Tag: labor

Club Leadership for Tough Times

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This webinar 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. 

In case you missed it, this webinar – hosted by the National Club Association (NCA) in early April – explores the ways effective club leaders are responding to challenges and evolving circumstances posed by the coronavirus pandemic.

In it, Henry DeLozier, Partner, and Patrick DeLozier, Director, feature as experts on crisis response and facilitate discussion about how the board and management at one of the world’s best clubs are dealing with today’s pressing issues.

Nicholas Sidorakis, GM at Southern Hills Country Club, and Bryan Johnson, Southern Hills Board President, explain how they are navigating the everyday challenges of the current health crisis while focusing on the future well-being of Southern Hills Country Club.

View or listen to the webinar (54 min)

View or download presentation slides (.PDF)

A special thank you to Henry Wallmeyer, Joe Trauger, John Good, and Cindy Vizza at the National Club Association for the opportunity to participate.

 

Lifting the Fog of Crisis

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This article continues a series of communications from GGA Partners to help leaders of private clubs address challenges arising from the COVID-19 coronavirus that are confronting their businesses and their employees. Today, Henry DeLozier, a partner of our firm, highlights that now is the time to remind members of their club’s relevance and value. 

Lifting the Fog of Crisis: Now is the time to remind members of their club’s relevance and value.

The “fog of war” is a term coined in the 19th century to describe the uncertainty military troops often experience in wartime situations. Amid the deep uncertainty that the coronavirus has brought to our families, communities and businesses, many of us find ourselves in our own fog of war.

As club leaders reckon with the impacts – both immediate and long-term – of the current pandemic, lifting the fog of misunderstanding and encouraging engagement are important to your club’s longevity and success.

Here are two important steps to make your club a beacon of hope and inspiration to club members, their families and friends:

Make your club a positive influence for members.

Members appreciate knowing how the club, its members and staff are responding to current challenges. They are especially interested in how the club is taking care of its employees. In addition to e-mail updates enhanced with photographs and short videos, also consider:

Organizing virtual events. Using such technologies as Zoom and Google Hangouts, host a virtual happy hour. Keep the number small enough that everyone can be part of the conversation. As the organizer, start with a general update from the club and then let members take over with questions and updates of their own. This is an opportunity to lift people’s spirits, so keep it fun as much as possible.

Telling stories that inspire. Tell members about staff who are volunteering to care for others, including other members, while continuing to do their jobs at the club. Many members have special relations with club staff and will appreciate staying connected through stories.

Encouraging members to take away meals and snacks. Brad Bourret, GM at Cabarrus Country Club in Concord, NC, launched Take-Out Tuesdays before the crisis. He now reports that take-out for his club has exploded in volume. In troubled times, keeping connected to the things and people familiar to them gives members a greater feeling of safety and well-being. Think of it as comfort food.

Increase members’ understanding of club matters.

Provide regular updates. These are obviously not normal times, but retaining some level of normalcy is comforting. Members will appreciate knowing what is taking place at their club. Maybe a new freezer has been installed or the locker rooms and bath house have been fully steam-cleaned to ensure the club’s usual high sanitation standards. If spring flowers and shrubs are blooming, send photographs or a short video that reminds members of the natural beauty they enjoy at their club.

Introduce learning opportunities. Many members don’t understand how some aspects of their club functions. For example, club finances, board governance and the process for recommending members are unclear to many members. In addition, basic operations, such as housekeeping standards, the care and maintenance of facilities and kitchen storage and cleanliness practices, are obviously timely subjects. Now may be a good time to capture their attention and communicate important information on these topics through a podcast.

Conduct single-topic surveys. If you want to know what your members are thinking, what questions they have and what suggestions they would like to make, ask them. Short member surveys – which typically require less than 10 minutes – are great ways to update your understanding of members’ wants, needs and expectations.

The most serious crisis most of us have ever experienced has settled a fog over much of our lives, including our clubs. Efforts to lift the fog, including making your club a positive influence for members and increasing their understanding of how the club operates in good times and bad, reminds members of the importance of the club in their lives.

