Governance in private clubs can too often resemble what is seen on the evening news: factions, resentment, distrust, skepticism, cynicism. In troubled times, sound governance is essential.
In our continuing Whitepaper Series, Senior Partner Henry DeLozier highlights the three keys to effective governance and proactive steps leaders can take to address and improve it at their club.
TORONTO, Ontario – GGA Partners, a global consulting firm, has released In Pursuit of Innovation, the fourth in its series of thought leadership whitepapers. This authoritative guide explores how surviving in today’s competitive landscape depends on the ability of clubs and organizations to unlock their creative potential and offers up several guidelines to allow freedom of thought and imagination.
In Pursuit of Innovation highlights the way companies must continuously transform in order to survive and how a constant pursuit of innovation will guard against failure, whether gradual or sudden. The paper clarifies exactly what constitutes innovation, where it comes from, and how club leaders can practice innovative thinking to unlock a culture of creativity.
“Our experience with thousands of private clubs over nearly three decades shows us that without innovation clubs become stale, membership falls until it eventually flatlines, competitive advantages diminish, members become dissatisfied, and talented staff look elsewhere,” explained GGA Partner Henry DeLozier, one of several authors of the piece. “Innovation can come from anywhere inside an organization, and we think it should be encouraged from all corners, from the folks raking bunkers to the person answering phones to the accountant balancing the books.”
Innovation happens at the intersection of problems, opportunities, and fervent minds but must be deliberately sought, practiced, and encouraged at all levels. “It’s normal in any business to want to maintain the status quo. It’s comfortable, it’s safe, and it’s easier than making changes,” said DeLozier. “In reality, the status quo only works for so long. If you’re going to grow, you must innovate.”
In Pursuit of Innovation illuminates four common roadblocks to an innovative culture and identifies the steps necessary to unlock a culture of creativity.
In addition to innovation, GGA Partners has published new whitepapers on strategic planning, branding, and governance which are accessible via the firm’s website.
About GGA Partners
GGA Partners™ is an international consulting firm and trusted advisor to many of the world’s most successful golf courses, private clubs, resorts, and residential communities. We are dedicated to helping owners, asset managers, club and community leaders, investors and real estate developers tackle challenges, achieve objectives, and maximize asset performance.
Established in 1992 as the KPMG Golf Industry Practice, our global team of experienced professionals leverage in-depth business intelligence and proprietary global data to deliver impactful strategic solutions and lasting success. For more information, please visit ggapartners.com.
Media Contact:
Bennett DeLozier
GGA Partners
602-614-2100
bennett.delozier@ggapartners.com
When we were introduced to COVID-19 in March 2020, no one had any indication that ten months later the number of cases and its toll on society would continue to rise. The introduction of a vaccine is promising, but the road ahead remains filled with uncertainty as to when the next normal will arrive – and what shape that normal will adopt.
Since its inception, GGA Partners has traveled the globe working with private clubs, golf courses, investors, real estate developers, resorts, municipalities, and financial institutions. This has provided unique insight into the state of golf, private club, and leisure businesses from many different perspectives.
We have observed that even before the coronavirus pandemic, significant change was underway across the private club landscape. As we prepare for the “new normal” the thought leaders at GGA sat down to predict what they believe is coming in 2021 and beyond.
According to Senior Partner Henry DeLozier, the change brought on by the pandemic is going to necessitate even more rapid change in governance, which GGA has seen clubs struggle with this past year.
“In corporate America, the concept of stakeholder capitalism was at the forefront in 2020 and that has transcended to the private club space,” commented DeLozier. “We’re hearing members across the private club spectrum questioning why they do not have a larger voice in their club and how board selections, as well as decisions, are being made.”
Private clubs that do not have current and effective governance will suffer from decreased member satisfaction and a constant churn of its membership base.
Linda Dillenbeck, GGA’s director for the firm’s communications practice, stated that there continues to be a need to assist clubs in their efforts to communicate effectively and efficiently.
“It is basic human nature that people do not like change,” said Dillenbeck. “To minimize the disruption of pending changes, it is incumbent upon the management team and board of directors to clearly communicate the what, how, and why of their decisions then allow members to voice their opinions. This provides the level of two-way communication members are demanding.”
