Private club boards of directors pose a fleeting presence.
In fact, in most cases, the board goes through a 100 percent change within three years, with usually a third of the board being replaced each year.
This can be a ‘sticky wicket’, because it’s often more difficult for a club to stick to a long term strategy with a short term board. It seems boards are continually taking the Maalox approach…something to deal with the symptoms rather than digging out the root problems.
What to do?
The difficulty is that boards of directors often forget why they are there…what their duties should be and how they should fulfil their roles as the guardians of each private club’s future.
Where does it all start? The roles and responsibilities of each board member must be clearly defined after each and every election and what they should do expands from there. This includes several key questions each board should ask of its members.
For example, do boards have a duty to monitor the board’s performance against a club’s long term plans?
“Absolutely,” explains Tarun Kapoor, a private club consultant with Kapoor and Kapoor Hospitality. “Not only are the boards transitory – temporary guardians of the club, they have to lead the club’s committees who are also transitory by collaborating with them. Moreover, as volunteers, they also have to collaborate with management –the paid experts. And without a strategic plan that the club is bound to, this collaboration will not be possible.”< Ah, the strategic plan, that document that clearly lays out the future direction of the club, a document that shouldn’t change upon the whim of the board’s new president, or personal agenda.
“One of the board’s most important roles and responsibilities is to be the strategic leader, guiding the club strategically,” injects Jack Sullivan who specializes in strategic planning for the industry consulting firm, Kopplin Kuebler & Wallace.
“An active strategic plan is one of the best business tools available to clubs and all of its constituents, keeping everyone focused on long-term goals and objectives. A good strategic plan is not just the board or management’s plan; it is the entire club’s plan,” Sullivan added.
“It’s the roadmap for the club’s future success in an environment that is constantly changing and the membership should be updated regularly on the plan’s status through town hall meetings and correspondence. When discussing strategic planning, one of my favorite sayings is this: ‘The purpose of a plan is not to produce a plan, but to produce results.’”
Gordon Welch, a former private club manager recently named president of the Association of Private Club Directors (APCD) says, “boards have a duty to monitor board performance, period.
“A performance report should be distributed annually so the board can score how the board members think they are as a group and as individuals. The general manager should also have input on this, and the GM may have a different experience with a board member than the full board has.”
Welch also offers another idea to monitor long term plans.
“Boards should have a ‘floating’ directorship that is appointed to the board that will oversee any long range plans. This position is not a voting position but an advisory position. The board member will participate as a director of follow-through.
“Having this position will give some stability through the process and historical knowledge. Many boards do not have this position, but in my opinion, it’s a good idea,” Welch offered.
“The board has a duty to measure its performance against the strategic plan, as well as the club’s greater vision and mission,” opined Skip Avery, executive vice president of Chambers, an industry planning and design firm, and a past president of the Club Managers Association of American.
“After all, performing in accordance with those goals is the point of having them written down in the first place. A strategic plan creates a stable environment for the club’s long-term health, establishing common goals and a common thought process that would otherwise evaporate whenever the board experiences 100 percent turnover.
“Boards need to utilize the strategic plan and long-term thinking to keep the club moving in the right direction,” he emphasized.
“Duty might be a strong word,” suggests Frank Gore of Gore Golf, and chief analyst for BoardRoom’s Distinguished Club program. “The board should have a long and short term strategic plan for the club, and it should include membership goals in both enrollment and retention. The plan should also include capital repairs, replacements and new improvements.”
While boards have a duty to monitor their own performance, they also must play the regular role of keeping management focused on the long term health of the club.
“As I’ve mentioned, boards must play an essential role in maintaining the goals and objectives of the strategic plan. In order to do this, they first need to understand their place in club governance,” Avery added.
“They (the board) are the ‘what’ in the equation. They determine what the club is going to do, who the club is going to be, and, who the club is right now. On the other hand, management is the ‘how.’
“Management looks at the board’s ideas from an execution standpoint and decides how those ideas are actually going to get done. Understanding this difference is essential for board members to be effective in their role,” Avery expressed.
“This is what board meetings are supposed to be about, not daily operations but goals, both short and long term. Daily operations should not be the board’s focus…but future goals and objectives,” added Welch.
“Boards keep management focused through a commitment to the club’s strategic plan and the plan is institutionalized by managing it through an annual plan that makes up the club’s budget, ” ===Kapoor.
And, “the club’s long term health is dependent upon having a full and vibrant membership roster. This should be the focus of every club’s board,” added Gore.
So the question is, “do boards need to become bolder to make an effective stand against short-term thinking?
“Bolder is dangerous. It gives opportunity to renegade directors whereas commitment to the club’s strategic plan is leadership,” added Kapoor, in making the differentiation.
“Bold may not be the right term, Welch explained. “But they (board members) do need to stand together and keep each other in check. This has to be a part of the annual board retreat as well.
