Staffing For Success: Part 3

Game Plan – Henry DeLozier‘s monthly column in Golf Course Industry Magazine – continues its series on staffing for success with the third of three installments. After looking at how the pandemic has afforded club and course managers the opportunity to reevaluate their teams (Staffing for Success: Part 1) and strategies for finding and hiring the right team members (Staffing for Success: Part 2), we turn to creating a culture that inspires and retains top performers.

Culture: The Secret Sauce of Success

A Supreme Court justice once defined obscenity by not defining it. “I know it when I see it,” Justice Potter Stewart famously said in 1964. It seems that an organization’s culture might fit into the same category: difficult to define, but obvious once illuminated.

The difficulty in defining organizational culture is because it is so many things at once. An amalgamation of personality, values, reputation, purpose, style and traditions framed by a set of written and unwritten rules developed over time and considered inviolable. Put them all in a pot, let them simmer for a while — a few years or maybe a few decades — and what’s left is culture!

Culture then is nothing less than an organization’s heart and soul, and its importance rivals any other asset or advantage. It is the glue that holds the organization together. It inspires loyalty in employees and motivates them to act consistently and pridefully. It influences them to perform at a high level because they feel a responsibility to uphold their end of the cultural bargain.

Culture is also an important factor in retaining top performers. Randstad, the international employment and recruitment firm, lists toxic cultures with poor pay, limited career opportunities, lack of challenging work, lack of recognition and work-life imbalance as the leading reasons people leave their jobs. There is an urgent need to pay attention to the culture growing around your club or course or risk losing top talent.

If this amorphous entity known as culture is so critical, what steps can you take, what keywords can you prioritize for search engines and what KPIs do you elevate to bake it into your organization? If only creating or transforming culture were so easy. Every winning culture is part of a unique set of attributes and characteristics that cannot be invented or imposed. It must be discovered from within.

But that doesn’t mean you should sit back and wait for culture to reveal itself — or for it to form in ways that could be detrimental to your future success. The road to a sustainable and winning culture ensures that employees:

 

  • Understand the club’s/course’s vision and how they contribute to it. When everyone knows where their leaders are steering the ship, it’s much easier to get people onboard and for employees to feel good about rowing.
  • Know how their performance is measured and what their personal success looks like. What results are expected? Are there both quantifiable and qualitative measures?
  • Are consistently recognized for contributions that meet and exceed goals. Nothing is more motivating than recognition in front of colleagues.
  • Recognize a commitment to diversity and inclusion. Employees of color and minorities want to see evidence that their opinions and work is valued and that they’re on a level playing field.
  • Feel that their managers are taking steps to safeguard their health and well-being. In a post-pandemic world, employees want to feel confident that their job is not putting them and their families in danger.
  • Are rewarded through a set of personal, flexible, creative benefits. Baby boomers, millennials and Gen Xers think about benefits and perks differently. To make them meaningful, managers must understand what each employee values most.

In addition to helping retain top performers, an engaging and embracing culture also has competitive advantages, particularly when it comes to sustaining high performance. Bain & Company research found that nearly 70 percent of business leaders agree that culture provides the greatest source of competitive advantage. In fact, more than 80 percent believe an organization that lacks a high-performance culture is doomed to mediocrity.

Culture may not be the easiest thing to define, but you can take steps that encourage a culture in which your organization thrives. You can’t rush culture, but you’ll know it when you see it.

This article was authored by Henry DeLozier for Golf Course Industry magazine.

Looking Outside the Boardroom

Board members are an important source of experience and knowledge. But when making strategic decisions on the future direction of the club, that expertise can easily be hampered by a lack of access to valuable data and actionable information.

GGA’s Bennett DeLozier explains how to connect your board with the critical insights they need from outside the boardroom.

Scenario: you’re a manager, it’s sunny, you’re in a board meeting, fluorescent lights buzz overhead.  The group is brainstorming capital improvement projects ahead of next season.  The topics of budget, capital reserves, assessments, competitor offerings, and attracting new members swirl around the room.