Your club’s relevance is among the many things being attacked by this virus. Now is the time for club leaders to take the steps that keep the club a meaningful and valuable part of members’ lives.

Employee Engagement

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This article continues a series of communications from GGA Partners to help leaders of private clubs address challenges arising from the COVID-19 coronavirus that are confronting their businesses and their employees. Today, Patrick DeLozier, a director of our firm, offers some ideas on keeping the team engaged.

Employee Engagement: It’s now more challenging, but also more important.

At the top of our priority list during these unsettling times is making sure our employees are not forgotten. They need to know that their clubs genuinely care for them and their well-being, and that you are mindful of the economic and social consequences that accompany this pandemic.

You also want to let employees know that they are valued members of a team that needs to stay connected during these tough times, so that they are ready to ramp up full-scale operations once it is safe to do so. Staying together even when you’re apart starts with communications, but also includes working effectively from remote locations and finding balance in a new work and home routine.

Social distancing doesn’t mean social isolation.

Leaders should make sure they are communicating with employees regularly and consistently. There are a number of ways to do this, some that take advantage of technology and others that rely on old-school practices.

You can write personalized notes to employees to keep them up to date on club news and plans. You can do this electronically, of course, which gives you an opportunity to add a video message. But this is also a good time for an old-fashioned handwritten note that arrives in the mail.

For those employees celebrating birthdays and work anniversaries, a phone call is a simple but effective way of showing that they’re a valued member of your team and further establishes you in their minds as an empathetic manager.

Make sure employees are included on any communication sent to club members. Keeping everyone informed at the same time builds trust and the sense that we’re all in this together.

Being comfortable – and productive – at home.

Most of your employees are probably not accustomed to working from home, which means they’re dealing with a new set of distractions—a dog barking, a child wanting attention – while trying to be productive in an unfamiliar workspace. Here are a few suggestions for working remotely:

Create a comfortable and separate workspace. Resist the temptation to pull out your laptop and plop down on the sofa, which makes it too easy to be distracted by other household activities.

Use one of the many video tools, including Zoom, WeChat, Skype and FaceTime to replicate the social interaction and brainstorming opportunities that a meeting at the club would provide.

It’s a balancing act.

Balance your day. Try not to fall into the trap of working too much. Instead, maybe watch an online concert, take an online yoga class or go for a walk with the dog. One of the best things you can do for your employees is to stay healthy, both physically and mentally.

Make time in your workday to speak with co-workers, friends and family about subjects not related to work. Share a funny story or compare notes on a favorite show or movie.

Now’s the time, carpe diem.

How many times have you thought, “If I only had more time, I would … .” Now you do, so take advantage of your down time to plan, dream and innovate. You might consider creating an idea think tank with your team and challenge them to submit ideas that support your member enhancement program. Have department heads dissect their business unit with the goal of improving efficiency, productivity and profitability.

John Quincy Adams said, “If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” Now, more than ever, employees are looking to you for leadership. Those who feel their employers are communicating consistently, openly, honestly and with empathy will stay engaged and return to work feeling connected to a team and a mission.

Because sometimes we just need to laugh…

Think Big Entering A New Decade

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Thinking of big changes in 2020?  Writing for Golf Course Industry Magazine, GGA Partner Henry DeLozier shares four macro changes to consider as the new decade begins.

Golf no longer exists in a vacuum, separate and distinct from market forces that shape other mainstream businesses. Gone are the days when golf club and facility managers could operate without a sensitive finger on the pulse of social, environmental and political changes affecting their business. As we enter the third decade of the 21st century, here are four macro changes to be aware of and to use to your advantage.

1. New solutions to labor shortages

Traditionally, labor costs for golf courses have ranged from 52 to 56 percent of golf course maintenance budgets. With increases in minimum wages and the ripple effect throughout organizational charts, labor costs continue to escalate. Derek Johnston, a partner at Global Golf Advisors, says labor costs have jumped as much as 6 percent.