In addition to communications about club finances and capital improvements, clubs need to improve the use of the data they have collected to provide tailored communications to members. For example, notices about evolving restrictions on golf events should only be sent to those who play and those about activities for families with children don’t need to be sent to empty nesters.
Beyond member communications, clubs that will be successful in 2021 will be those which can retool and refine their external communications to ensure the message of what truly makes the club unique is presented clearly.
Report after report has trumpeted the tremendous increase in rounds played during the pandemic. According to GGA Director John Strawn, that is in large part due to work-from-home adaptations which are providing greater flexibility in how and when employees complete their daily tasks.
“People have more control over their work lives,” said Strawn. “Golf experienced fewer restrictions during the pandemic and that has brought out many new and fringe players leading to full tee sheets at both private and public golf courses.”
Full tee sheets are causing negative feedback from those who play more frequently as there is a belief that those not paying full dues are taking coveted tee times. To solve the problem, Strawn predicts clubs will need to revisit their strategies and ultimately their business models more frequently to ensure they are meeting this new and different demand effectively. Flexibility will be critical until the long-term impact on golf demand is better understood.
While clubs continue struggling to ensure fair and equitable access to the tee or courts while accommodating increased demand, Senior Associate Andrew Milne added that clubs should expect that best practice solutions may shift regarding reservations and tee sheet management to include lottery systems and Chelsea systems to ensure dissatisfaction among members is minimized. Understanding that new reservation management approaches may change the value proposition for members, a clear plan and message acknowledging this, and for measuring and adapting the approach as the future becomes clearer, will be important.
According to the National Golf Foundation, while only one in five golfers are women, females represent a disproportionately higher percentage of beginners (31%).
Women ease into the game for a variety of reasons; to spend time with their family, to compete, to be outdoors, and to enjoy the support, community, and socialization. As these women age and consider joining a club, they will choose the clubs that shape programs, staff, activities, and offerings to blend the female competitive group with the group that is more interested in the social community.
“We’ve known for some time just how important the role of women and the family dynamic is regarding the decision on whether to join a private club,” commented GGA Director Murray Blair. “For clubs to succeed in 2021 and beyond, they will need to understand how women are impacting the decision-making process and implement the necessary adjustments to make them feel welcome, whether they play golf or not.”
Among the most remarkable takeaways from 2020 was the ability for clubs to adapt their operations and service offerings swiftly and effectively in the face of facility closures, variable human resource availability, and rapidly changing restrictions for public health and safety.
Contactless payments, varying tee time intervals, and pace dispersion tactics are pandemic-inspired efficiencies which GGA Associate Andrew Johnson predicts will continue.
Adding to the list, GGA Director Ben Hopkinson expects clubs will become more efficient at managing grab-and-go meals, take-out dining, and mobile ordering, following the best practices of companies like Uber Eats and DoorDash.
New ways of operating have also brought about new challenges, some of which will persist into 2021 and require even more new solutions to be generated at clubs and courses.
GGA Senior Associate Andrew Johnson expects that the increased costs associated with COVID-19 mandated protocols such as labor for sanitation and cleaning, as well as elevated maintenance expenses due to increased rounds, will remain through 2021.
Clubs that effectively determine what increased interest and golf participation means for facility accessibility, program creation, membership categories and associated privileges will find increased membership satisfaction and interest from new prospects.
Despite successful adaptations in club operations and economic relief opportunities afforded by governments and municipalities, the full extent of the pandemic’s economic impact will remain varied across club types depending on business structures and market areas.
GGA Senior Manager Martin Tzankov, remains concerned about the financial position of many clubs and believes the brunt of the economic impact has yet to be seen.
“The reliance of clubs on dues increases and capital assessments has been particularly apparent this year and may have stretched the value proposition too far for some,” stated Tzankov. “2021 will show the clubs where a clear and present value proposition is being presented to members, who in turn, will continue to pay the cost of belonging.”
GGA Partner Derek Johnston believes there are clubs that will be able to increase pricing and sustain the increases in the long-term and there are clubs that will overshoot the mark. Johnston expressed concern that some clubs may move joining fees too high, too fast; golf businesses may move their green fees too high, too fast; and some may move away from tee sheet management practices too quickly.
