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briefs the measure of time By Bonnie J. Knutson
“Time is my ultimate luxury!” Unlike money, time isn’t fungible; no matter how long or hard you try, you can’t make more of it. It is fixed and something every member wants more of. But while time is a luxury for every member, how different generations view it is relative. So when you think about your members, remember that for a “luxury marketer,” the major differentiator is age. Research conducted by Unity Marketing, a firm that focuses on the luxury market, found that the three major consuming generations view time in their own way. The Boomers think in terms of an 80 year lifespan. Passing their half way mark, and having “been there, done that,” they are trying to figure out what they want to do with the 20-30 years they have left. They are looking for new experiences and challenges, so how can your club help? And remember, 60 is the new 40; for them, old is a bad word.
Millennials are in the aspirational part of their lives. They grew up watching The Lifestyle of the Rich and Famous, Chrisley Knows Best, and Keeping Up With The Kardashians. Belonging to a club can be part of that lifestyle. Here, the club strategy should be twofold. First, the club can give. The key is getting the “influencers” to join. So even if all your members share the same clock and the same calendar, it is important to remember that each generation views the tick-tock of time differently. BRB
GenXers live in a pressure cooker, 24/7. They are in the heights of their careers and wondering if they will accomplish what they thought they would. Often they are the sandwich generation, with both commitments to and responsibilities for children and aging parents. They would love to have an 8 day week with 36 hour days to get everything done they want and need to do. The key for these club members is to make everything as convenient as possible.
briefs
table of contents board The Cost of Micromanaging - p2 Board Member’s Fiduciary Responsibility - p12 club culture The Measure of Time - p1 Governance Asset Disposal Procedures - p6 Hope is Not a Strategy - p8 Planning Ahead - p13 Greens Alternate Water, Improve Sustainability - p10 Golf by the Numbers- p12 Human resources Keep OSHA Injury Records for 5 Years - p13 membersHip Branding That Drives - p10 Wellness Are Private Club Spas the Next Big Thing- p4 Trends in Spa and Fitness - p6
JA NUARY/F EBRUARY 2017 VOLUME 2 | ISSUE 1
boardroom briefs is complimentary to boardroom magazine subscribers. This newsletter offers content that goes beyond the buzz, by surfacing and summarizing important industry information. Each issue will offer practical insights from industry experts with a focus on fit for boards, board presidents and paid management.
John G. Fornaro / Publisher dee Kaplan / Advertising
Heather arias de cordoba / Editor dave White / Consulting
If you have a story idea, please contact heather@boardroommag.com or call (949) 365-6966. For more information please visit www.BoardRoomMagazine.com. Interested in advertising, please email dee.kaplan@gmail.com or call (310) 821-0746.
contributinG Writers and industry resources Henry DeLozier / golf management consultant / hdelozier@globalgolfadvisors.com Ruth Engle / executive vice president/CFO, Troon / (480) 606-1000 Fred Hosier / editor, Safety News Alert / fhosier@pbp.com Bonnie J. Knutson Ph.D. / professor, The School of Hospitality Business, MSU / drbonnie@msu.edu Philip Newman / partner, RSM / philip.newman@mcgladrey.com Mike Phelps / CEO, Pipeline Marketing / mike@pipeline-inc.com Joanna Roche / spa & fitness director, The Westmoor Club / Joanna.Roche@thewestmoorclub.com Gordon Welch / president, APCD / gordon@gordonwelch.com Chambers / jwhite@chambersusa.com GCSAA / Golf Course Environmental Profile / www.gcsaa.org USGA / USGA Green Section Publications / www.usga.org
the cost of micromanaging By Gordon Welch
There is a vicious cycle going on in the club. Your club is losing money. So let me tell you one of the first places to look – your board. What? I must be kidding, the board? Yes, you heard me right. Are you a micromanager? Do you allow your board to micromanage the club executive or staff? First, let me tell you that there are rare moments that micromanaging is required by the president. But the president should never allow board members to micromanage the club executive or the staff. It will hurt your business. Let me share with you a real-life story. A young 26-year-old general manager just started at his first club and working his tail off trying to complete a renovation and prepare a budget for a club he doesn’t know much about. This young GM doesn’t know how to say “no”, yet. He has a very strong president that controls the board in the boardroom. The house committee chair has just enough restaurant experience to be dangerous and wants to “help” the general manager. The house committee chair has good intentions!
