for money. Yet he was a shrewd politician. He worked the scenes from the back row, so to speak, with enough of the remaining IKB members to have power. Within about two years, he and his cronies effectively took over the board and began their own “turn- around.” They began to micro-manage the manager. They put a hold on all the forward-looking planning. They focused on making F&B a profit center. Every decision they made was exactly opposite the actions prescribed by data.
As you might have guessed, the IKBs succeeded in their effort to aim the club right back where it started: squarely in the red bucket. That exceptional manager resigned and is on the way to a bright future in the industry. The club, on the other hand, is beginning to flounder amid divisiveness in the boardroom and any progress that was made has ground to a halt.
Driving Forward
Clearly, any successful business operating in the 21st century must embrace change and be innovative. Change and innovation are constants, but neither comes easily to private clubs. The superpower of IKBs is to inhibit change. Common refrains from the IKB crowd when faced with change and innovation are typically “we don’t need this,” or “we can’t afford this.” The IKB crowd can, does and will resist progress,
reject change and kick and scream all the way through the process of evolving a club.
Certain clubs have continuously succumbed to the IKB crowd and have thus become stuck. Proposed modernization projects have been discussed repeatedly and rejected despite facilities that are obviously old and worn out. The club leans away from asking members for money and settles into a long, slow decline. Eventually, in time, without change and evolution, the club becomes stuck in the red bucket.
Determining which bucket your club is in is a first step. A Net Worth and Balance Sheet benchmark will objectively present how your club has fared over time and show you which bucket you are in.
It isn’t a stretch to say the heart of the IKB crowd’s main belief is “don’t raise my dues or ask me for more money” or “spending less is better than spending more.” This inclination needs to be clearly addressed because the data show they are simply wrong. The club needs the money it needs to fund its footprint, and that money must come from the members. Clubs, like every business, must reinvest and evolve. Getting “stuck” should not be an option.
The nominating process can be an effective filter for inhibiting IKBs from becoming involved in club governance. The nominating process should clearly state the need for objective thinkers who are not stuck on issues like keeping the dues low. They must also not be one-agenda candidates who see everything at the club through a single lens such as greens speeds, F&B profitability or stopping the fitness center investment.
Great leaders are great learners. No volunteer leader has been divinely endowed with the gift of perfectly understanding the private club business model, although we have met some who think they were. A willingness to learn and the humility to acknowledge that “you don’t know what you don’t know” are requisite for effective club leadership.
Trusting the Professionals
During my 10 years of service on my club’s board, I observed the approach new board members took to interacting with department heads. Most tried to understand the professional’s perspective. However, a portion didn’t care to hear or didn’t listen to or respect the thoughts/ perspective/input from the professional. They just “knew better.”
They would have benefitted from the wisdom of “Mr. Hockey” Gordie Howe, who was famous for his advice to rookies: “I always tell kids; you have two eyes and one mouth. Keep two open and one closed. You never learn anything if you’re the one talking.” Ask yourself who understands better or has more on the line: the professional who has spent years, often decades, mastering the art and science of club management and whose livelihood depends on his or her success, or the volunteer leader who is an expert in some unrelated industry? Lyman Bullard, president of
The Country Club in Brookline, Mass., explains his club’s approach to that aspect of leadership in the Governance Perspective column in this issue.
One of the most popular episodes in the hit TV series Ted Lasso is “Be Curious Not Judgmental.” Based on my observations during those years of board service, I believe the message is a perfect analogy for the humility required of great volunteer leaders and club members. The gist of the episode is that there is much to be gained by asking questions and listening to the answers versus passing judgment or jumping to conclusions.
A few years back, I had dinner with a new club president and two other people who make their living in the club industry and are recognized leaders in their areas of expertise. We spent two hours together and I left the table in shock. The club needed serious help at that time and the president had just fired someone I thought was a great manager. Despite all that, he sat for two hours with three people who were being paid for advisory services without asking a single question—not one. He pontificated for two hours on his views of clubs and the industry and frankly, most of what he said was utter baloney. The hard truth is, he had no idea what he was saying, but he was certain every tidbit was a nugget of gold. As I left the table with the other two advisors, we all predicted the next two years would be rough going for that club, and as you might have guessed, they were.
mean every professional is perfect. Some may have blind spots; some are better than others. There must be a team-based process. People who “just know” don’t consider process and other perspectives because they are confident they have the answers.
What type of person are you? Are you a person who asks questions or are you more inclined to make statements? Does the “Be Curious Not Judgmental” message resonate with you? Do you believe you know more than others? More than the professionals? Do you embrace data even when it is contrary to your opinion or thought? Are you objective or subjective? Do you enjoy learning? How do the professionals speak of you when you aren’t around? Do they view you as an objective listener or do they think of you as a micro-managing IKB?
What is the culture in your board and committee meetings? Are your club’s volunteers positioned as partners with the professional department heads, supporting them and listening to what the members and volunteer leaders can do to help move the department forward? Or are the volunteer leaders in IKB mode? What would Gordie Howe think about the interaction between rookies (the volunteers) and veterans (the professionals)?
A Final Plea for Objectivity
Almost everyone who becomes involved as a volunteer leader in a club sets out to make the club better. Some leaders do make that happen, but the hard truth is that others end up making their club worse. Clubs fail because of continuous, subjective poor decision making—subjective decisions made with emotion and without data. Most often, the poor decisions revolve around making investments and asking the members for the money to do so.
The best, most effective volunteer leaders are objective. They don’t believe they have all the answers. They work with the club’s professional leaders collegially. They ask questions, seek knowledge and data and they are team oriented. The best volunteers are not over-confident in their own knowledge. They understand the club industry is a business that values experience and learning as much as any other. The best volunteers know their limits and are curious, not judgmental.