“Nobody knows what’s coming. If clubs have experienced less attrition than in the past, it may be due to members being unwilling to give up their safe sanctuary, but when things begin to stabilize post-vaccine that may not persist,” he explained. “I believe that a portion of the historical attrition hasn’t been abated, just held back. There will be increased attrition over the next 12-24 months and there may not be the same demand there to replace those who leave, especially as other social and lifestyle pursuits become more widely available again.”
2021 will be a time for clubs to experiment. A measured, flexible approach to joining fees and dues will be a prudent approach this year.
Craig Johnston, a partner and head of GGA’s transaction advisory practice, emphasized that the success of clubs during and following the pandemic will in part be driven by its sum of parts. Johnston explained “A private club may include a fitness center, retail store, several restaurants, a golf course, and a marina. The pandemic has impacted the utilization and thus success of all those ‘parts’ differently, and therefore the overall success of the club will largely be dependent on the club’s product or shall we say parts mix.”
“Every club is going to be different depending on its type of business and the operations which comprise it, the extent and variability of pandemic-related changes means that comparatives are going to need to be refined,” continued Johnston. “Clubs that understand and appreciate the challenges and successes of the various parts of their business will be in a better position to realign and optimize heading into the ‘new normal’.”
Our news feeds have been full of stories about high-profile people and companies moving out of California into Texas, as well as the movement of bankers to Florida from New York. If looking at this as a trend, you might imagine seeing increased need and greater attrition among clubs in the California and New York markets and, conversely, excess demand for clubs in markets like Texas and Florida.
According to GGA Manager Alison Corner, it will be important for clubs to understand the movement of people – not just the movement away from major urban centers and into the suburbs, but also the movement of companies and the actual physical locations of corporations – because they may have drastic impacts to how certain club and leisure businesses perform over the next 5 – 10 years.
Clubs that are mindful of these relocation trends will help themselves to recognize and either seize new opportunities, or mitigate future risks.
TORONTO, Ontario – International consulting firm GGA Partners has released Leveraging Differences in the Boardroom, the third in its new series of thought leadership whitepapers. This authoritative guide explores the benefits of clubs with diverse boards and suggests several steps to take when recruiting with diversity in mind.
Leveraging Differences in the Boardroom evaluates the consequences of unintentionally insular board composition and challenges the idea of “sameness” in the boardroom, which limits the ability of a board to effectively perform its duties and threatens a club’s health and longevity. The paper illustrates how multiple perspectives contribute to greater success in governance and argues for adjusting the profile of a club’s leadership to better serve members and prospects.
“We often see board members with similar professional, cultural, and ideological backgrounds and perspectives,” explained GGA Partner Henry DeLozier, one of several authors of the piece. “Boards that are neither representative of the membership nor reflective of their surrounding community risk losing the opportunity both to serve their current members and to attract new members.”
In addition, the whitepaper encourages that clubs intent on increasing diversity among their board take a holistic, multi-dimensional approach to its creation. “Forward-thinking boards understand that it is the breadth of perspective, not the mere inclusion of various diverse traits, that benefits the organization,” said DeLozier. “In addition to social diversity, professional and experiential diversity are also important in increasing the range of perspectives represented on the board.”
Board diversification is likely to be met with resistance from the status quo, which the paper aims to help club leaders overcome by providing tactics for building a diverse board, developing new board member criteria, and making a commitment to diversity.
In addition to governance, GGA Partners recently published new whitepapers on strategic planning and branding. The firm has announced that another in the series focused on innovation will be published through the third quarter of 2020.
About GGA Partners
GGA Partners™ is an international consulting firm and trusted advisor to many of the world’s most successful golf courses, private clubs, resorts, and residential communities. We are dedicated to helping owners, asset managers, club and community leaders, investors and real estate developers tackle challenges, achieve objectives, and maximize asset performance.
Established in 1992 as the KPMG Golf Industry Practice, our global team of experienced professionals leverage in-depth business intelligence and proprietary global data to deliver impactful strategic solutions and lasting success. For more information, please visit ggapartners.com.
Media Contact:
Bennett DeLozier
GGA Partners
602-614-2100
bennett.delozier@ggapartners.com
When was the last time your club audited its human resources? Alignment between a club’s strategy and its employee offering is essential in order to enhance the overall club lifestyle, culture, and experience for members and staff.
