WEBINAR VIDEO: Club Trends Winter Outlook 2021 – The Member-Centric Club
The Winter Outlook Webinar was held on Thursday, February 18, 2021. Listen to this recording to hear from the Club Trends authors speak and answer questions about topics covered in this issue.
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WEBINAR VIDEO: City Clubs – Thriving Not Just Surviving
The City Club – Thriving Not Just Surviving webinar was live on January 14, 2021. Hosted by the Club Leadership Alliance (McMahon Group, Kopplin Kuebler & Wallace and Club Benchmarking) and Henry Wallmeyer, President & CEO of the National Club Association to share their experiences which address how the club world is changing and especially how city clubs must change with it.
A City Club Manager Roundtable from some of the most successful city club managers in the nation (Jeffrey McFadden, John Dorman and Matthew Allnatt) capped the webinar to show where the city club of the future is going and how to be sure your club is one of them.
Protect, Preserve, and Grow Club Assets
Protect, Preserve, and Grow Club Assets
Why every Board Room meeting should include a conversation about Growth.
Core Value: Strategic stewardship
Best Practice: Protect preserve and grow the assets through comprehensive capital planning that addresses obligatory and aspirational improvements within a unified facilities master plan.
Has your board ever had a discussion about growing the club’s balance sheet? The key balance sheet metric for measuring growth in clubs is Net Worth which we believe is the single most important data point for any club. Non-profit clubs generating capital income in excess of the depreciation expense are growing (net worth) and those generating less capital income than depreciation are shrinking (net worth). Growth in clubs results from generating the necessary capital to fund a unified facilities master plan which addresses both obligatory and aspirational improvements. The plan is critical to protect, preserve, and grow the club’s assets.
Increasing your club’s net worth is important because it forms the foundation of well-maintained and relevant facilities, which along with access to special people and programs, is the ultimate promise of club membership. The facilities are the vehicle through which the club drives engagement and builds a sense of community. Therefore, facility maintenance and enhancement are a critical function that requires the leadership’s full and consistent attention. To have the greatest chance of sustained success in the new economic and demographic environment, clubs must provide an excellent recreational experience along with up-to-date dining and social facilities that are in tune with current consumer preferences. Offering a broader variety of activities and services in addition to the key dining and golf offerings is a strategic response to the greater emphasis members and prospective members now place on these once less-important services and amenities (i.e. fitness, group exercise, aquatics).
You might ask, “Should my club be growing when we are a not-for-profit business?” Isn’t the club business different because we have a fixed number of members and fundamentally operate on a break-even basis each year? We must grow to remain relevant, improve membership satisfaction and loyalty and continuously and consistently recruit new members. Ninety percent of not-for-profit clubs set the operating ledger to break-even, excluding depreciation. The financial growth in a club stems from the capital ledger requiring capital income in excess of depreciation. This is a key point to understand in not-for-profit clubs.
Despite its importance, most clubs struggle to manage facility upkeep and planning future improvements effectively. It is a capital-intensive process, yet the rotating board structure, all-too-frequent management changes and concerns about member pushback derail efforts to ask the members for the capital to renovate or add facilities. Without a master plan to guide orderly and cost-effective facility development and a financial structure to regularly replace and grow the assets, appearances fall below acceptable standards, and the member experience stagnates. The best positioned and maintained clubs continue to prosper and grow. Many are benefitting from a “flight to quality” as members defect from lesser performers. Their success validates the benefits to be gained from thinking strategically, maintaining existing facilities with strict attention to detail, and investing in new amenities to respond to changing social habits and recreational pursuits.