“It’s the executive committee’s role to make sure other board members are aware of the board’s ultimate role, and it is the responsibility of the GM to see that this is planned and followed through on.
“I recommend having a professional mediator present every three years so things can be hashed out. Having a (non-member) mediator present can be a great benefit,” he added.
Avery agreed that ‘bold’ is not necessarily the right term, but ‘directors…certainly need to be steadfast.
“A board of directors is doing its job when board members continually say to others and each other, ‘This is the direction we’re going as a club and we need to stay that way.’
“That means avoiding the personal agendas of certain board and committee members. Each person needs to represent the club as a whole instead of themselves as individuals. The easiest way to do this is to remain true to the strategic plan – and update it with the goal of keeping it active and current,” Avery outlined.
“The club board must have the courage to keep the club relevant to today’s consumers if it expects to attract new members especially the Gen’xers and Millennials, which is the future of clubs,” Gore injected.
“This requires making some changes that may not be popular with a segment of today’s members. The club owes its older members a great debt it can never repay because they made sacrifices to get the club where it is today. Having said that, if the current board does not begin to make changes for the future and caters only to the older members the club may not survive in the future.”
What can a board do to keep directors focused on the long term goals?
“By ensuring that management and committees’ plans are sticking to the club’s strategic plan, and if the board is focused on the short term, the club’s general manager/COO should push to revise the club’s governing documents to manage through a strategic plan,” Kapoor expressed.
“As the board’s paid professional with the expertise, it’s the GM/COO’s responsibility to lead the board from behind,” and present the board with long term goals and strategy.
“The best way to keep the board focused on long-term goals is to conduct an orientation session at the beginning of each year, led by the president and the general manager, for new and current board members,” Sullivan outlined.
“The purpose is to gain input and buy-in for the operational and strategic goals and objectives for the upcoming year, along with establishing priorities, accountability and a timeline.
“This should become part of the board and management’s annual action plan. We also recommend that a similar orientation be conducted with all committee members, so everyone understands their roles and responsibilities, along with defining their involvement with short and long-term goals and priorities.
“A best practice in today’s club world means conducting one orientation with members of all committees at the same time, to clearly define the inter-relationship of committees,” Sullivan added.
“The board and management first must agree on a responsibility chart that defines the roles and responsibilities of the board, committees and management. Once agreed upon, this chart should be part of the board and committee orientations and published so the entire membership understands who is responsible for what.
“Best practices establish that management is responsible for operations, and boards have a more strategic role. Another best practice that helps keep everyone focused on long-term goals is… a regular quarterly, or even monthly review of the club’s strategic action, to closely monitor the status of each issue, “Sullivan explained.
“The role of the GM/COO is to be a partner with the board and committees on the process of identifying and agreeing upon the club’s long-term strategies and goals While the GM/COO has an invaluable perspective of the issues and challenges facing the club and must provide the board with the critical information necessary to make the appropriate decisions, the board is elected and required to exercise its fiduciary responsibilities for which it is charged. This includes approving and monitoring long-term goals and strategies,” Sullivan emphasized.
Dealing with a board member’s personal agenda has always been a curse for private clubs, and as Avery explains, “it’s much easier to keep directors focused on long-term goals if there are procedures in place to ensure that they will avoid prioritizing personal agendas over the club’s overarching plan.
“All clubs should have a detailed board manual, thoughtful policies, and comprehensive procedures for their directors to learn and follow. It also helps to select board members that have previously served on committees, so they fully understand the nature of club governance and their role in it,” Avery added.
“There’s nothing inherently wrong with short-term goals, but those short-term goals need to fit into the club’s larger vision. Part of the general manager’s job is to ensure that the short-term goals boards … meet the club’s long-term objectives.
“General managers need to make sure that the board isn’t reworking certain aspects of the club plan for the wrong reasons and incorporate the board’s short-term goals into the overarching plan. This transforms the obstacle of short-term thinking into an asset that betters the club as a whole,” Avery continued.
“If the club has a well thought out plan based on the market it’s located in, and have thoroughly reviewed the competition and understand what needs to be done to attract the next generation of members, they (the board and management) must have the discipline to stick to the plan,” Gore added.
“The general manager should assist the board, do research and give the club’s board options to consider based on industry trends. The GM should keep providing the board with facts…real usage data, real market comparisons, and real survey data from all members, not just a few.”
Welch suggests that if you have short term directors, you’ll also have short-term thinking, and these are directors “either new to the board who haven’t been trained or they’re directors on their way out.
“The challenge is this: Successful individuals (business people) are voted to the board. They’re successful in their own industries and believe they can crossover into the multi-faceted club industry.
“It’s very rare that this can be done successfully and without dangerous change. Again, it is the board’s role, the executive committee and the GM to train-up the new board members. It is also the board’s role to provide board continuity as it transforms often. The most difficult transformation on the board is going from president to past president. You must plan for and transfer that power and flow of information,” Welch emphasized.