Only time will tell the true cost of micromanaging. The worst thing that can happen is replacing your staff and losing a few angry members, which could cost upwards to a few hundred thousand dollars, not to mention your reputation. For the next year, the GM receives between two and five calls every day the club is open. “Yes, the house chair called me at least two times a day and some days five! What in the world did he want so many times a day? I had a great history of food and beverage even at that age. Some days he called to tell me about an article he read, some hearsay or something he saw on the Food Network,” the GM related. “I was so frustrated that I didn’t know what to do! As a young professional I stuck it out and I did learn things from all his questions. However, a tenured GM probably wouldn’t stay at that club very long. The emotional impact and frustration are just too great.”
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What is the actual cost and loss of productivity because of micromanagement? When your GM is being micromanaged, they are not able to focus on their job; they are focusing on what YOU want. That’s not always what’s best for the club and your members. In many cases if a board member is micromanaging the club executive you will experience complaints about other areas of the club. There is a funnel effect that takes place. Areas that gain focus ramp up while all other areas lose the attention. Your team’s confidence is shaken, they are unclear about expectations and they do not do justice to their managerial responsibilities. Only time will tell the true cost of micromanaging. The worst thing that can happen is replacing your staff and losing a few angry members, which could cost upwards to a few hundred thousand dollars, not to mention your reputation. The club president must have a close enough relationship with the club executive to know when something is wrong, and the ability to ask questions and act. As the leader of the club and its board the president must be in control of the meetings and agenda. Your board meeting is a time to act upon the clubs’ business. I’ve experienced boards that are driven and led by a strong leader. I have also experienced board presidents that want to be all inclusive and have more of a “cumbia” approach. Believe me, the club functions better with strong leadership and management. There will always be a few murmurs of complaints here and there at any club. Someone is unhappy with their food or the rough wasn’t cut low enough. There is always an “opportunity” to correct human error. However, the cost of allowing your management team to be micromanaged by anyone will be detrimental to your club. As a club leader, don’t allow it to take place. BRB
are private club spa Facilities the “next big thing?” part i By the design experts at Chambers
In today’s ever-shifting world, the future of private clubs can seem uncertain. However, the nation’s burgeoning obsession with wellness may reveal where the industry is headed. Spa/fitness services are the fastest growing sector of the market – making them top-of-mind for future facilities. Many factors impact wellness’ rising prominence, but these factors directly influence how clubs must think about spa facilities…
scientiFic evidence Big data and advancing technologies confirm the importance of easing stress and emphasizing holistic wellness. Research verifies the detrimental effects that negative mindsets have on mental and physical health. There’s no better place to unwind than the spa – and more individuals are recognizing this need. More than any other factor, scientific evidence supports the rise of spa services and “wellness-optimized” facilities.
spreadinG urbanization With more people living in cities than ever before, it’s not surprising that people are seeking a quiet oasis amid the chaos. In fact, Spafinder pinpointed “stillness” as a top spa trend. This need for a retreat correlates with most club missions: To be members’ “home away from home.”
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sHiFtinG demoGrapHics Shifting demographics aren’t only changing American households, but entire markets. Women are gaining economic traction and investing discretionary income into spa-related services; men are recognizing benefits of spa services, and millennials are increasingly seeking holistic solutions to health problems – all translating into higher demand. With this in mind, private clubs should incorporate spa facilities for memberships of the future.
evolvinG status symbols The recession changed the way people spend, with data showing that the wealthy are now purchasing products that contribute to their overall wellness – including spa treatments. These days, healthy means wealthy. Private clubs can tap into this new status symbol to sell wellnessoriented amenities. Stay tuned for Part II to discover unique ways of creating a relaxing private club spa facility! BRB
trends in spa, Fitness and Wellness for 2017 By Joanna Roche
The club industry is taking notice of wellness, the fastest growing amenity within clubs. This is evidenced by: • The number of clubs expanding, building or planning the • The growth of the club, spa and fitness associations, and • Rick Ladendorf, executive producer of America’s Healthiest Clubs, founding of the Wellness Project and the 20-plus founding members who’ve signed on. Club managers and leadership have realized that wellness is an important amenity to perspective members and to families who want to streamline their activities and maximize their free time. Clubs that develop a healthy focus will see better retention as they are providing a value added service that is important to their members’ lifestyle.