Someone claims that what members “really want” are new amenities, another counters that new amenity supporters are mostly younger members in restricted categories, a third comments on the price of dues for this group.  Opinions begin to diverge on membership pricing, someone mentions member satisfaction, people start using the word ‘should’, and a healthy, productive conversation turns to conjecture.

In this situation, a common reference point can bring everyone back on task. You’re confident you probably have data points on all of these topics somewhere in your office or in your inbox.  You’re scrolling, scrolling.  Before long, the meeting adjourns with decisions on hold, and you leave with a list of research tasks and staff projects to tackle in advance of the next one.

Board Members Need Information

While this scenario may be an overdramatization, it’s not terribly uncommon.  This is what happens when intelligent, capable people face important decisions without actionable information.  It deters strategic thinking and is taxing for the manager and staff.

Board members are usually smart, business-oriented people and they expect to have empirical discussions just as they have done in their own line of work.  Their job is to strategize, and a strategy is only as good as the information which informs it.

The most effective club managers gather, consolidate and deliver a war chest of information to the boardroom in order to facilitate better, easier, and quicker decisions.

The Right Kind of Data

A word of caution: not all data is good data and managers are wise to beware the data ‘dump’.  So, what does the right kind of data look like?

  • Data that is current. In a perfect world, the provision is real-time data and predictive analytics.  Data should be updated as frequently as possible and be on-hand for timely, relevant insight before annual planning exercises and performance monitoring activities take place.  In some markets, data that is 12 months old is out of date.
  • Data that comes from multiple sources. A combination of internal club data and external market data are required to be informed at both a micro and macro level.  Data from the club’s management and point-of-sale systems or reports from department heads alone doesn’t cut it.
  • Data that is useable. In presentations and speaking engagements we’ll often joke about the graveyard for strategic plans: in a three-ring binder on your credenza collecting dust.  Cheeky, but true.  Data should be readily available and accessible in a digestible manner.  Having to look for it, go get it, wait for it, or set-aside-15-minutes-for-everyone-to-skim it usually means your data isn’t seaworthy.
  • Data that works for you. Transferring the right kind of data to your board requires you to have a framework for gathering, analyzing, and succinctly documenting all the research and information that is Your data framework should not create more work for you. In other words, you need technology to gather, centralize, and process that information into synthesized insights.

What kind of information do boards want?

They want consolidated internal data to inform them about the club’s financial and operational performance, as well as member satisfaction, habits, preferences, and attitudes.  They want external data which informs them about competitive offerings, prevailing market trends, industry standards, and helps them contextualize the club’s performance relative to others.

Most importantly, they want to know about progress – where the club is now relative to where it needs to be or where members want it to be.

Why don’t boards have this type of information?

Simple. Because their manager hasn’t given it to them.  Usually the manager hasn’t given it to them for really good reasons: they don’t have the time, resources, money, or – in some cases – the culture to support data-driven decision-making.

To be clear, managers should not be expected to have the ability to answer every question which comes their way.  However, they should be expected to successfully guide the process of strategic decision-making at their club.  Here are six tips to make you more efficient and effective at connecting your board with critical insights:

  1. Survey members on satisfaction every year, if not more regularly. Be deliberate and selective with attitudinal surveys, capital improvement surveys, and club votes, but be adamant about doing a satisfaction survey every year.
  2. Know your market inside and out, literally. Knowing your internal market means helping your board know the club’s performance and members.  Knowing your external market means keeping your board apprised of competitors, industry standards, trends, and best practices.
  3. Maintain a constant grasp on the state of your club’s operational and financial data. Being able to reference, provide, or recite details about the club’s finances and operating performance is one of the most effective ways to enhance your command presence in the boardroom.
  4. Keep your data organized and ready to go on short notice. Get yourself in a position where you’re prepared to deliver an informed response to any questions which come your way or threaten to derail a productive discussion.
  5. Report on performance metrics before you’re asked. Be proactive about regularly updating your board on current status, changes, and evolutions within the club.  As the saying goes, they don’t know what they don’t know.
  6. Build upon your data and monitor how it changes over time. This will provide your board with a sense of progress and will serve as a powerful cache of information when it comes time for your annual performance evaluation.