To determine whether it’s time to reexamine culture, Partner Derek Johnston lays out 4 questions private club boards should be asking.
Among the most reverberant takeaways from the coronavirus pandemic is the importance of people to businesses. Global business leaders and executives at leading corporations have indicated that the shift toward talent as the most important source of corporate value has continued. The pandemic also seems to be leading an increasing number of talent-forward companies to take an “employees first” approach.
But this is nothing new for large-scale global businesses. Indeed, the third week of August marked the one-year anniversary of the influential Business Roundtable’s statement on corporate purpose – which puts employees, customers, their communities, and the environment on a par with shareholders.
It’s also nothing new for club businesses. Our continuous research on club industry trends has shown human resource management and labor challenges to be a persisting trend, one which club managers have reported to be rising in importance – before the coronavirus.
In 2019, human resources was ranked the 6th most-impactful private club trend (out of 27) in a global survey of club managers. And, in a separate Canadian club industry survey, it was identified as both a key risk and primary hurdle to modernizing club management while topping the list of areas which managers say are under-supported from an education standpoint.
The early-pandemic question as to whether COVID-19 impacts would accelerate the business community’s move to stakeholder capitalism, or slow it down as companies focus on short-term financial pressures, seems to have answered itself.
For clubs, the people-related challenges previously reported by managers have exacerbated, with topics like employee willingness to work, labor anxiety, staff recruitment and turnover emerging as key strategic questions which club leaders are currently wrestling.
Widespread COVID-19 impacts like club closures, layoffs, and furloughs certainly haven’t helped ease concerns. With significant changes afoot in staffing, retention, human resource availability, and operational adaptations, clubs are presented with a unique opportunity right now – the chance to reevaluate and perhaps reset their culture.
In clubs, culture IS governance. Sound governance is a strategic imperative primarily because it enables, supports, and nurtures effective strategy. And, as the Peter Drucker saying goes, “Culture eats strategy for breakfast.”
This is extremely important for club leaders.
It’s important because it means that no matter how strong a club’s strategic plan is, its efficacy will be held back by team members, staff, and employees if they don’t share the proper culture.
When the breaks are going against the business, as they are for some right now, the people implementing the club’s plan are the ones that make all the difference. While strategy defines direction and focus, culture is the habitat in which strategy lives or dies.
Now is the perfect time to reexamine your club’s culture to ensure staff square rightly with the club’s strategy. In other words, to ensure that your people are the best fit for accomplishing the club’s goals and objectives. Someone who was right for a specific role pre-pandemic may not be right for the same role now. Your business has changed, and some people may need to change too, either themselves or their roles.
The first place to start is by understanding what you’re currently doing for employees. Club leaders require a comprehensive understanding of the club’s current approach to human resource management so that they can determine the alignment of people and culture with the club’s goals.
When was the last time the club audited its human resources approach, policies, procedures, and performance? Ensuring alignment between the club’s strategy and its employee offering is essential in order to enhance the overall club lifestyle, culture, and experience for members and staff.
To help you get started, here are four HR questions private club boards should be asking:
1. How does our current organizational structure sit relative to best practice and what recent COVID-related changes should we make permanent or revisit?
Review your club’s current organizational structure, including both employees and contract workers, against best practice structures at comparable clubs locally, nationally, and globally. This review should focus special attention on the roles and responsibilities of human resources within the organizational structure with the goal of highlighting key gaps or divergences from best practice. Often times in clubs, an overly flat organizational structure tends to create ‘siloes’ that breed inefficiencies and bloat staffing levels.
2. Are we both efficient and competitive in the compensation and benefits afforded to employees?
Complete a comprehensive benchmarking exercise which compares compensation and benefit levels of all key staff and for the club as a whole to comparable clubs and other businesses with whom you compete for talent. The focus of this exercise should go beyond salary and hourly wages, factoring in relevant club financial and operating data, benefits packages, member and employee feedback scores, and other market-related information.
The goal is to identify current and accurate reference points for evaluating current compensation and benefits against best practice. There is a high degree of likelihood that there are opportunities in your current compensation and benefits structure to better align incentives and shift compensation to top talent, which tends to support increased productivity and reduced head count.