trends 2017 • the club is not only a social experience it can be a healthy experience – notice how wellness can be applied to all areas of a club; dining, golf, children’s programs and more. It becomes a filter through which to market and highlight a club’s unique points of difference. Think healthy food, yoga for golfers, and athletic conditioning for student athletes. If families can get these services at a club they already belong to – why look elsewhere? • saunas are having a moment – the sauna (whether infrared, traditional or a salt chamber) has recaptured the interest of
the wellness community. The theory is simple – sweating out toxins is good for you. It’s also a simple low-cost, high-return item, and they can be co-ed. • self-care is not a luxury – the pilates session, the massage, the green smoothie after the workout, these are no longer considered the extras by many club members, they are now part of the habits that support a healthy lifestyle. If they can’t get these services at their club, they will go and find them elsewhere. • Farm to table – with so much media attention on GMOs, organic foods, white foods, and cleanses, clubs are paying attention. An interest in locally sourced and locally grown food has grown into clubs having their own gardens, shopping farmers markets, and using specialty purveyors for meat and seafood. The dining experience is now far more curated and sophisticated with an eye toward health. Having both a traditional and healthy choice menu is becoming the standard. • recognition of the spa professional – the manager of your club’s wellness program needs to have experience, a vision and should align with your club’s goals. The field is narrow, and will grow out of demand, and your manager needs to have experience in hiring, training, and working with health and fitness professionals. BRB
asset disposal procedures By Phil Newman
With so many clubs across the country beginning or contemplating significant amenity improvements or additions, clubs need to make sure that they have properly planned for entire construction process. Focus naturally tends to fall on the new stuff. That is, much time is spent fine-tuning contracts, understanding financing mechanisms and communicating everything pertinent to the membership at large. One item that often gets overlooked, or is an afterthought, is how does the club control the disposition of items that are no longer needed due to a renovation? The detail in fixed asset records at clubs can run the gamut from overly detailed lists of amounts that have been capitalized to large “lumped together” amounts for various projects or purchases the club has made over the years. This can make it difficult to accurately track just what items that will be leaving the club during a new project. page 6
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Clubs can combat these challenges by taking regular inventories of property and equipment and by instituting a rigorous asset disposal procedure, which includes documentation of disposals. Almost all assets have at least a scrap value in the marketplace so in addition to documenting who assets were sold to, they should document the amount received, if any, and who approved the sale. Since most projects encounter some member resistance, the last thing a club needs to deal with are awkward questions about “who got what” when the clubhouse was renovated! BRB
Hope is not a strategy By Ruth Engle
A private club can, and should, have a very personal connection to key stakeholders, but many times this results in a management approach grounded more in emotion than good business sense. A lack of preparation for economic stress, shifting demographics, and an aging member base can leave management with nothing but hope for the future, putting the club’s sustainability at risk. It’s been proven that organizations that ignore market change will follow a downward path, while those that change with the market will merely remain steady. But those that anticipate change can remain relevant and outperform the competition.
Certainly innovation in delivering new offerings plays into this, as well as understanding what is important to members, which allows a club to address net promoter score drivers. Assessing a club’s member base by age is a simple way to gain insight. Understanding the demographics of age range within each category will provide data that can be dissected and then analyzed for trends, such as with attrition.
metric for capital funding will ensure the money will be there when a club needs it. If additional capital is needed, take the time to understand the sources and tenures of the many different financing options available, so a choice can be made that aligns with the proposed use.
Clubs that anticipate change know what needs to be done, and they know how they will apply their cash and available resources to accomplish goals.
Optimizing operations by implementing the proper processes will help to eliminate waste and create better productivity, creativity, sustainability, growth, and member satisfaction.
Even the best clubs in a market can fall prey to changing economic conditions, aging demographics, and neglect. Boards and staff that make use of actionable data and take a balanced approach will have a better chance at sustainability than those who think hope is a strategy for success.
Successful clubs adhere to a balanced scorecard approach that incorporates short, moderate and long-term strategies that will help them stay on track, while ensuring that decisions are grounded in data, rather than intuition or emotion.
