The private club world is evolving…and with it so are the leaders of tomorrow’s industry.
However, change – technological change and otherwise – in the private club industry often lags behind other industries. Certainly some clubs are at the forefront as early adopters, and even better, the industry does benefit from innovators, as change continues unabated.
However, the same can’t be said for the majority of private clubs that most likely fall into the ‘late’ majority or ‘laggards’ categories of those adopting new ideas or innovations.
It usually takes these clubs considerable time to trust any change. Boards, members and management are indeed skeptical about innovation and feel quite comfortable with the ‘status quo.’
So why is it change and acceptance sits on the backburner at many clubs. In this publisher’s perspective we’ll address change from several different viewpoints including new technologies, human resources, key performance areas and indicators, and dining and food trends at private clubs.
Why late adopters?
Smart thinking general managers (and boards) know they must adjust in today’s world…so why are so many clubs in the private club industry are ‘late adopters, or laggards.’
An overview of the ‘adoption’ curve studies give us a clue. We may be familiar with the innovators in our society…those who are eager to try new ideas, are venturesome and have the money and a high risk tolerance. However, we don’t find many of these people in the private club industry.
Early adopters, usually younger people with a strong educational background and some cash in their pockets follow the innovators, because they realize it’ll help them maintain their central communication position…as opinion leaders.
Other categories are: the early majority – those who’ll accept an innovation after a period of time and then the late majority and laggards – key groupings for many private clubs.
People in the late majority generally approach innovation, such as advance technological products, with a high degree of skepticism, and the adoption usually occurs only after strong peer pressure, and often because of economic necessity.
Laggards are traditionalists; older folks who don’t want change. They’re suspicious not only of innovation but also how it happens and what it may do to their lives.
They focus on what has been their life…the past, although in today’s age, younger people, for example, grandchildren who are often early adopters, are bringing these laggards (the grandparents) out of the darkness by helping them become accustomed to products like SmartPhones, Smartphones etc.
So where do private clubs fit into this scenario?
“Clubs are often late adopters because their membership isn’t demanding change,” suggests Jim Fedigan, president of Jonas Club Software. “Many clubs are more than willing to adopt new technologies, but why would they if their members aren’t crying out for these changes. This is likely a result of the membership demographics we see today, which in most cases is 55 plus. While some in this age range are heavy technology users, the vast majority of Baby Boomers and older simply aren’t.”
Bill Boothe, president and owner of The Boothe Group, an independent consulting firm, says, “it shouldn’t be a surprise that clubs are slow to embrace technology. The private club environment has always been a balance of tradition and innovation.
“Technology is ever-changing, so it naturally bumps up against the traditions that clubs hold dearly. In addition, nine out of 10 clubs don’t employ an IT professional. Instead they depend on an outsourced provider to maintain their systems. By definition that puts technology in a reactive position. The outsourced provider reacts to issues and problems, but rarely is able to proactively encourage technology advancements at the club,” Boothe added.
There’s consensus on some points.
“It’s a combination of cost, fear of change and a threat to traditions,” explained Michael McCarthy, CEO and general manager of Addison Reserve Country Club in Delray Beach, FL.
“Many private clubs have been around for a few decades and are stuck on keeping a tradition going or keeping a look they feel is the club’s brand. Many private clubs have also not updated their facilities to having some very basic technology needs such as Wi-Fi or hardwire access to the Internet or the more intuitive software for their internal operations that are commonplace in the non-private sector, and the cost involved to do so can be very expensive.
“Honestly,” McCarthy emphasized, “tech scares the non-tech savvy. Many of the owners or members of the governing boards lack the understanding of what is needed to accommodate the latest in technology.”
Knowledge, in Ron Banaszak’s opinion, is precisely one of the factors.
“Clubs traditionally have lagged behind the rest of the business world in the technology world for two main reasons, cost and knowledge,” Banaszak, CEO of Operating Partners, LLC, expressed.
“However, costs of technology are really not a barrier anymore. Clubs are trending up their technology spending (although less than the for-profit business world). Technology is becoming more affordable and boards and finance committees are receiving a great deal of information (data) from their professional lives and they are expecting the same from their club.”
These factors, Banaszak feels, will drive the next generation of tech savvy chief operating officers and chief financial officers.
Tarun Kapoor of Kapoor and Kapoor Consultants, brings another equation into this discussion – club governance.
“They (private clubs) are late adopters because of the broken decision making tradition unique to clubs where mangers have to get almost every purchase that isn’t ongoing to be approved by the board or some committee.
“What makes this approval process painful is that the board or committee then needs to get consensus or better yet unanimity. Unless the need is critical managers are reluctant to take on this uphill battle with the board.
“To avoid this brutally frustrating decision making process, managers should institutionalize a technology reserve as a line item in the budget. Then they can continue to update their technology without board approval,” Kapoor opined.
Club politics also have an influence says David Lacey, managing director of HR services with The Hirshorn Company, and a former board member of the Philadelphia Cricket Club.
“Quite often political motivation overrides the content or necessity for change, and by political I mean that it is more important to the club president and the GM to be reelected and continue employment, the without risk of members resisting change,” Lacey offered.