What does growth look like in a not-for-profit club? The answer is found in investment in property, plant and equipment. As a matter of fact, 80% of the assets in the average club are in the net property, plant, and equipment line of the balance sheet. Net Worth is not a new term in the corporate world, but we believe it needs to be embraced in the club industry based on the fact that 63% of clubs are not growing Net Worth at or above the 3.5% per year recommended by Club Benchmarking. Is your club meeting the recommendation? Are your facilities up to date? Do you have a great resort pool, an updated irrigation system, a dynamic fitness center and great casual dining? The member experience is enhanced by great facilities which are the result of great capital planning and execution. Clubs with great facilities are typically successful and clubs with lackluster facilities are usually not successful. The quality of a club’s facilities and the strength or weakness of its financial outcomes go hand in hand in most instances.
Why should you be concerned about growth of your club? As fiduciaries of the club, managers and boards are responsible for growing the business. In fact, the definition of fiduciary is just that – one who is entrusted with preservation and growth of assets. It is one of our primary functions as professional and volunteer leaders and yet industry data shows that 66% of all clubs have net worth that is stagnant or declining. Clubs have many assets including the physical structure, the golf courses, fitness centers, tennis centers, restaurants, boat slips, and all the equipment that fits into those spaces. As leaders, we must keep moving the club forward in investing and growing our property, plant and equipment which, on average, form eighty percent of our assets. We must stay focused on planning to preserve, protect and grow the assets – which means focusing on forward-looking capital planning to assure we can keep our property, plant and equipment, fresh and up to date. A unified master facility plan coupled with a forward-looking capital plan is the vehicle for doing so.
Developing and Maintaining an Effective Strategic Plan
Developing and Maintaining an Effective Strategic Plan
The strategic plan is vague. The majority of clubs have them and they were usually developed when a club had a major challenge. This was often when the need to make significant facility upgrades was realized and the club had no funds available. It was when membership was declining, with new members not joining. Or it was when the board was not on the same wavelength as the members on basic philosophical issues like dress codes, golf only attitudes, youths against seniors’ schisms and attitudes of frugality strangling a club’s ability to serve its members.
One way or the other strategic planning has become the best method of bringing members and their boards together to understand what the club’s purpose is, in other words its mission, so then all members could work together to achieve that purpose in a spirit of compromise to achieve an end goal.
Just what is strategic planning?
Private Club strategic planning is essential to do and is effective for achieving and maintaining club success in our ever changing world. Its process, is accomplished by a club’s Board and General Manager. Don’t let it be done by selecting a special group of older members or past presidents. If this is done, you will get a plan for the past, not for the future. Only the current Board with the General Manager should strategic plan because if the Board develops it, then the Board, future boards and the General Manager will follow it. The Strategic Plan’s continued use, however, very much depends on a club’s General Manager. He or she will be most responsible for keeping the plans alive.
The Strategic Planning Process
Strategic plan development takes six months to complete. It starts with a comprehensive, membership survey having initial focus groups to identify strategic issues from the members’ viewpoint. Then with survey results in hand, the Board, General Manager and strategic planning moderator review the survey results, do the strengths, weaknesses, opportunities, threats (SWOT) analysis, identify the club’s key success factors, and then develop the club’s Mission statement defining:
- Who the club serves,
- What the club provides,
- What quality level does it strive for, and
- What makes the club unique in its marketplace.
Once the Mission is determined, the next step is setting goals with specific action plans necessary to achieve each goal. The strategic planning’s success greatly depends on the plan’s moderator and his/her organizational skills and knowledge of the club world. The club world is very different from the for-profit business world and even the charitable organization world. A club’s members are both owners and customers, one-in-the-same. This complex relationship with each member of the club affects this duality relationship which can make club governance and accomplishing major achievements difficult. This is where strategic planning becomes so necessary as it resolves issues amicably so the club can move forward in achieving its success in service to all members.
Maintaining A Strategic Direction
Having a good strategic plan is one thing, following it year after year is quite another challenge. Almost always the strategic plan was developed to help solve a major club challenge. It was usually very effective in resolving that one thing, and then it, the plan, is laid aside as other ongoing issues arise. The Board that developed the plan, change. A new president is elected who has new ideas on where the club should go. It is at these times that it is most important for management to keep the Board focused on the strategic plan, to keep the plan relevant as a guide for directing the club’s future. Only management can do this, so the General Manager becomes the custodian and promoter of the strategic plan. If a manager leaves for another club or retires, this becomes when a new or refreshed Strategic Plan should be developed by both the Board and new General Manager. It is critical that when managers change, the new General Manager and the Board need review and refresh the old strategic plan.
