Private clubs to be sustainable, must have boards that fully understand the club’s culture, its core values, the club’s mission and vision, and long-range strategic plan, and what that long-range plan means – a continuing commitment from the club’s board. Board members must be leaders, not interventionists, or second guessers.
Knowledge is vital for decision making because a lack of knowledge of the issues can imperil not only the board’s decision-making process, but also the long-term future of not only the club, and the club’s top management and board. Boards must be aware of issues facing their clubs.
Equally so, it’s vital that the general manager, the club’s daily operational leader, fully prepare the board with background reports, research documents and current information required for diligent, incisive decision making.
Board members must separate personal agendas from that of their club…their strategic plan and the club’s daily operations. They must think like board members, for the public (the club’s) good.
The GM/COO and department heads should update the board on major issues that might affect the club. Boards must be presented with facts and projected issues. Only then can a club’s board look for solutions leading to a stronger, better member experience.
So, what are the major issues facing private clubs today? Here are the thoughts of some of the industry’s leading contributors.
Jerry McCoy, principal, Clubwise, LLC, a private club industry consulting firm.
Solving the issues of governance structure allows for a club to deal with myriad strategic and operational issues the club will face in the future. There are very few problems that cannot be solved in a club where volunteer leaders, management and the full membership all trust and respect one another. The following issues are important to help insure a system that can deal with almost anything presented to them.
1. The club needs to have the basic governance parameters to guide their actions.Rules for how the board works, how they interact with management and the responsibilities of all involved need to be clearly spelled out and then most importantly followed. Some clubs have very few or don’t abide by the ones they have.
2. If you don’t start right it is much harder to succeed. Having the right people on the board is critical. That is why the nominating committee’s job is most important. There needs to be a good vetting program for potential nominees. In vetting candidates, the committee needs to consider the following:
• Does the person have an agenda to just accomplish one thing?
• Are they running to represent their own social circle or click?
• Be sure the person does not believe their job is to manage the club
• Do they have previous committee experience?
• Are they interested in the welfare of the total club and willing to abdicate their priorities for the greater good?
• Can they disagree without being disagreeable?
3. Provide a comprehensive new board member orientation. You never hire a new employee and immediately put them in the job with no orientation or training. Even though the elected board member may be successful in business, a professional or entrepreneur does not mean that they can immediately make effective decisions regarding the club.
The unique nature of individual clubs, their issues regarding, membership, finance, capital investment priorities and strategic issues can be daunting. Providing new members a full review of all aspects of the issues they face is critical to getting new board members off to the right start.
4. Great boards need to be able to speak with one voice. Board members should be able to have candid conversation regarding difficult issues. Many board votes will not be unanimous. It’s critical, no matter where a board member is on an issue, that board members come out of the meeting speaking in one voice. When confronted by a member asking how the board could have made that decision the answer must be: “We discussed the issue thoroughly. All sides were represented. Now that the board has passed the policy and it is now my job to help it succeed. It is the same for every board member no matter how they initially voted.”
5. Leadership for the president and GM is paramount. It’s very easy for organizations to go astray if there is not competent leadership. The membership expects the elected volunteer leadership to team with the club management to deliver a positive club experience. Therefore, it’s critical that the club has a vibrant leader in the general managers seat as well as a solid leader in the president’s chair. The president can keep the board members on target instead of running down rabbit trails. The GM can lead through operating results and offer solid guidance to the board on the issues facing the club as a whole and the industry in general. Each understands their roles and responsibilities and they coordinate well together.
Jack Sullivan, consultant with Kopplin Kuebler & Wallace, a strategic planning, consulting and executive search firm in the private club industry.
Any of the following issues pertinent to a specific club should be part of the action plan, which is the main component of a club’s strategic plan. This action plan should outline the issue, its objectives and strategies, along with timelines and responsibilities.
Orientations – Providing training for all new board and committee members, reviewing key club information and current issues, along with clearly defining expectations and roles and responsibilities.
Succession planning for club leadership – Establishing a procedure and process that defines the desired qualities and qualifications for future committee and board members and then recruiting the most qualified candidates.
By-laws and rules and regulations – As the governance foundation for clubs, many portions of these documents were established when the club was established and may not have evolved with the changing times and needs.
Strategic planning – Club governance is most often a key issue contained in a club’s strategic plan, and
Resource management in a club can include the workforce, amenities and the natural resources, such as water that are used in its operations. Restrictions by government agencies are often placed on these resources and in-depth knowledge of their impact and how to manage them is critical.
“Any of these issues that are pertinent to a specific club should be part of the action plan, which is the main component of a club’s strategic plan,” Sullivan stressed. “This action plan should outline the issue, its objectives and strategies, along with timelines and responsibilities.