It’s important to plan ahead financially, as well. Club management should know the net available cash number at any given time. Adequate capital will provide the fuel a club needs to maintain and grow, and using depreciation as an overall
Hope may not be a strategy, but having a strategy will certainly provide hope. By using data to drive the strategy and message efforts to members, a club can begin to achieve predictable financial results with understandable outcomes. BRB
Sustainability is best achieved by addressing several key areas, such as organizational/governance health, leveraging its unique competitive advantage, retaining members and associates, growing the membership and, of course, hitting the numbers. In stark contrast to hoping for the best, building a strategy means asking (and answering) tough questions about relevance, demographics, efficiency and the club’s physical conditions. How does a club know if it’s staying relevant?
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branding that drives leads By Mike Phelps
A brand is much more than just a logo. Like a person, a brand builds relationships based on its characteristics and reputation. And while identity elements like logos, fonts and color schemes are important, most private clubs don’t focus enough on the other two critical components of branding: positioning and messaging. Clearly defining the positioning and messaging elements of your club’s brand is essential. It’s the basis for communicating who you are through your member communications, website, collateral materials, PR efforts…in fact, everything—even how your employees talk about your club. We’ve worked with hundreds of private clubs and communities to help them enhance their positioning and clarify their branding and marketing messages using a simple framework. In nearly every case, they’ve seen a dramatic increase in new membership leads, without having to lower prices, deal out incentives, or offer short-term membership gimmicks – all things that work against brand. So where do you begin? Here are 3 key areas that will help you determine if your club’s brand’s positioning and messaging need support, maintenance or extra work: 1. Know your club’s place in the market. Understand how your club fits into the overall mix of clubs in your market. Rank your club against each primary competitor in three areas: price, service, and product (experience). To be competitive, you should be better than the market average in at least one area, ideally two. If your club doesn’t fill a clear space in the market,
don’t worry. Chances are the clubs that do aren’t clearly articulating their brand messages, which in itself presents an opportunity. People are drawn towards brands with clearest messaging, even if they aren’t necessarily the best. 2. don’t try to be all things to all people. Identify the unique attributes and distinctive elements of your club, and pinpoint the advantages you want your members to associate with your club. In other words, what’s your club’s “hook”? The best hooks are unique, believable, desirable and deliverable. The worst place to be is the “me too” position. 3. use messaging that establishes an emotional connection. It’s not just about what you offer, it’s about how you transform the lives of your members. In addition to explaining what you have, you must also articulate how that makes your members feel. This will elicit an emotional response that fosters engagement. Does your messaging tap into freedom, inspiration, security, creativity, status, credibility, the bonds of family or another emotion? BRB
alternate Water sources improve sustainability • In the Pacific Region, the median cost of water for an 18-hole golf course increased by more than 300 percent from 2005 to 2013. • U.S. golf courses used an estimated 1.859 million acre-feet of water in 2013, a 21.8 percent decrease from 2.379 million acrefeet in 2005. • The use of recycled water on golf courses increased by more than 30 percent between 2005 and 2013. BRB Statistics from: Golf Course Environmental Profile and Water Use and Conservation Practices on U.S. Golf Courses,” 2014
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a board member’s Fiduciary responsibility It’s important for members of private club boards of directors to explore and understanding the legal responsibilities, implications to steer clear of problems. There is taking short cuts. Board members legally are required to know their responsibilities, their roles and be informed and active participants of their private club’s governance mission. And there are best practices that can help board members meet their requirements that help create an effective board of directors.
monitor and oversee not only the organization’s financial dealings, but its ongoing regulatory compliance program. So, a board member’s main purpose is to ensure that the private club’s assets and resources are used to achieve the goals and objectives of the club. This includes the duties of care, loyalty and obedience.
Key is a director’s fiduciary responsibility in that the relationship is designed to meet only the needs of the organization and the fiduciary must act without regard to the director’s own needs.
duty of care: A trustee has a responsibility to participate in decision-making on behalf of the organization, and must exercise independent judgment while doing so.