Operators managed the first wave of escalating labor costs by reducing head counts and outsourcing certain activities to third-party contractors. Now, they are being forced to get more creative to deal with what is by far the facility’s single largest line item. Some have reacted by flattening their org charts, eliminating supervisory positions and restructuring responsibilities for some managers and staffers. As a result, staffing levels that ranged from 19 to 25 employees per 18-hole course are in significant decline.

Labor will remain a primary focus and concern for operators in 2020. Suggestions for managing rising costs are to re-evaluate all operational activities with an eye for possible benefits to be gained from outsourcing; take labor-intensive components of your operation and determine how the work could be accomplished more efficiently; and look at non-golf sectors for solutions being implemented in other fields such as hospitality and manufacturing.

2. Increased environmental awareness

Golf courses throughout North America have embraced opportunities to increase their environmental stewardship. Beekeeping, which sustains the bee population and ensures ongoing pollination; bat houses, which address mosquito infestations; and habitat restoration for butterflies, especially monarchs, whose habitat supports pheasant, quail, waterfowl and many other species; have been introduced at many locales.

Making golf courses and their surrounding grounds environmental sanctuaries is resonating with key market influencers, including millennials and women, who are also prime targets for increasing play and membership. Audubon International CEO Christine Kane reports that clubs as sanctuary communities are on the rise nationwide: “Audubon-recognized sanctuary communities have increased more than 20 percent over the past five years,” according to Kane.

Progressive superintendents and golf managers who expand the reach and impact of their environmental efforts will be viewed favorably by community leaders as well as current and prospective members and customers.

3. Expanded reach of social media

Superintendents and facility managers have become important sources of content relevant to club members and consumers. Photographic images of flora and fauna on club grounds are of interest to members who take pride in their clubs’ beauty and connection to the environment.

Instagram and Twitter can be used to show images sourced by staff members — golf course workers, cooks, janitors, golf professionals — who are alert to opportunities to snap butterfly habitats, wildflowers and all sorts of wildlife that call the club home. Such images are often posted to the club website and distributed to club members and visitors as a means for extending brand engagement.

Gone are the days of the cut-and-paste guidance for how to repair a ball mark. The increased relevance and timeliness of today’s news is attributed to the capability and proliferation of social media.

4. Comprehensive planning

The growth of strategic planning (supported by specialized plans for marketing, communications, finance and membership) is another example of general business’s influence on a more enlightened group of golf managers. Just as most any business relies on a strategic plan to guide its decision-making, golf is recognizing the importance of establishing a clear vision that serves to prioritize programming and investment. Top performers rely on data-based plans to distinguish their facilities not only in overcrowded markets, but also with consumers debating their leisure activities and spending. Those facilities that create market differentiation will prosper in 2020 and beyond.

Creating A Better Environment for Workers … and Potential Hires

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This is the second of two Golf Course Industry Game Plan columns focusing on becoming an employer of choice.  For more, check out the previous article “Become an Employer of Choice”.

“… And what do you do, Mike?” the guy grilling the burgers at the neighborhood barbecue asked casually.

“I’m the golf course superintendent at Laurel Lake Country Club.  It’s an amazing place to work.  I have a great team and my manager really appreciates the job we do.  If you’re thinking about joining a club, why don’t you come out as my guest one day?”

Is that the kind of answer one of your staff members would give in a similar situation?  If it is, you’re in an enviable position in this tight labor market — you’re what’s known as an “employer of choice.”  Employers of choice enjoy higher retention rates, better productivity from their teams and a healthier workplace culture.  What’s more, they don’t have to search as hard for top talent because the best people come to them, hoping to join their team.

So how do you create that kind of reputation for your club?  It doesn’t happen overnight, but it can start with the ways in which you promote job openings.  Here are five keys to positioning your club as a place where top talent wants to work:

1. Show your colors up front. Describe who you are and what your course or club represents. This description of your values and the high standards to which you hold team members is attractive to top performers.  Stating your values and the significance of the position helps prospective employees know if your club is one where they would be proud to work.