3. Are our personnel positioned to help us achieve the club’s goals and objectives? Are we helping them achieve theirs?
Assess your club’s performance tracking and review processes. The goal here is to analyze current performance evaluation processes and procedures to ensure alignment with the club’s overarching goals. This requires the board and executive committee to have a focused, clear, and comprehensive understanding of the club’s mission, vision, core values, and objectives.
For maximum benefit, to both member and employee satisfaction, it is incredibly important that performance is measurable and incentivized. The trick is determining the right way to track and measure performance and tie it to the right incentive.
4. Are our staff equipped with the tools they need to succeed? Are they empowered to do so?
Evaluate your club’s current recruiting, onboarding, training, and ongoing relational efforts. This will likely require management meetings and staff interviews to learn about the current approach and unearth any ideas or recommendations your team may have to suggest.
The success of every private club is dependent on the quality of their staff. Recruiting the best talent, integrating them into the envisioned culture, training them for success, ensuring their satisfaction, and ultimately retaining them is an important goal. The outcome from which tends to have a positive financial impact on the club and on the member experience.
After all, an investment in people is an investment in culture and clubs will benefit from this investment.
TORONTO, Ontario – International consulting firm GGA Partners has released Speaking the New Language of Brands, the second in its new series of thought leadership whitepapers. This authoritative guide redefines a traditional brand value equation and illustrates how adding emotion and experience to a private club’s brand story will increase its value with members.
Speaking the New Language of Brands highlights ways iconic “mega-brands” mold, define, and advance their organizational identity toward the goal of influencing consumer purchasing decisions. The paper evaluates a traditional outlook on the brand value equation and asserts a redefinition which paves the way to enhanced value perceptions among private club members.
“Traditionally, the key to building value in the eyes of the consumer has been demonstrated in a simple equation, where perceived value is equal to performance divided by price,” explained Henry DeLozier, one of several authors of the piece. “We believe there is a far more effective – and cost efficient – way to increase the value members place in your club and in your brand. It’s by introducing emotion and experience into the equation.”
In addition, the whitepaper argues that a successful branding program is based on the idea of “singularity” and should be designed with differentiation as the primary goal. “Harkening to the days of the Old West, a branding program should differentiate your cow from all of the other cattle on the range,” said DeLozier. In other words, creating in the mind of a member or prospective member the belief that there is no other club on the market quite like your club.
Building a brand is easier said than done. For club managers not familiar with the brand development process, the whitepaper explains six essential steps for clubs to follow when constructing their brand and draws on examples from inside and outside the private club business.
In addition to branding, GGA Partners recently published a new strategic planning whitepaper and has confirmed that others in the series focused on governance and innovation will be published through the third quarter of 2020.
About GGA Partners
GGA Partners™ is an international consulting firm and trusted advisor to many of the world’s most successful golf courses, private clubs, resorts, and residential communities. We are dedicated to helping owners, asset managers, club and community leaders, investors and real estate developers tackle challenges, achieve objectives, and maximize asset performance.
Established in 1992 as the KPMG Golf Industry Practice, our global team of experienced professionals leverage in-depth business intelligence and proprietary global data to deliver impactful strategic solutions and lasting success. For more information, please visit ggapartners.com.
Media Contact:
Bennett DeLozier
GGA Partners
602-614-2100
bennett.delozier@ggapartners.com
TORONTO (June 10, 2020) – GGA Partners – international consulting firm and trusted advisor to many of the world’s most successful golf courses, private clubs, resorts, and residential communities – will continue its thought leadership series with the publication of four new whitepapers to help leaders of golf, club, and leisure businesses make better-informed decisions regarding key planning and marketing challenges. The whitepapers focus on strategic planning, branding, governance, and innovation.
That may be the understatement of the year.
Between rapidly advancing technology, economic uncertainty, transforming demographic and lifestyle stressors, and a digitally-connected global community, the environment for club and leisure-related businesses is more competitive than ever.
The business landscape is shifting and management stances are evolving, yet the principles of competition endure: one’s gain is another’s loss and the strongest will come out on top.
Knowledge is a tremendous source of strength and GGA Partners is developing authoritative reports on the industry’s most pressing issues and constructing advanced problem-solving guides for the road ahead.