“Too many clubs are willing to accept things as they are. For example, if by-laws are out of date and restrict a club from moving in a direction that will benefit the club and its membership, then the club should change the specific by-law that impedes the progress. Just because we have always done it this way, does not mean we should continue to do so, “ Sullivan stressed.
Gordon Welch, president, the Association of Private Club Directors.
These needs or issues that I outline aren’t new to the business but the need to correct them is growing to a critical stage. I get frustrated when I speak with general managers/COOs and hear the same things over and over. Clubs are like many state governments in the way they operate. Many of them believe the problem is cutting cost but often the truth is a need to generate more income.
Clubs fear they will lose members if they increase dues, fees and prices and they may. A club can’t save their way into profit. The board’s role is to tackle the issue and bring in more, or new income. That burden cannot rest solely on the shoulders of the staff.
In Welch’s opinion, here are the industry’s top governance issues.
1) Master planning for future – The need for facilities upgrades and raising the money for it.
2) Controlling operational expenses: Water, salaries (being able to afford or keep key staff), healthcare and debt reduction cost are the top concerns.
3) Membership: Finding new members, and membership retention are key. I did speak to one general manager that is raising transfer fees and reducing the number of members
4) Staffing and labor: There is a need for competitive wages and compensation packages.
5) Home Owners Associations – Home Owners Groups: More clubs (and the general manager) are dealing with HOA complaints that are from non-club members. These are difficult and frustrating as the HOA normally has no interest in the club. The members of the HOA have no interest in supporting or investing in the club.
“Clubs and their boards must start playing a role in vetting new or potential board members. Experience is the key,” Welch explained. “The days of the ‘good old boy club’ need to be past. Today boards should be selective in the process of cultivating talent for the board.
“However, the GM can’t do it all. Quality support staff is needed to assist the GM in the many roles and issues they face daily.
“If the club has an approved operating budget the board needs to assist in finding income sources to accomplish the goals (budget) laid out for the year.
“We see many clubs cutting expenses. Some that I know of have been asked to cut up to $500,000 in a year. This certainly affects the members and staff. Instead of cutting every year clubs need to look to new income sources,” Welch stressed.
Here are other major private club issues as defined by Randy Addison, principal, Addison Law and Robert Jones, principal, Ethos Club & Leisure, with Randy and Dallas Addison.
1) Understanding and misunderstanding of the board members duties, responsibilities and obligations. Today the tendency to micromanage club management is at an all-time high and an epidemic in every board room.
Because of the turnover of members in the board’s annual election, there is a constant need to have the members understand and be advised of their duties and role as a board member.
The board powers and duties should be specifically addressed in the club bylaws, summarized as (i) to set club policies, (ii) provide for club’s long-term goals, mission, and brand (iii) effective measured oversight and review of club management, not “hands on” day-to-day operational oversight or counter directives from the board given at the lower tier departmental level.
There is a need to (iv) establish governance procedures for club decisions and member conduct and (v) provide leadership to the members in major undertakings, new membership offerings, new categories, etc.
The clubs should annually perform a board strategic planning week, during which the following should take place: (i) a re-orientation of the current board members, (ii) an orientation for new board members, and (iii) a goal setting session to set the next fiscal’s goals for the board, for the year, (iv) a SWAT analysis of regional / local competition, (v) consultants reviews of national trends, financial club bench marking, and facility planning.
During this planning week, the club’s leadership team should present departmental business plans by area, and their respective needs and goals for the upcoming fiscal period.
2) Problematic disputes between individual board members that lead to factions on the board and in the membership.
Members of the board are elected to represent the membership and club as whole, not specific groups, or personal projects, or the wants and needs from their golf or social groups.
For example, the golf committee, house committee, tennis and social committees all have different goals and concerns. Their annual goals should be set by the board in congruence to the board’s annual goals.
Decisions are to be addressed and made based on the fiduciary duty to all members and the club, not the individual desires or personal obligations of an individual board member. All conversations within the board during discussion of issues and potential problems are to be on a strict confidential basis until a decision is reached by the board to avoid misinformation and dissenting factions of members develop before the board’s decision.
Failure of any board member to adhere to the primary commitment should be cause for immediate dismissal. A firm “code of conduct” is to be read, understood and agreed to by each board member in writing before service on the board. Failure to abide by the code of conduct is cause for immediate dismissal of a board member.
3) Hasty major decisions, made by the board to deal with club issues without proper due diligence and consultation with knowledgeable third-party input, cause major failures.