In other words, the board members are entrusted with overseeing the private club’s mission, and they must be concerned about the performance of the club and see that its interested are pursued faithfully. Because the law recognizes that fiduciary relationships sometimes may occur outside of any contractual relationship that might allow the organization to enforce its rights, fiduciaries should be held to certain standards. This provides the organization with incentives to enter into fiduciary relationships by reducing the risk of abuse of entrusted power and ensuring high-quality fiduciary services. It is a legal relationship between a board member and the organization and board members have an obligation to
duty of loyalty: When acting on behalf of an organization, board members must set aside their own interests, whether professional or personal, or the interests of any other organization. Simply put, the nonprofit organization must come first. duty of obedience: Board members have a responsibility to be faithful to the organization’s stated mission and not to act or use its resources in incompatible ways or purposes. Failure to meet these obligations can have consequences for a board member. If a board member breaches any of these duties or otherwise harms the non-profit private club or its members, the board member may be personally liable for failing to comply. However, trustees also should be familiar with state laws governing non-profit groups such as private clubs and the consequences of any lapses of fiduciary duties. BRB
planning ahead By Henry DeLozier
Private clubs have made a comeback since 2008, what are the important ‘to do’ items for a club’s success today? There are at least five characteristics that separate topperforming clubs from those that are not: • excellence in Governance – Top clubs do not have disciplinary problems. Moreover, top clubs govern with an openness and resolution on which members may rely. Matters that come before the board are addressed timely, thoroughly and within the context of a well-known and widely understood Board Policy Manual (“BPM”). These clubs’ boards deliberate as many and govern as one. Differences of opinion and priorities are kept in the board room.
• market differentiation – Most clubs are situated in oversupplied and highly competitive markets adrift in a sea of “sameness” where one club offers much the same value proposition as the next. Top clubs are easy to spot because they are different…and everyone knows it. What distinguishes your club from its competitors? The objective of market differentiation is to make your club more attractive, appealing and successful than others within its competitive set. Typically this begins with focused brand planning and execution. Top clubs have “it” and everyone can point to what “it” is!
• trusted leadership – Top clubs enjoy great leaders. Servant leaders who put the needs and priorities of others – their fellow members – ahead of their own. Sometimes the great club leaders are titans of industry and sometimes small business owners; they are always servant leaders. They are trusted because they are reasonable, respectful, patient and visionary. They can see beyond the horizon.
• revenue-Focused (versus Expense-Focused) – Top clubs understand the metrics of their business…fees and dues. Top clubs recognize several sources of fees: (1) joining fees are typically used to fund capital reserves and long-range capital needs; (2) fees for non-member services such as weddings, outings and special events; and (3) usage fees for such needs as club storage, lockers and access privileges of one type or another. It is often said that “clubs are in the dues business”. In fact, fees and dues represent the most high-yield / highmargin sources of funds for private clubs. Leaders in top clubs understand that their club must consistently increase revenues from the various high-yield sources to achieve economic sustainability, which is paying all of the club’s costs and funding its future capital needs. BRB
• visionary strategy - Boards at top clubs understand that they are responsible for three critically important matters: strategy, finance and culture. These boards rise above the dayto-day issues of the club and keep focused on the future of the club…what its values will be…how it will fund its unending capital needs…and, what steps will ensure long-term economic sustainability for the club. Clubs of this type have strategy that is big, bold and evolutionary.
Keep osHa injury records for 5 years By Fred Hosier
OSHA has issued a regulation that requires employers to keep injury and illness records for five years. The final rule is a response to a 2012 DC Circuit Court decision which said by law, OSHA could only require companies to keep injury records for six months. OSHA had fined Volks Constructors of Prairieville, LA, $13,300 for failing to properly record workplace injuries and maintain its injury log between January 2002 and April 2006. OSHA issued the citations in November 2006. What changes for employers? Keeping injury records isn’t anything new. What will change is that OSHA will have an additional avenue for recordkeeping fines over what it had after the Volks ruling. osHa will be able to cite companies for failure to record an injury going back up to five years instead of just six months. the final rule takes effect Jan. 18, 2017.
Why does OSHA want you to keep injury records for five years? When the rule was proposed, OSHA chief David Michaels said, “They will enable employers, employees, researchers and the government to identify and eliminate the most serious workplace hazards – ones that have already caused injuries and illnesses to occur.” Business argued that allowing OSHA to look back as many as five years for recordkeeping violations was an unfair burden on small- and medium-size businesses. The final rule doesn’t require employers to record any injuries or illnesses that they weren’t already required to record. BRB
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