2. Describe the job benefits clearly. Benefits are an important differentiator in today’s workplace, but don’t think of them in limited terms. Beyond health insurance, sick leave and vacation days, benefits include respect, being part of a winning team, and the opportunity for continued professional learning and development.  Make sure you help prospective employees understand the full range of benefits that you offer.

3. Tell what the job entails. Pay attention to the language you choose to describe the job and its responsibilities. And don’t be hesitant to describe the job in demanding terms. Top performers want jobs that challenge them and ones that matter.  Describe the team that the prospective employee would join, its work ethic and its team spirit.  Being a part of a great team is a strong incentive to employees who enjoy collaboration and sharing.

4. Know your competition. Being an employer of choice requires that you do your homework to know how your compensation, benefits and culture compare with the competition. In a tight job market, it’s also important to realize that your competitors include more than golf clubs and other golf operations courses.  You’re also likely competing with landscape companies and hospitality positions for top talent.  Knowing what competitive organizations offer helps you structure benefits and comp attractively while being mindful of the budget.

5. Tell stories of valued performers. Stories of performance, customer service, overcoming adversity and teamwork give new employees insight to the organization and the culture they are part of. Think of it as a window into your team room, which allows you to describe the human components of the job that are not a part of the formal job description.

In his book, “Attracting and Retaining Talent: Becoming an Employer of Choice,” Dr. Tim Baker emphasizes the importance of standing on trustworthy values.  “In plain terms, being an employer of choice means establishing a business that is a great place to work.  If companies don’t genuinely act to become an employer of choice, then good employees will simply vote with their feet and move to a forward-thinking employer who offers them what they want.”

Remember the story of the janitor at the Johnson Space Center in Houston who, when asked by President John. F. Kennedy about his role, said, “Mr. President, I’m part of the team that is putting a man on the moon.”

Don’t you wish that janitor worked for you?

This article was authored by GGA Partner Henry DeLozier for Golf Course Industry Magazine. 

Covering Isn’t Just For Music

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The inimitable Elvis Presley’s version of Hound Dog sold 10 million copies and holds the 19th spot on Rolling Stone’s list of 500 Best Songs of All Time. But the King of Rock ‘N’ Roll can’t claim Hound Dog entirely as his own. Elvis was covering a version recorded three years earlier by Willie Mae “Big Mama” Thornton, an American rhythm and blues singer and songwriter.

Elvis has been accused of stealing or culturally appropriating Hound Dog. But the truth is that covering was even more popular in his day than now. The more important takeaway is that we should always be paying attention to the past, learning from others and developing our own plans for success. There are three distinct plans that club leaders should have within easy reach at all times.

Strategic Plan

A strategic plan should clarify two aspects of purpose: what we are and what do we intend to accomplish. An effective strategic plan builds on the knowledge of past experience and market understanding to describe the club’s goals and objectives.

All businesses benefit greatly from the discipline and clarity provided by sound strategy. Although many golf facilities lack formalized strategy, those that actively use their strategic plans hold a distinct competitive advantage. According to research completed by Global Golf Advisors, 73 percent of clubs that rely on a strategic plan to guide their operations outperform their competition.

Marketing Communications Plan

Most golf courses and private clubs do business in markets that are extremely oversupplied. Further, many of these facilities lack a current and actionable understanding of the people who are their customers, members and prospects. In highly competitive and crowded markets, the advantage goes to those who know whom they are looking for, where to find them and how to communicate with them effectively.

Effective and purposeful communication plans are target specific. Knowing how to communicate with your baby boomer audience is different than reaching millennials, for example. The best communications plans utilize multiple media and reinforce messaging on a disciplined schedule.

Most people find time only for trusted information sources. Thus, golf courses and private clubs have the advantage in most cases of being “known” to their active market segments. What tactics are working best?

  • Robust and engaging websites are the platform for any communications plan today. They must be inviting, engaging and functional.
  • Print communications – newsletters and postcards, for example – are sticky with many golfers, especially those over 50, and should not be disregarded even in a digital age.
  • Engaging social media help create conversations within your community of members and prospects.
  • Video that shows images of people enjoying the golf course and clubhouse activities help tell the club’s stories in authentic ways.
  • Person-to-person contact from key staff members remains a difference-maker. There is no substitute for a personal invitation.