“The content or the reasons for the change are not well enough thought out and communicated to members. Also, it takes courage to be an early adopter – the first to launch an initiative. In short, club presidents and their GMs need more guts,” he stated bluntly.
Crystal Thomas of Clearly Concepts, club solutions company, specializing in team training and operating efficiency, says, “clubs often use the excuse that they are too busy to make changes, even if they see the benefit.
“Club culture can be very traditional and change does not come easy. When making a change requires input from the board of directors and committees, the process can take a long time and is often put off until the management has time to address the changes and the processes that go with them,” she explained.
“Perhaps, it is the status quo for some clubs, but with everything available to everyone all of the time, it’s essential that clubs embrace change in order to stay relevant to their membership.
“I don’t think that cost is always the main reason that clubs are late adopters. Clubs have strong traditions and often long-time members who have invested so much into their clubs, are reluctant to support change. Management is sensitive to adopting new practices that may not be accepted easily,” Thomas emphasized.
Where are clubs with technology today?
“I believe there are cycles that the club industry churns through,” opined Prasad Suryadevara, CEO of Northstar Club Management Software. “While the private club industry has lagged in adopting new technologies, clubs are always look at new technologies to enhance their operations and members experience.
“For many years clubs didn’t use electronic POS systems, but then there was a real rush to place them into every club. The same held true with club websites. Once the value was established then every club moved quickly to get a website.
“As the websites have become a commodity, many clubs are recognizing that they are vastly over-paying for their current website. The clubs are also recognizing the ways mobile apps will take the member experience to a much higher level through the use of location-based services, GPS, camera, push notifications, etc.,” Suryadevara expressed.
“As for enterprise software, things really do not change too much in this area of the club industry,” says Don Williams, CEO of ClubTec. But clubs do need to remain current.
“Accounting is accounting. POS systems all do what they are supposed to do – get the food or beverage order to where they need to go, or in case of retail pro shop transactions, process the sale and post it to the desired payment method (member account, credit card, credit book or cash) and then provide reliable reports,” Williams added.
“And, as technology vendors, we constantly are looking for ways to help clubs utilize technology to better serve their members, even though clubs also have been very lax in budgeting for new hardware and software solutions, as well as keeping staff trained.
“Clubs need to budget more funds to this and develop plans for spending these funds to remain current. The best place to start on this with their current technology vendors and the staff members who use these solutions. This includes their enterprise software providers, IT staff or contractors and website vendor.
“It takes a lot of money to run a software company and the clubs need to better understand that in order to get the latest and greatest, the vendors need to see a path of profit,” Williams stressed.
Bill Boothe, in explaining that clubs are reactive rather than proactive, feels clubs can benefit from in-house IT professionals.
“These professionals do both – put out the fires and present ways to use technology to increase staff efficiencies and enhance a club’s member experience.
“There are several alternatives that work well at much less cost. A part-time person or a shared person (with another nearby club) are great alternatives to the sticker shock of adding a full-time IT professional.
“I know that general managers don’t want to hear this, but they more than anyone are responsible for technology taking a back seat in the club industry,” Boothe exclaimed.
“Most general managers know very little about technology. But also in their defense, there’s very little education available to them in this arena. Every other aspect of club operations enjoys broad and deep education opportunities. Technology – not so much. Until club industry leaders embrace the need for serious technology education for club managers, this knowledge gap will only widen,” Boothe opined.
Jim Fedigan of Jonas suggests clubs have far more technology available to them then they even realize. As well, he points out, in 10 years’ time Millennials will be a large part of a club’s target market.
“There will always be a place for traditional clubs, but the vast majority of clubs will need to adapt to this new generation. Now is the time to start laying that foundation, after all, the oldest Millennials are already in their 30s.
“Clubs need to look to their technology providers for training and support. Moreover, clubs need to articulate the vision of the experience they wish to provide, and let their technology partners show how technology can be leveraged to deliver that desired service and experience.
“Technology adoption is increasing in every aspect of our lives, and clubs are no exception. It’s not about convincing anyone, it’s more about recognizing when the time is right for them,” Fedigan offered.
“However, some clubs would still rather stick with what they know than adopt a new process. Simply put, if the willingness is there, most likely there is a technology solution available.”
Key performance areas
Key performance areas and key result indicators are valid indicators of what’s happening in a business. Ron Banaszak suggests that because technology is becoming more affordable and the fact board members and club executives are receiving more and more data in their own lives, they want the same information from their clubs.
As expected clubs are slow to change in using key performance areas and key performance indicators to tell them what’s happening at their clubs?
“The industry as an industry has yet to adopt them,” offers Tarun Kapoor. “Managers who consistently showcase their outcomes – key performance indicators – to their boards and committees (in each key result areas) will eventually get them to focus on the result and stop micromanaging.”
Greater adoption of these indicators “will drive all sorts of improvements to the member experience and most importantly the creation of two or three KPIs for the board and management to pay attention too,” Banaszak said.
“This data will come from multiple databases, including accounting software, labor management software, data mapping software, membership survey data, and other proprietary software.
Specialized knowledge and tools are required to extract this information. The good news is that these services are available today, at reasonable costs to the club.