How to Embrace Emerging Club Technology

In a market brimming with new technology solutions that could revolutionize the way you run a club, GGA Partner, Derek Johnston, reveals how your club can embrace these opportunities, while mitigating any business risks they could create.

Technology continues to change the world; new devices, platforms, and applications continue to enter the market at pace. Yet the criticism leveled at clubs remains the same. The industry is ‘slow to change’, ‘reluctant to adapt’, or can be ‘averse to new technology’.

Is this truly the case? And, if so, what are the reasons for the reluctance?

A technology dilemma

The promise of what enhanced technology can bring to a club is a compelling proposition: better information, increased productivity, improved accuracy, cost efficiencies, delivering an enhanced experience to members and guests. But it’s true that club leaders face a paradox, in that while new technology can often be the source of these tangible advantages, it can be the gateway to unforeseen issues and risks – ones which can easily go unnoticed if not supported appropriately or utilized correctly.

How have these risks come about? In part, through the existence of historical governing frameworks and adherence to traditional operating practices which have not kept pace with the digital transformation. Add in a human element, where individuals may not be properly equipped to implement or operate new technology with due skill and attention, and what were risks can easily become real-life business issues.

A common business issue clubs encounter is not just identifying a new technology solution, but adopting and integrating it effectively.  Clubs can decide upon and acquire a technology and not use it – sometimes they don’t know how best to use it, other times their chosen technology is incongruent to their current business processes or improvement objectives, and, more often, folks simply don’t have the time.

Technology is a tool like any other, it fulfills its purpose when it’s being used. To embrace emerging technology, clubs must identify and select the right tool for the job, map out their implementation approach, restructure their existing processes, if necessary, and define targets against which progress will be measured.

Five Tips to Drive Technology Success:

What can clubs do to mitigate risk when assessing and implementing new technology?

1. Use evidence to inform your decisions

Based on business intelligence and current performance indicators, what are the areas of improvement you have identified? Technology solutions should address those areas directly to realize productivity, accuracy, cost efficiency, or other specifically identified improvement objectives.

2. Be selective

Scrutinize the technology proposition as it relates to its ability to address business needs and make significant improvements when compared to current processes. Then…

3. Take a phased approach

The majority of clubs are not blessed to employ extensive teams with broad and rich skillsets dedicated to technology implementation, training, and maintenance. This typically reduces your capability to take on multiple new forms of technology all at once and be effective in doing so. Prioritize and take a phased approach to how you introduce new technology.

4. Invest in staff training

While learning can and does take place ‘on the job’, ensure the relevant staff members are appropriately trained on an ongoing basis either by yourself or your technology partner. This will ensure you maximize the benefits of the new technology to your club, avoid improper use and protect against too few individuals owning the knowledge connected to the technology.

5. Set goals and targets

You may be investing on the promise of increased efficiencies, but unless you set targets and put in place the necessary measures to track performance, it’s impossible to assess the effectiveness of the new technology. Clear expectations and targets will help your staff buy in to its introduction and encourage your technology partners to best assist you in achieving them.

Although these steps may appear to be extensive, they should in no way be viewed as a deterrent to change. Why? Because there is also risk attached to inaction, standing still while the wider world continues to evolve.

Take one aspect of consumer behavior, for example. As the trend towards mobile and digital continues to grow and evolve, if your club becomes disconnected from this trend it could be seen as old-fashioned, traditional, or in ways simply incongruent with what your club really stands for. While clubs should never feel technology should be forced on them, they should at least consider what existing members and prospective members want; what the club needs to operate efficiently and effectively fulfill its mission; and what club leaders require to effectively develop, monitor, and maintain the club’s strategic direction. Most importantly, clubs should be prepared to act on their findings.