Staffing Plan

Access to affordable labor is one of the most important operational challenges at most golf clubs. With labor costs now exceeding 55 percent of most clubs’ operational expenses, thoughtful planning is essential. Borrowing ideas from the past enables managers to create meaningful relationships with employees and keep them committed to their jobs. What’s more, clubs that encourage their best employees to recruit friends and relatives have an advantage in attracting top talent.

A reliable staffing plan identifies the utilization flow of the facility to ensure that the club is properly staffed at all times. The plan must calculate labor and payroll burden costs to enable dependable budget projections. The best staffing plans show the position title and description, number of employees required, allotted compensation and benefits, and options for flexing staff size and positions as conditions change.

Big Mama Thornton inspired Elvis to lay claim as the King of Rock ‘N’ Roll. Who’s your inspiration, and what’s your plan for success?

This article was authored by GGA Partner Henry DeLozier for Golf Course Industry Magazine.

Change Shows No Sign of Slowing

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If your time to you is worth saving
Then you better start swimmin’ or you’ll sink like a stone
For the times they are a-changin’
– The Times They Are A Changin’, Bob Dylan

The songwriter, poet and social observer Bob Dylan warned us about change.  Back in 1964, he said it was a-coming.  Forty-five years later, we are reminded of his prescience.

In private clubs, change has arrived in full force and shows no signs of slowing.  As a new year reveals itself, private club leaders should be alert to change in five key areas affecting their operations.

1.  Economy – A surging economy has helped a number of clubs in North America add members in the last two years. But many experts are forecasting a softer economy in 2019.  According to the Conference Board’s November 2018 report, “Higher interest rates, and the intention of the Federal Reserve to keep raising them into 2019, will create a more challenging environment for business next year.”  That means membership recruitment and retention are still top priorities at most clubs.

Global Golf Advisors estimates that less than seven percent of the 4,400 private clubs in North America are full and working from a waiting list for admission.  Anticipating that the economy may soften, private club leaders must intensify their efforts to recruit new members while giving focused attention to retaining existing ones.

Often the solution is not a price change, but something more creative, such as ones that make the club more personal and relevant to today’s lifestyles.

What are the right moves for your club?  The answers start with knowing your members as well as your prospects and knowing what they value most in a club relationship.  If you don’t know how they define value, ask them.

2.  Delay no longer a strategy – In the heat of the recession, many businesses, including many private clubs, decided to forego capital improvements until times got better. Times got better, but many continued to delay investment.

Now many clubs are playing catch-up on deferred capital improvements. In the process, they’re discovering that new members are attracted to standards of quality that match their personal lifestyles.

That means that improvements to club facilities, programs and staff must reflect a long-term commitment to sustained quality.  Most members want their clubs to be better five years from now and club leaders are obliged to fulfill that expectation.

Club leaders do well to establish a broad standard of excellence for the club.  This is where clubs can truly be “unique,” as everyone like to profess.  The standard of excellence dictates the qualities of fit and finish for the facilities, the style and level of services and the types of recreational programs offered members.

3.  Brand takes on added significance – Private clubs are brands, and just as a particular soft drink, computer or automobile stands for something in consumers’ eyes, so does your club stand for something in the eyes of your members and prospects. Club leaders must develop an intentional branding strategy that sustains the promises on which the club has built its reputation, including course conditions, levels of service and culture.

 For brand planning in a private club, several keys apply:

  • Confirm the club’s potential tax-exempt status to ensure conformity with the U.S. Tax Code;
  • Develop and implement a proactive communications plan that reinforces primary brand pillars, and
  • Remember that the club’s brand is reflected in everything it does . . . and fails to do. Everything communicates.

When making any key decisions about the future of the club, make sure you’re staying true to your brand promise.