The strategic planning whitepaper, which can now be downloaded from the GGA Partners website, focuses on a misconception regarding the strategic planning process, according to Henry DeLozier, who along with GGA partners Steve Johnston, Rob Hill, Derek Johnston, and Michael Gregory authored the paper.
“Because of its traditional long-range horizons, many club leaders don’t prioritize strategic planning,” DeLozier said. “With conditions inside and outside the club environment changing as quickly as they are, there’s a new urgency to strategic planning.”
In addition, the whitepaper argues for a shorter planning cycle, ranging anywhere from 12 to 24 months, and a closer connection between strategy and execution.
“Businesses that are directly affected by shifts in the economy and consumer preferences should consider shorter planning cycles,” Johnston said. “Think about it: Would a five-year strategic plan created in 2015 successfully guide your business today?”
Today’s most successful clubs look at their strategic plan as a blueprint for action, Hill added. “They don’t put their plans on a shelf to gather dust. They’re implementing their plans, adjusting as needed and executing their vision for the club.”
For club managers not familiar with the strategic planning process, the whitepaper explains five key steps in developing a plan and draws on examples from inside and outside the private club business.
In addition to strategic planning, other whitepapers in the series focused on branding, governance, and innovation will be published through the third quarter of 2020. Discover more about the cross-section of high-impact topics GGA Partners is studying at ggapartners.com.
About GGA Partners
GGA Partners™ is an international consulting firm and trusted advisor to many of the world’s most successful golf courses, private clubs, resorts, and residential communities. We are dedicated to helping owners, asset managers, club and community leaders, investors and real estate developers tackle challenges, achieve objectives, and maximize asset performance.
Established in 1992 as the KPMG Golf Industry Practice, our global team of experienced professionals leverage in-depth business intelligence and proprietary global data to deliver impactful strategic solutions and lasting success. For more information, visit ggapartners.com.
Media Contact:
Bennett DeLozier
GGA Partners
602-614-2100
bennett.delozier@ggapartners.com
This article continues a series of communications from GGA Partners to help private club leaders address challenges confronting their businesses and their employees as a result of the global health crisis. Today, in the second of two articles discussing financial stewardship, partner and head of transaction advisory, Craig Johnston, outlines information and tactics which should be considered in developing your club’s financial plans in times of crisis.
As businesses across North America begin to re-open, ever-changing social and economic circumstances further complicate the decision-making process, and now more than ever it is imperative that business leaders have access to the critical information which impacts their business.
In the midst of a crisis, we believe prudent financial stewards should embark on a phased approach to financial planning and analysis. The three phases are:
1. Cash Preservation
2. Sustainability
3. Opportunity
The immediate focus should be on cash and cash preservation. The familiar adage Cash is King takes on even greater importance in crisis situations. Next, the focus shifts to reviewing key risks to long-term sustainability and developing plans to reduce and combat those risks. Once a game plan is understood for sustainability, business leaders should explore opportunities to enhance member experience, reduce operating or capital costs, and increase return on investment.
To navigate these three phases, two critical financial platforms are required: a detailed annual budget and a club financial model.
Often these platforms are considered one in the same, but they are not. A detailed annual budget should be designed on a monthly basis and based on agreed upon key performance indicators (KPIs) and specific circumstances for the year. A club financial model should be designed on an annual basis and based on historical and budgeted KPIs as well as other economic inputs. The monthly budget is important to support cash preservation analyses while the financial model supports long-term sustainability scrutiny and enhancement opportunity exploration.
Both platforms should be dynamic, both platforms should encompass all three financial statements, and both platforms are a must-have. By “dynamic”, we mean easily adjustable for various economic and club-specific KPIs and, by “all three”, we mean income statement, cash flow statement and balance sheet. (Yes, a club should set and approve a budget at the outset of every year, but that does not mean the platform it was developed under needs to be static.)
The information required to develop both platforms include:
The specific tactics under each phase of planning and analysis will vary from club to club, but some predominant examples include:
a. Analyze current club liquidity: evaluate the club’s current balance sheet, including available cash, receivables and payables based on an up-to-date budget, then leverage the monthly budgets to assess the near-term (three to six months) liquidity based on estimated revenues and expenses.
b. Scenario analysis: complete various scenario analysis within the annual budget platform (designed on a monthly basis) based on potential closure and re-opening scenarios. This requires a realistic evaluation of the impact of each scenario from department managers.