Embracing change

How then should a club approach technological change? In short, with an open-mind and a pragmatic, data-driven approach combined with the support and buy-in of staff, members and club stakeholders.

Whether the aim is to increase productivity, reduce costs or deliver a better experience to members and guests, those invested in the success and sustainability of the club will recognize the intention to improve. Not only will this protect against the market forces of standing still, it will take those invested in the club on a journey towards a better, brighter, more sustainable future.

For help on identifying and embracing emerging technology at your club, connect with Derek Johnston.

Key Benchmarking Standards in the Golf Industry

How to Leverage the Information to Improve Operations

Benchmarking standards are commonplace in most industries. These standards are set and updated based on defined and evolving business models and shared information. The core objectives for creating and using benchmark standards are performance measurement and improvement. The golf industry has lagged other industries in the widespread adoption and use of benchmark standards.

The good news is that change has been brewing for years and is picking up speed. The NGCOA Canada is helping to lead the charge through its various benchmarking and performance tracking initiatives, including the Revenue Tracker and Rounds Played & Weather Reports, which provide comparisons of an individual course’s results to their competitive set, provincial and national averages along with Performance Intelligence which provides course specific benchmarks and feedback.

With the various categories of courses, and corresponding operating models (private, semi-private, resort, public, and municipal courses), executing benchmarking and performance tracking initiatives is no small feat.

In order to effectively use benchmarks, there needs to be standardization. This typically requires the use of Key Performance Indicators (“KPIs”) that enable meaningful comparison from business to business and across markets. The KPIs for each type of course are different.

As an owner or operator, this means you need to be recording, tracking and updating KPIs in a manner consistent with the industry (category) standard as a baseline starting point. Therein lies the greatest challenge the golf industry is set to overcome.

In recent years, it has become evident that benchmarks and KPIs have significantly helped golf course owners and operators measure and modify their operations to improve financial performance. Financial performance is not just net income, it includes managing the balance sheet (working capital and debt) and ensuring the maintenance of physical assets.

PUBLIC, SEMI-PRIVATE AND RESORT FACILITIES

Public and semi-private golf course operations have a singular focus – maximizing the yield on a finite inventory of available tee times. As the market for golf continues to evolve, a focus on maximizing gross margin from non-golf related revenues will also become more important.

Some of the most important benchmarking standards for public and semi-private courses relate to rounds of golf, revenues per round, and labour and other expense ratios.

The following are a few examples of important KPIs by category:

Rounds and Revenue

Naturally, a key measure of performance is rounds played. Beyond revenue, rounds played, and average revenue per round, critical indicators required to understand performance include:

  1. Tee time utilization: rounds played compared to rounds available; and,
  2. Rounds played yield variance: how much does each round yield, on average, compared to the highest yielding round.

These indicators allow operators to quickly understand if their pricing model is effective, or if it needs to be adjusted to drive utilization and yield simultaneously higher. While each course and market are different, if your tee time utilization is below 40% and your average revenue per round yield is below 70% of your highest yielding round, significant adjustments should be considered to improve performance. A healthy course will typically run at a utilization rate of 50% to 65% of weather adjusted available tee times and average revenue per round as a percentage of peak revenue per round between 70% and 80%.

Other helpful metrics include utilization and yield statistics measured on a per round basis for other ancillary revenue sources such as carts, driving range, food and beverage, and merchandise. Resort properties will also measure green fee revenue per room, after adjusting for occupancy sales; and total rounds played by guests of the resort versus non-guest play.

Cost of Sales

The cost of sales metrics are generally more straightforward and easy to come by, with costs more consistently recorded and tracked. Generally, food and beverage cost of sales as a percentage of food and beverage revenue average between 26% and 36%, while merchandise cost of sales as a percentage of merchandise revenue average between 65% and 75%, depending on the mix of hard and soft goods sold.