4.  Security and privacy concerns are increasing.  In a world rife with cyber threats, private clubs are highly vulnerable targets.  People of means gathered in one easy-to-access vault of names, addresses and possibly financial information constitute an attractive target for those ill-intentioned among us.

Members place their trust in their club to safeguard their privacy.  Break that bond and the consequences could be irreparable.  Club leaders must contract with companies expert in securing their club’s sizeable data storehouse and secure this information.  This threat will expand in 2019 at clubs that are unprepared

5.  Access and affordability of labor is changing clubs. Most clubs surveyed by GGA report increasing direct and indirect labor costs.  Many clubs are outsourcing work through contract-labor arrangements.  Some clubs are securing overseas workers for seasonal needs.  All clubs are evaluating steps to reduce the reliance on accessible labor for routine club services.

In some clubs, self-service is taking hold.  In progressive clubs, new solutions including F&B orders entered on tablets, are reducing head-count.  Some clubs are exploring making the golf halfway house and the tennis and pool snack shacks honor-system facilities, where losses are likely to be less than the labor costs to secure them.

On the flip side of Dylan’s ballad that promised change was a song titled “Honey, Just Allow Me One More Chance.”  A new year gives us revived opportunities – one more chance – to get ahead of change.  We better start swimmin’.

This piece was authored by GGA Partner Henry DeLozier for BoardRoom Magazine.

Key Benchmarking Standards in the Golf Industry

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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. 

Budgeting 2019

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Budgeting for 2019 requires a broader-than-usual alertness to changing times and impacts on golf-oriented businesses. Newfound elasticity on revenue sources, such as dues and fees, will allow many to plan for revenue increases. That’s the good news. More sobering is the fact that most courses and clubs will strain to cover the rapidly accelerating costs of operations.

While it’s helpful to know that costs are rising, budget planners benefit even more from understanding the factors driving cost increases. Here are five cost areas where knowledge of underlying trends and timing will lead to accurate projections.

Labor

The U.S. Department of Labor’s Employment Cost Index notes that wages and salaries for U.S. businesses increased 2.9 percent for the 12-month period ending in June 2018, following a 2.4 percent increase in June 2017. The cost of benefits rose 2.8 percent for the 12-month period ending in June 2018, after increasing 2.2 percent in June 2017. Employer costs for health benefits increased 1.6 percent for the same 12-month period.

Insurance

The costs associated with insuring golf facilities are increasing. Willis Towers Watson’s insurance industry semi-annual report (2018 Insurance Marketplace Realities) projects increases in insured categories more vulnerable to natural catastrophe impacts.

  • Property: Previous-loss history more than doubles premiums in most markets. Clubs located in markets exposed to catastrophic claims will increase as much as three times those of non-exposed clubs, while those clubs with catastrophic experience with losses may see increases from 15 to 20 percent.
  • Casualty: WTW projections indicate that rates for casualty insurance will increase less than 4 percent.
  • Auto Liability: For clubs with automobile insurance premiums, rates are expected to rise from 5 to 9 percent. Ongoing market challenges exist in this space, and two years of steady price increases have not kept pace with loss trends and adverse developments. Rates are expected to rise more steeply.
  • Cyber: Golf clubs are vulnerable to cyber-risk. The WTW study notes a 15-fold increase in two years with claims near $5 billion. Organizations without claims can forecast increase of 5 percent or less.

Healthcare

“Over the past nine years, employee out-of-pocket spending for a family of four increased 69 percent in the form of higher co-pays and higher deductibles, along with 105 percent employee premium contribution growth,” Keith Lemer, CEO of WellNet Healthcare, said in an interview with CNBC earlier this year, noting that over the same period a year earlier employer premium contributions increased 62 percent.” Lemer added, “In 2008 more than 8 percent of a family’s income was spent on health care. In 2015 (last available data) it rose to 12 percent. This means people are making less money today as a direct result of the cost of health care.”