Based on the results of the above, determine if any near-term adjustments (staffing changes, discussions and negotiations with suppliers and lenders) are required for cash preservation.
a. Anticipate attrition rates: depending on the timing of annual dues payments, attrition rates during times of crisis can be significant. Running scenario analysis based on various levels of attrition and their impact on the club’s long-term sustainability is essential.
b. Estimate decline in membership sales: some clubs may rely on entrance fees to support operating expenses, or more predominantly capital maintenance expenditures. Evaluating the potential decline in new membership sales over the short and medium-term, and its impact on club sustainability is critical.
Based on the results of the scenario analyses, scrutinize the club’s operating model to address discrepancies between cash inflows and cash outflows. This may require moderate or significant reductions to the club’s operating profile, including hours of operation and levels of high-touch service, for example.
The review of enhancement opportunities may come about during the focus on sustainability, as the club looks at unique ways to better align cash outflows with cash inflows. However, for clubs where sustainability is straightforwardly achievable, the focus on opportunity will follow sustainability. Areas of opportunity include:
a. Staffing profile: use times of disruption to consider changes to your management team and right sizing of your staffing profile.
b. Debt re-structuring: meet with the club’s lender(s) to discuss revised terms to the current debt agreements. Interest rates are near all-time lows, and although the numerator on certain coverage ratio calculations has declined, a preferable rate or term may be available.
c. Capital projects: favorable prices may be available on large-scale projects or purchases during times of crises. Consider moving ahead with large-scale projects if the potential savings are meaningful and there is a high degree of confidence in the club’s financial sustainability.
Navigating through crisis in this phased approach – while adhering to the guiding principles of financial stewardship – will help clubs develop financial plans which offer short-term solutions and lasting success.
This article continues a series of communications from GGA Partners to help private club leaders address challenges confronting their businesses and their employees as a result of the global health crisis. Today, in the first of two articles discussing financial stewardship, founding partner Stephen Johnston outlines the guiding principles for being a prudent financial steward.
Despite the opinions of pundits and experts parading before our television screens, no one can accurately predict how long this pandemic will last or its economic impact. By the same token, it’s impossible to anticipate every challenge club leaders will face in the days ahead. But we can say with certainty that long-term financial stability is an issue confronting every club leader. Those who evaluate the challenge and develop a strategy with both short-term and long-term plans give their clubs the greatest opportunity for success.
From our perspective, actions in these uncertain times should follow these guiding principles:
1. Fairness. Prior to a final decision, step back and ask yourself if the anticipated action is fair for all parties, starting with members and the employees. This crisis will pass, and people will remember how they were treated.
2. Transparency. Do not take anything for granted, especially when it comes to sharing information with employees and communicating with membership. It is important for members to understand and appreciate the conscientious approach and the lengths taken to ensure the viability of their club. Video conferencing and electronic pulse surveys make timely communications and opinion convenient and efficient.
3. Value. It is important for members to understand the club carefully considers the value members receive for their fees, dues and other financial support of the club. The value for money proposition for each club and each member is different; “we’re doing what other clubs are doing” discounts this uniqueness.
4. Ownership. Ensuring members maintain their club participation and pride of ownership during challenging times is critical. Maintaining a sense of ownership in the club will help members appreciate the difficult decisions being made in the face of unprecedented circumstances.
5. Right Things Right. Make sure each critical action or decision is conscientiously considered and prudently implemented. By considering the long-term economic and social consequences of your decisions, leaders often realize that efficiency and cost savings are not automatically the top priority.
6. Think Long-Term. Short-term planning and tactics are the priority. But before executing, assess how the short-term actions affect the long-term plan and vision for the club. Always measure the impact any action will have on cash preservation, club value, member and employee satisfaction. Adjustments to the short-term plan may be necessary to reduce the impact on your long-range strategic plan.
7. Preparedness. It’s easy to say we should be prepared for the worst, but it’s impossible to anticipate every calamity. What we can do is make sure all the club’s business information and resources are readily available. This generally means putting in that extra hour or two each week to stay organized. As we prepare for reopening and the new normal, develop a reopening plan and adjust this daily based on new information which comes available.