Labour and Other Expenses

Labour expenses are the largest category of expenses for golf courses, generally ranging from 52% to 58% of total expenses.

Expense metrics which go beyond simple dollars and cents, are generally harder to come by due to the wide variety of operating models, departmental structures, and local market conditions for labour and other products and services.

That said, typical labour metrics include the following:

  1. Labour related costs as a percentage of revenues and costs. For instance, food and beverage labour expense as a percentage of food and beverage revenue generally averages between 38% and 50%.
  2. Full-time equivalents by department. According to the most recent NGCOA Canada Compensation & Benefits Report, the average full-time equivalent head count at public and semi-private facilities in Canada is 18.2.
  3. Actual key employee payroll and benefit costs. Public and semi-private facilities employ an average of 52 employees, with significant variances in the mix of staff (permanent, seasonal, full-time, and part-time) by region and type of facility – you are encouraged to consult the report for a detailed breakdown of compensation by key position.

Other operating expenses are typically evaluated against a unit of measure. For example, greens expense per maintainable acre and clubhouse expense per square foot.

Advertising expense is measured as a percentage of total revenue, as are other variable expenses such as bank charges and credit card fees. From a capital expenditure standpoint, public and semi-private golf courses should on average spend between 3% and 5% of total revenue on maintaining existing capital items.

PRIVATE MEMBER CLUBS

Private clubs sell and market more than just golf, they promote a lifestyle and social hub. Instinctively, not-for-profit private clubs focus on break-even operations, member satisfaction and maintaining assets.

In order for a private club to be successful, all aspects of the operation must meet members’ expectations, and as a result, measuring utilization and service levels of all club facilities is quite important. In addition, most people do not want to belong to a club that appears run down; as such, an important KPI is expected capital maintenance costs and the funding of those costs through entrance and capital maintenance fees. Below are a few examples of private club KPIs:

Revenue

The key focus from a revenue perspective is annual dues, maintaining a stable membership count, guest fees, power cart revenue, and food and beverage revenue. An example of important revenue KPIs for a private club are shown below:

  1. Full Member Equivalent: total annual dues divided by a full member’s annual due.
  2. Satisfaction, participation and utilization: critical statistics to measure and benchmark.
  3. Natural attrition rate from existing membership: typically average between 5% and 8% of total memberships.
  4. Membership Conversion Rate from Inquiries: generally average between 8% and 12% of qualified inquiries.
  5. Revenue per membership by department, source and membership type.
  6. Average guest rate (achieved) compared to the peak guest rate, typically averages between 65% and 75%.
  7. Average number of guest rounds per membership, typically ranges from 5 to 12.
  8. Average tournament patron rates, typically ranging from 80% to 90% of the peak guest rate.
  9. Rounds per membership, typically ranges from 35 to 48.
  10. Utilization of tee times by membership category.
  11. Golf Cart Utilization: golf cart usage as a percentage of total rounds, which typically ranges from 35% to 50% depending on walkability of the golf course.

Cost of Sales

Similar to public golf courses, cost of sales as a percentage of revenues are some of the more readily available metrics. Typically, food and beverage cost of sales run higher for private clubs, between 35% and 42% of food and beverage revenue, while merchandise cost of sales typically average 75% of merchandise revenue.

Labour and Other Expenses

From an expense perspective, most private clubs have excellent controls in place to keep expenses in line with the approved budget.

  1. Labour expense ratios as a percentage of total expenses are usually slightly higher at private clubs ranging from 55% to 62%.
  2. Full-time equivalents and headcounts are also typically higher at private clubs, averaging 48.3 FTEs and 101.9 employees.

All other KPIs related to expenses are generally based on a unit of measure of as a percentage of revenue. For most operations, controlling expenses is important; however, for private clubs this may not be as important as meeting member satisfaction. Defining what is important needs to be a ‘first step’ for each operator.