“This information would be combined to track the club’s major KPIs, preferably one of each based on revenue, expenses and the always-paramount member service levels. This is what allows management and the board to make decisions in the best fiscally prudent manner to give the members the best service possible,” Banaszak explained.
Challenges in the private club human resource field often relate both to technological innovation as well as changing best practices?
“Many clubs barely have a human resources department and often the club’s controller wears both hats. Technology can offer support in making the job of human resources easier and more beneficial to the club as it often offers solutions for streamlining and implementing HR practices,” injected Crystal Thomas.
“There’s improved technology, especially the enhanced HR platforms from payroll providers, which can handle electronic time and attendance, performance review protocols and tracking salary actions,” explained David Lacey. “Technology is far more efficient than Excel spreadsheets or other paper-based applications.
“All too often a club’s human resources are defined by the CFO as recruiting, benefit and salary administration. This definition is far too narrow and pays insufficient attention to strategies for attraction and retention of key people, professional development and management education. These areas require professional expertise.
“With expanded use of technology by human resources, more retention and development work can be done. It is work central to being a premier club.
We can be doing both: more technology and evidence of best practices. Both lead to more and higher levels of effectiveness,” he offered.
There’s also the influence of the United State department of labor when dealing with legal requirements.
“Conducting an HR audit to pin down compliance with at least 15 different state and federal statutes is rarely done because the prevailing logic is: the club will never be audited,” explained Lacey.
“The USDOL hired 2,000 field auditors two years ago and targeted hospitality as one of three businesses to be audited. At a minimum HR should do an audit as part of the club’s risk management strategy,” Lacey opined.
Change has also hit dining trends with movement toward more casual dining, healthier options and smaller portions served as a faster pace, says Addison Reserve’s Michael McCarthy.
“This trend started about six years ago in the private sector, about four years ago at clubs and today continues to drive the F&B revenue within clubs.
“To find success you need to fulfill the demand for a high quality food product – and serve mostly healthy food selections. More organic and locally sourced food is important to consumers and it’s inspiring chefs to become creative and resourceful,” McCarthy outlined.
“Clubs that are progressive and have several dining outlets are definitely following dining trends. The southeast Florida country club market is the pioneer within the club industry for cutting edge food and beverage programs.
“We see top level chefs producing food that is as good as it gets anywhere. The greatest challenge…for many clubs is change, particularly with menu development. Many club members that don’t consider themselves foodies are still seeking simple food and resist trends that are out of their comfort zone,” the Addison Reserve CEO added.
“Listen to what your members want and implement the changes to reflect their desires,” McCarthy cautioned.
“Initially, any change seems large but gradually they are accepted and eventually become the norm. Remain open to feedback and you will get it right.
“We know we have to evolve constantly to keep our members interested in dining at the club. If we remain stagnant, revenue will hold the line but growth becomes negligible. So feed the entrepreneurial spirit of your chef and F&B director by challenging them to implement new and creative menu ideas. Keep the ideas fun and simple. Then add them into the menu programming but you MUST market them as they happen so the members understand the change and embrace it. By taking a proactive approach you will get them excited about the food as opposed to being hypercritical,” McCarthy intoned.
“With the addition these more casual, healthy options we find our members coming to the club for that ‘other casual meal’ they used to eat elsewhere at a local restaurant. And yes, it is driving revenue higher.”
All good signs for a private club.
Publisher’s final thoughts
Change is difficult for many clubs, and while we may need change it needs to be by evolution not a revolution.
Yes, many clubs are evolving – some perhaps a little too slowly for members and staff, while others are moving too fast for members and staff. It’s a matter of finding the right pace.
I read an interesting comment a while ago, suggesting, “younger people embrace technology to seek new skills because they might become relevant later, whereas older folks are most interested in what seems to matter now.” So they focus more on emotional goals and being with people that matter most in their lives. That’s why Facebook is technology embraced by many older people.
It’s important to remember not all computer users are created equal. As we age, changes in perception and motor skills can make it more challenging using computers, SmartPhones, and iPads etc.
However, I believe older staff and members will adapt to new technology if given the right incentive. They want an opportunity to experience a meaningful reward.
Our clubs must embrace technology to allow our clubs to operate more efficiently and effectively. We must use technology to better reach out to our members, and we must use technology to put the club culture on display and establish a club’s brand.
What we can’t do, I believe, is push technology too fast to the members. To them, tradition is sacred, and efficiency takes a back seat. And a tradition might trump change, at least until evolution brings about change, as surely it will.
Michael McCarthy of Addison Reserve has also reminded of food and beverage changes that are making inroads in the private club industry. During the past year, representatives of our company visited more than 150 clubs, and we’ve seen it all.
My biggest takeaway from this: Some clubs are very progressive with their food menus and dining trends. While some are featuring unique Nuevo dishes, many of these clubs have gone back to many traditional club foods. One particular club features meatloaf and a Monte Cristo sandwich – they’re the two of the top items on the menu. That’s what this club’s members want…and by the way, they had a younger club membership.
Think evolution not revolution…
At least that’s the way I see it! BR
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