“If the board has hired a competent GM with the skills necessary to run the operation then they must prove, without a doubt, that they are in control, are professionals and are in charge. They must be able to accept the daily complaints that arrive from members to the board and the board needs to entrust the GM to handle them.
“If the board will not turn loose of the short-term then I’d hire a specialist to come in and have this discussion or workshop with the board. Unless the club is in major turmoil the board needs to stand down and let the professional management handle the daily operation. The individuals in charge need support and encouragement but not interference,” Welch opined.
So is it then the role of the GM/COO to present the board the long term goals and strategy?
“I believe it’s the role of the GM/COO to ‘plant the seed’ with the board for long range programs. Of course the management team is involved in all long range planning but as soon at the GM sees a need, even if it’s five years down the road they need to begin talking about it at the board meetings, committee meetings and annual meetings. (The more people that think it’s their idea the better.),” Welch commented.
“The general manager needs to communicate the long-term goals and strategy that current and future boards need to run the club,” Avery reiterated.
“Because boards experience such high turnover, sometimes the general manager might be the only person that has been present continually throughout the governance process. This makes them well-suited for keeping everyone’s ‘eye on the ball’ so-to-speak.”
Does this mean, directors should be elected or appointed for their ability to provide insight into the strategy proposed by the club’s management? The answer is singular – anyone on the board, first and foremost, should have the club’s long term health in mind.
“Directors who understand their role as stewards of the club should be chosen and their main role is attracting the next generation of members and providing the resources necessary to keeping the club relevant,” Gore offered.
“The ideal board member should have the ability to separate their personal agendas for the good of the club. This is incredibly important, because the board should be representative of a club’s entire membership, rather than just the needs and wants of a few individuals,” said Avery.
“All of your board members should have the ability to provide insight into the strategy,” added Welch. “The GM/COO has a vision … and has a plan that is written and can carry it out.
“While there’s always some discussion about who’s idea is the best, the board needs to be aware of the issues and thoughtful enough to understand that the GM and management team have the skills and abilities to present the proper strategies.”
“Board positions should be based on the skills a person brings to the table that helps position the club for success, Sullivan said.
“Election or appointment to the board must not be a popularity contest, rather the identification by the nominating committee of the best possible candidates who can address strategic issues and assist in leading the club into the future, and the board members should be doing so in partnership with the GM/COO,” he added.
“Boards need to be aware or have an awareness of their club, roles and responsibilities. Boards need a thorough training annually and refreshers along the way. Board members should know the club’s mission and if a decision is being made the board needs to be able to explain the decision and how it will support the mission. Board training is the best way to survive your club!” Welch stressed.
“Maintaining a long-term club strategy all starts from having a good leadership culture,” Avery expressed.
“Everyone should understand their roles and responsibilities, as well as the differences between the board, the committees and the management team. Clubs must ensure that all of those roles are clearly stated, maybe in an official document, and that everyone signs off on it. Ultimately, there needs to be a process and a culture of leadership achieved through combined efforts and goals.”
Publisher’s final thoughts
A club’s board of directors is there to remove a pain and solve problems for the club’s management and the club.
Perhaps many of a club’s difficulties arise from the way these clubs are set up…with a volunteer (and transitory) board and paid staff. Board members come and go and are often unwilling to solve some the issue clubs face.
I believe 99 percent of general managers and department heads are of the mindset that they must solve problems, yet often the boards are squashing change. Boards put change on hold, they’re slow to respond and as with many home owner or community associations as well, the customers (members) are the owners and as owners/customers, they also oversee the governance. To make this work effectively and efficiently is the challenge.
We need an evolution, but not an extreme revolution aimed at long term survival. And if it doesn’t happen, club members can expect rising dues, more assessments, and fewer amenities, even to the point of more clubs closing down their operations.
It’s as Frank Gore says: “The club’s board may never get the credit it deserves for having put in place the plan for the club’s next generation, but it is their (the board’s) main responsibility.
“The old club model that didn’t change for almost 100 years must now be modified. The market is ever-changing, the consumer is more informed, pace is faster and information is available to everyone at their fingertips. Clubs must adjust more quickly than they’ve had to in the past.”
Yes, a club’s board, operating with clearly defined roles and responsibilities, mindful of fiduciary responsibilities and working collaboratively with the club’s paid management, can contribute greatly to a club’s long term health.
Then it won’t be a matter of swallowing more Maalox to erase the painful symptoms because the club (the board and paid management working collaboratively) will be on course to root out, and take action to solve the problems that threaten the club’s survival. Collaborative governance is the goal.
At least, that’s the way I see it!
John G. Fornaro, publisher
If you have comments on this article or suggestions for other topics, please contact John Fornaro at (949) 376-8889 or via email: email@example.com