Food

The costs of food consumed at home diverged a few years ago from the costs of food served away from home – in restaurants and clubs. The U.S. Department of Agriculture predicted grocery store price increases from 1 to 2 percent. Food consumed away from home is expected to increase from 2 to 3 percent. For menu planning purposes, be aware that beef and veal are projected to rise 2 to 3 percent, egg prices will increase 4 to 5 percent, while cereal and bakery prices will go up 3 to 4 percent. The USDA expects prices for fats, fruits and vegetables to drop.

Fuel

Large consumers of fuel and oil by-products, including golf courses, will see some relief in fuel-related costs in 2019, according to an August 2018 J.P. Morgan forecast. “While geopolitical tensions and lingering risks of large supply disruptions remain an upside risk, we think that prices will be corrected downwards towards end of the year and remain capped in 2019,” J.P. Morgan analyst Abhishek Deshpande wrote in the note reported by CNBC. This is important for golf where oil prices and those of oil by-products, including fertilizer, have direct budgetary impacts. For budgeting purposes, managers should watch oil futures. One can expect higher gas prices about six weeks after an increase in oil futures.

GGA’s Henry DeLozier penned this article for Golf Course Industry Magazine.

Is Your Club Truly Member-Centric?

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In 2017, Toymaker LEGO announced that revenues had hit a record high, rising 6 per cent to DKr37.9bn (stg£4.4bn) – the highest ever annual level recorded in its 85-year history. Profits were also higher, with operating profit up 1.7 per cent to DKr12.4bn and net profit up 2.2 per cent to DKr9.4bn.

LEGO is a remarkable success story considering that, almost 15 years ago, the company was on the brink of bankruptcy. Though it was a transformational strategy, led by CEO Jorgen Vig Knudstorp, which sparked the unprecedented turnaround in fortunes, significant emphasis was placed on the contribution that customer insights played in the turnaround.

“We never take customers’ enthusiasm for granted. We reward them by showing that we listen to and care about their feedback. I also tell customers that they fulfil another vital role: They are an avenue to the truth. And in today’s world, a CEO needs every avenue to the truth that he or she can find.”

 From my experience, the majority of club leaders stress the importance of understanding their members in order to stay relevant in today’s fast-changing external environment. So why is it that so few clubs seek to systematically listen to their members and as a result, are constantly reacting to change rather than planning for it? Why is it they are reluctant to travel this “avenue to the truth”?

To be truly member-centric, club boards must use member insights in major strategic decisions and core processes, not just member-facing ones.

Our analysis indicates that, actually, this is rarely the case. A recent global survey, undertaken by GGA, examined several hundred clubs to find which conducted annual member research. The reported benchmark range for clubs who do conduct annual member research was found to be between 10%-20%, with the norm being just 15%-16%.

Member insights provide an essential window into the change that lies ahead through their perceptions, needs, preferences, behaviours and attitudes. Gathering, tracking and applying such insights can empower a club to lead rather than react. It allows them to match strategy and implementation to their environment, and to prepare for change rather than responding to it.

In his book Good to Great (2001), management guru Jim C. Collins cites 5 elements of member-centric associations;

  1. Culture. A documented, shared understanding among all staff, embraced and touted by leadership, which defines expectations on how the association interacts with members.
  2. Metrics – Tracking, measuring and responding to data that defines success through the eyes of its members and for the organization. One of the 7 Measures of Success pillars is being data-driven.
  3. Knowledge – Belief and practices on collecting, sharing and responding to the challenges, needs and expectations of members.
  4. Technology – Planning, managing and leveraging tools (e.g., database, social media) to collect, share, and deliver information to all stakeholders in a timely manner.
  5. Segmentation – Developing profiles of and understanding specific groups, or segments, of members to deliver on their expectations and to increase retention rates.

How does your club score in relation to these member-centric qualifications? Think back on recent “leadership” or “planning” meetings you attended at your club. In how many instances did member insights, measured evidence, inform a final decision?

In the oft-quoted words of Wayne Gretzky, leaders will find deep and relevant member insights will guide a club in “skating to where the puck is going, not to where it’s been.”

Rob Hill is a Partner at GGA’s EMEA Office, based outside Dublin, Ireland.

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