8. Listening. We are a firm believer in the importance of empowering the general manager to make critical business decisions. We’re equally committed to the idea that managers need to listen to the ideas, challenges and concerns of their board members, department heads, members and industry and government leaders. Their input and feedback are essential in making informed decisions.
Financial stewardship matters most in times of crisis. Even the most prudent financial stewards cannot anticipate every obstacle they will confront. But experienced, poised, and attentive leaders will follow proven guiding principles to protect the club’s members, brand and overall financial health. In our next article, we will explore specific tactics for developing a financial plan to ensure short-term success and long-term sustainability.
This article continues a series of communications from GGA Partners to help private club leaders address challenges confronting their businesses and their employees as a result of the global health crisis. Today, Henry DeLozier offers several examples of the right things to do if you are a crisis leader.
Excellent leadership is a mixture of many important ingredients and information – access to it and knowing how to use it – is critical to the mixture. Smart leaders are using time during the novel coronavirus outbreak to sort through many sources of information to choose the most relevant and insightful information sources available to them.
During this pandemic, leadership qualities are being revealed in no uncertain terms. Those who have reliable information and can explain circumstances succinctly, consistently, and timely are viewed as “crisis leaders”. At GGA Partners, we consider someone to be a “crisis leader” when they are able to do the right things right.
Following are several examples of the right things to do, if you are a crisis leader:
Understand the significance of trustworthy leadership.
Achieving trustworthiness requires having reliable and current information, maintaining an on-going dialogue with those relying on you, and being truthful in your dealings. If the news is bad, trusted leaders are able to convey the combination of truthful expectations or projections in an empathetic manner.
After England suffered the fall of Dunkirk, Winston Churchill described “a colossal military failure” when reporting to the House of Commons at Parliament. He did not mince words and aligned accountability – his own – with the authority given him. People trust those who can step up in tough times.
Manage information aggressively.
Keep your stakeholder groups of members, employees, suppliers, and extended business partners – like bankers and insurance carriers – well-informed. It is essential to be inclusive, informative, and accurate. Do not make any incorrect statements.
Club leaders serve many stakeholder groups which often have different needs and priorities. Evaluate your stakeholder groups and refine communications which decisively and clearly address the expectations and needs of each group.
Express optimism.
US President John Kennedy focused his countrymen on a goal of putting a man on the moon in May, 1961, when he told the US Congress, “This nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the Earth.” At the time, this was not a popular idea as 58% of American’s polled were opposed to the idea. And yet, in July of 1969, Neil Armstrong, Buzz Aldrin, and Michael Collins fulfilled the slain President’s goal.
Churchill’s ability to deliver dreadful news, like the fall of Dunkirk and Singapore, was supported by his bull-doggedness in telling the British people that they would “never surrender” as he pointed out that Britain’s far-flung empire and the New World powers would come to the rescue, as they did. Bitter truth was supported by an optimistic outcome.
Be present.
Maintain regular – if even predictable – contact with your stakeholder groups. Address their concerns in the context of updated information. See that your information updates are available using multiple media – such as email, social media, direct mail, and conference calls – and be willing to repeat certain key bits of information for the sake of emphasis.
Communicate your plans – and act on them.
Your members want information, to be sure. Even more importantly, they want confidence that their club is in steady hands. They want to see evidence – action more so than talk – that the club is taking measured steps and addressing the key strategic issues without distraction with petty short-term matters. This capability requires a reliable game plan.
In her 2018 book entitled Leadership in Turbulent Times Pulitzer Prize winning historian, Doris Kearns Goodwin, cites several specific lessons that can be drawn from Franklin Roosevelt’s first term in leading America from the depths of the Great Depression. First and foremost, indicate that there is a center-point of leadership and direction. Roosevelt made clear his understanding that he was chosen to lead. Then, came the Hundred Days and the New Deal…so there was a plan. Now, as for Roosevelt, planning must be very dynamic and agile.
Sound leadership is a matter of thoughtful and comprehensive planning. The clubs that will prosper after these difficult times are the clubs with a plan that is comprehensive in nature and not drafted in piece-meal fashion.