An example is the board implementing a new membership category or membership plan to deal with membership issuance not meeting plan, without (i) review of the club’s obligations under the existing and previous bylaws and membership agreement, (ii) review of marketing conditions, (iii) long term effect on membership pricing, (iv) legal constraints and (v) impact on existing resignation lists, (vi) a thorough review and understanding of regional and local club competition, and demographic data.
Major decisions not tied to factual analysis and proper research are generally unsuccessful, and will cause long term issues, and possibly club failure.
4) Board’s attention to detail management issues, the issue of the day versus working on long term strategic goals and policies for the club is another major issue.
The board’s role is to set the policies and procedures and club’s goals and objectives for the management team. Board Members should not be dealing on an individual basis with employees and their concerns. These matters should be brought to the attention of the general manager/COO for handling. We have created a specific “Complaint and Grievance Procedure” section in our club bylaws to specifically deal with how members complaints are to be heard and addressed, including bylaws and rules and regulations infractions and procedures regarding employees. Remember, “management operates, board sets policies and provides member/owners input,” emphasized Randy Addison.
5) Boards need to recognize that the operation of a club is a complicated service business” not a part time voluntary business.
Country club and golf clubs are like a “small city” with a variety of issues, including membership, food and beverage, liquor laws, water issues, financial, compliance with employee/labor laws, environmental, land use regulations, adjacent homeowners and HOA issues, tax issues and fluctuating market conditions.
“These issues must be addressed and with a long-term strategy and policies to provide management the tools for success. The board must assemble a management team and third-party consultants that are in the club business in advance to protect the interest of the club and the members,” added Addison.
The Association of Private Club Directors offers solution to many of these issues, and more specifically to the vetting of board members.
“Our association assists in educating the board members to know and understand what their role and responsibilities are,” explained APCD’s president, Gordon Welch. “The burden of ‘training’ the board should not rest on the shoulders of staff or the GM. The board needs someone who will work with them and be blunt or forward when reviewing the needs and responsibilities of the board.”
Publisher’s final thoughts
As I mentioned earlier, it’s vitally important for private club boards to be well aware and have knowledge of the issues facing their club, because without that knowledge base, the club’s sustainability hangs in the balance.
It’s incumbent upon both the board and the club’s general manager to collaborate in guiding the club’s operation, it’s also incumbent upon the GM to provide the board with background reports, research documents and current information required for diligent, incisive decision making.
At the same time, the board’s decision-making process means setting firm, viable policies that allows the club’s paid management to fulfil the policies established by the board. All too often during my travels visiting private clubs across the country, I’ve encountered clubs without written job descriptions for the board itself, the board’s directors and also committee members.
In other words, they don’t know what they’re supposed to be doing for the betterment and sustainability of their club.
Jerry McCoy reiterates this point when he suggests the club needs to have basic governance parameters to guide their actions, including rules for how the board functions, how the board interacts with management, and how the roles and responsibilities for each are spelled out clearly. And this is all for naught, of course, if the board ignores its own advice.
The importance of board orientations ties directly to these parameters. It’s vital that all board members (new and old) and committee members receive an orientation that provide key club information and a review current issues. And it’s at the board orientation that the roles and expectations for everyone are clearly defined.
All so often we hear of the same (and old) issues facing boards and paid managers. As Randy Addison and Robert Jones suggest, micromanagement remains at an all-time high…boards just cannot leave well enough alone and keep their fingers out of management’s pie.
Addison make a strong argument in saying the board’s powers and duties should be addressed specifically in the club’s bylaws and policies setting out the club’s long-term goals, that also clearly defines the board’s oversight of club management and counters micromanagement.
An increasingly important issue that also must be confronted is that of home owners’ associations and their relationships to private clubs. What’s the relationship of one to the other? How do clubs deal with HOA complaints that arise from people who have no interest in supporting or investing in the club?
None of these issues are new to the private club industry…in fact, they’re consistently raised at clubs all over the country. Yet many clubs (boards) are unwilling to make the decisions they need to make. It’s as the APCD’s Gordon Welch says, “many of them believe the problem is cutting cost but often the truth is a need to generate more income. A club can’t save their way into profit. The board’s role is to tackle the issue and bring in more, or new income. That burden cannot rest solely on the shoulders of the staff.”
As Jerry McCoy reminds us of an old adage: There is a GM for every club and a club for every GM, but every club is not for every GM and every GM is not for every club. This goes for elected volunteer leaders as well.
Finding the right synergy and trust between management and the club’s volunteer leaders, and dealing with the club’s governance issues in a timely manner is vital to a club’s future.
At least, that’s the way I see it. BR
John G. Fornaro, publisher