The most forgotten aspect of effective strategic planning is, “Following it”. This means when every important club decision is made, this Board and General Manager should ask the question, how does our action comply, or agree with the club’s Mission? The club’s newsletter should always state the mission. The Board and General Manager should have an annual planning retreat to reflect on the year past and with a view to the year ahead so the primary strategic objectives for the year ahead are endorsed by the new Board each year. Only by following this practice will the governance and management be effective in leading the club in good and bad times.
Strategic Planning – The Key to Club Success!
From an old Japanese proverb, truth is learned.
“Vision without action is a daydream” “Action without vision is a nightmare”
We in club governance and management have the responsibility to lead. Only through this leadership will clubs succeed.
Embrace data-driven leadership rooted in strong governance principles and transparent communication to all stakeholders
Core Value: Informed Leadership
Associated Best Practices
- Embrace data-driven leadership rooted in strong governance principles and transparent communication to all stakeholders.
Embrace the Data
High performing clubs embrace data-driven leadership rooted in strong and proven governance principles;and they communicate transparently to all stakeholders. The unfortunate reality is that too many underperforming or dysfunction club board, who are ELECTED and therefor have a MUCH higher level of actual fiduciary responsibility to the club, allow the Finance Committee, who are mostly APPOINTED, to ‘hijack’ the agenda andbecome de facto boards in many cases.Board members need to understand their legal role and also have to recognize that data, NOT emotion, has to lead their decision-making in the boardroom.
Most dysfunctional and underperforming boards haven’t talked about KPI’s (Key Performance Indicators), don’t understand industry trends and tend to have a narrow vision of decisions—seeing only the expense, not the member value enhancement or ROI of the cost.Or, don’t recognize their role and responsibility to grow the club’s net worth or value, real orin satisfaction/engagement data.
Ultimately club executives have to find a way to get emotion out of the board room as best as they can. It will never fully be gone but with better data and the understanding of what the data means, what it’s telling us and what the trend line is saying, decisions can be made on a more solid basis. Board members can’t be making decisions about something they don’t fully understand. Opinions are disputable, data is not.
All too often, the performance of board members becomes hindered because they don’t understand the data or are intimidated by the financial experts in the room. This is why it is so important for stakeholders to be educated continuously. Then they can understand what the data is, what it’s saying, and what the outcome should be as a result.
Conduct mandatory and comprehensive orientations for all stakeholders
Core Value: Informed Leadership
Associated Best Practices
- Conduct mandatory and comprehensive orientations for all stakeholders.
Orientation is not Optional
We believe the highest performing clubs do a great job of educating their consumers not just once, but continuously. It’s the reason we urge every club to conduct mandatory and comprehensive orientation for all stakeholders (Board, Committee, New and Existing Members and Staff). We think education is so important that you should even be educating prospective board members, prospective members and prospective employees! Explain what they can expect in the role and what you will expect from them.
Stakeholders must go through a mandatory—not discretionary—orientation process to ensure they are fully informed and educated. If you want to maximize their performance and ensure that they “hit the ground running” in their role, you’ve got to give them the information they need to be successful right out of the gate. You would never expect a new employee to know all of their roles and responsibilities without first going through an orientation. Why are board or committee members any different?
Provide stakeholders with the necessary information and teach, train and educate them to be the best board and committee members they can be. When you do, you dramatically reduce the learning curve that typically exists. If new board/committee members understand where you’ve been, where you’re going and why, it takes their focus off of worrying about when to talk in meetings and how to conduct themselves. Orientation helps eliminate that awkward transition period and helps your stakeholders be knowledgeable, well-informed and highly functional decision makers for your club