HOW DO YOU LEVERAGE KPIs?

A requirement for effectively using benchmark standards to improve your specific circumstances is the application of experience to compare and contrast your results with that of the standard, investigate discrepancies and develop focused improvement plans.

Most owners and operators want to be as efficient as possible without lowering their expected standard of excellence. The use of benchmarks allows operators to both measure performance and adjust operating procedures to improve performance and meet the goals of the club.

Although benchmarks are typically used to measure historical performance, they can be used to make alterations on a timely basis if reviewed appropriately and to provide direction for adjustments moving forward.

For example, certain utilization KPIs can be evaluated daily, weekly or monthly. For a public course operator, it is essential that their information system be ‘real time’, so KPIs can be calculated, and if needed, communication to the general public adjusted in a timely manner (yield management). The use of KPIs and benchmarks need to be part of the toolkit for management and the owner.

Furthermore, more sophisticated operators have set up specific dashboards with differing KPIs for different levels of management and/or ownership. The dashboards are produced on a periodic basis, either daily, weekly or monthly depending on the audience.

This information is then used to adjust operations on a timely basis or adjust marketing and communications to patrons in order to enhance utilization of the facility.

From a management perspective, KPIs and utilization statistics can be used to align labour costs with activity. In addition, some operators use KPIs to evaluate staff performance and determine bonus calculations.

The most important are KPIs that allow for timely revenue enhancement and service improvements that improve patron/member enjoyment. If you are not using KPIs, you are at a disadvantage and are missing a key tool in your management toolbelt.

STAY COMPETITIVE

In summary, benchmarking standards help each operator remain competitive within their market segment. KPIs can also become a motivating influence for staff and management. Simply tracking your results compared to budget is not good enough. Operators need more dynamic information which allow for the development and implementation of timely tactical solutions.

Industry benchmarks are key to a successful operation – without them your operation is at risk.

This article was penned by Derek Johnston for NGCOA Golf Business Canada

Financial Indicators to Monitor

What are the financial indicators that the club leadership should monitor to stay strong?

Canaries in a coal mine were the early-warning system that saved miners’ lives before technologies for detecting noxious gases came along.  Just as careful miners took caged canaries underground with them, club directors are wise to protect the club by implementing early warning tools—or Key Performance Indicators (KPIs).

Stephen Johnston, the founder of Global Golf Advisors and a former KPMG senior auditor for major accounts, explains, “The number one duty of every club director is to protect the assets of the club.”  To Johnston, the canary to be watched is full member equivalents (FME) of a club.  FME represents the total annual dues amount divided by the amount of a full-member’s annual dues.  Johnston warns directors that when FME metrics begin to slip, directors should beware.

Future attrition rates and the successful conversion rate from potential new members follow the FME metric.  Attrition signals retention success or concern while conversion rates presage new member recruitment.  Keep these KPIs singing a happy song.

Successful membership recruitment follows a 10 percent conversion rate—from bona fide member lead to accepted new member.  Therefore, this ratio instructs the board and management that the roster of prospective members must be ten times the number of membership openings.  Says Johnston, “If you want to add 30 new members, you will do well to develop at least 300 trustworthy leads.”

In addition to FME metrics, Johnston emphasizes the power of the cash flow statement.  For a club to be truly economically sustainable it must generate revenues adequate to pay the club’s bills and fund its future capital needs.  Johnston advises club directors that the annual “spend” on capital assets should be 7 to 9 percent of annual gross revenue.

The impact of the recessionary cycle caused most clubs to fall behind on capital replacement and maintenance so the cash available to catch up on deferred capital maintenance is a critical early indicator of future financial stress or security.

For the miners, early-warning was the difference between life and death.  For private clubs, monitoring early-warning KPIs is similarly crucial.

GGA’s Henry DeLozier penned this article for the National Club Association’s Club Director Magazine.

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