Tag: policies

Mid-Year Predictions for the Second Half of 2021

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At the start of the new year and in the spirit of planning, the thought leaders at GGA Partners sat down to predict what we believed to be coming throughout the year and shared our 2021 Predictions on the Shape of the Next Normal. Now, halfway through 2021 with the spring season in the books and summer underway, we reconvened GGA leaders for a mid-year check-in on predictions for the latter half of the year.

1. Ensuring fair and equitable access to amenities remains top of mind, especially on the golf course

A trending topic throughout the industry is golf’s demand surge and how long it will sustain, much has been written on this point and those who are closely watching rounds played metrics anticipate a clearer reading by the end of the summer.

Stephen Johnston, GGA’s founding partner, expects that private clubs will see the surge continue to elevate rounds played by members which will likely increase issues relating to compaction of tee traffic and accessibility.  He predicts the benchmark regarding average number of rounds per member to be higher by approximately 10% following the pandemic and also increased golf course utilization by members’ spouses and family members.  Both factors will create a greater demand for tee times at private clubs.

Johnston believes some clubs may need to consider permitting round play by fivesomes instead of foursomes, potentially catalyzing logistical challenges such as a greater need for single-rider power carts in order to maintain speed of play at the same rate as foursomes with all players using power carts. For club managers and course operators, this entails an increased need for current and detailed evaluation of the benefits of membership and the relationship between playing privileges and the practical ability to book a tee time and get on-course.

2. Effective demand management is key and will shift from agile, flexible approaches to new operating standards as demand stabilizes

During the pandemic and throughout 2020, many golf, club, and leisure businesses recognized the increased need to more accurately and routinely measure the utilization of amenities, adapting operations management to react quickly to change.

Craig Johnston, head of GGA’s transaction advisory practice, anticipates an evolution in this one-day-at-a-time, agile monitoring approach into a new and more formalized standard of operating procedures.  “At the start of 2021, we said we would see clubs provide flexibility and experiment with various operational changes,” he explained.  “With the pandemic feeling like it’s steadily moving toward the rear-view mirror, members will be expecting clubs to begin instituting the ‘new normal’ operations and the data compiled by clubs in the first half of the year will be critical to deciding on the new normal.”

Johnston believes that membership demand will continue to be strong through the second half of the year and that it is likely utilization will reduce marginally as members begin travelling again for work and social obligations.  Even with a marginal reduction in utilization, demand for private club services will remain strong and will continue to put pressure on capacity and access in most clubs.

Senior Partner Henry DeLozier encourages club and facility operators to embrace short-term continuations of high demand while keeping an eye on the future and the non-zero probability of a demand shift in the coming years.  “Clubs must create pathways to sustain demand while navigating utilization volume.  It is unwise to place hard or irreversible limitations on capacity while clubs are at historic maximums for demand and usage,” cautioned DeLozier. “Clubs will do well to establish a clear understanding of demand and utilization to enable innovative programs which serve to fill periods of low demand in the future.”

3. Ongoing uncertainty about the pandemic’s long-term impact on club finances will increase the review and reevaluation of club financial projections to ensure sustained budget flexibility

While data regarding utilization, participation, and engagement throughout the summer months continues to be captured and consolidated, business leaders should not delay their financial planning and instead get to work on reevaluating finances and updating their future forecasts.

“Now is the time to review, evaluate, and reset club debt levels,” emphasized Henry DeLozier. “Clubs need to recast financial projections based upon elevated joining/initiation fees arising from high demand.”

In support of alacrity in financial planning, DeLozier notes that labor shortages spurred by the pandemic will increase payroll-related costs at a material level. He also predicts that comprehensive risk review is needed at most clubs to evaluate possible impacts arising from cyber-crime and/or declining club revenues during 2022.

Beyond internal shake-ups in utilization or operations, club leaders should be anticipating external impacts that could impact their financial plans.  A hypothetical example raised by DeLozier is if the U.S. economy were to become more inflationary.  In such a circumstance he believes clubs would see an increase in the costs of labor and supplies which would necessitate increases in member dues and fees, a deceleration of new-member enrollments as consumer confidence dips, and a slight slow-down in housing demand.

Right now, uncertainty remains with respect to the virus as well as the resulting economic impact from the pandemic. From a financial standpoint, clubs will do well to advance their forward planning while retaining budget elasticity.  “It will be imperative for clubs and boards to build flexibility into their budgets and agility into their operations,” added Craig Johnston.

4. Existing governance practices, policies, and procedures will be revisited, refurbished, and reinvigorated

A litany of new ways of operating and governing the club arose as a result of the pandemic, some of which suggest an efficacy that can be sustained in a post-pandemic environment.  Essential to assimilating these adaptions into new standards of procedure is a review of existing governance practices and the documentation which supports them.

“At a time when boards can measure the full range of financial performance metrics, updating club governing documents is a primary board responsibility,” noted Henry DeLozier.  “Board room succession planning must be formalized to prepare clubs for the inevitable downturn from record high utilization.”

In considering the nearly overnight adoption of technology tools to enable remote meetings and board-level deliberations, partner Michael Gregory noted a substantial increase in the use of technology tools that go beyond virtual Zoom meetings.  “The pandemic has allowed clubs to test online voting,” he explained.  “For many clubs, once things return to normal, their bylaws won’t allow for the continued execution of online voting unless they make changes.”

“We have seen the adoption and implementation of online voting to be a huge success for the clubs who have tried it for the first time,” said Gregory. “Members love it, it’s easy, it’s convenient, it leads to higher participation from the membership, and many clubs are in the process of changing their governing documents to allow for online voting as a result.”  The challenges and opportunities of employing online voting are detailed in our piece on taking club elections digital, which features a downloadable resource that can be shared among club boards.

5. In human resources, expect to see deeper reevaluations of compensation structures and employee value propositions

Weighing in from across the pond, Rob Hill, partner and managing director of GGA’s EMEA office in Dublin, predicts that club leaders will face bigger challenges in human resources throughout the remainder of 2021.

The first of three particular items he called out is a reevaluation of compensation.  “Making decisions about employee pay is among the biggest challenges facing club leaders in the wake of the coronavirus shutdown,” stated Hill. “As they begin compensation planning for the rest of the year and into 2022, these leaders not only have to consider pay levels, but also the suitability of their mission and operating model to thrive in a post-pandemic world.”

Citing his recent experiences in the European market, Hill shared that club leaders are challenged with finding new ways to operate smarter and more efficiently, while also looking for innovative ways to implement sturdy, low-cost solutions that their employees will love.  Which leads to his second point, that there will be a renewed emphasis on what employees love and how clubs, as employers, can provide an enhanced value proposition for their employees.

“As employees get back to work onsite, employers are finding that what their people value from the employment relationship has changed,” Hill explained.  “Where pay has been viewed as largely transactional in the past, clubs may need to provide new types of benefits, especially programs that provide more flexibility, financial security, and empowerment to retain and motivate their people.”

Lastly, there is likely to be considerable movement of talent over the coming year brought on by employees’ new work-life ambitions and financial imperatives, said Hill, “As demand for their skills and experience grows, the very best talent will seek out employers that demonstrate they view employees not as costs but as assets and reflect this in their approach to compensation.”

Recalling our start-of-year prediction that the movement of people and relocation of companies will reshape markets, partner Craig Johnston added, “The relocation of people continues to be a prominent trend and one that is likely to continue in the second half of the year.”  For club employers, it’s not just the changing physical locations which impact the cost and supply of labor, but also the expectations of employees as they seek out competitive new roles and work experiences.

6. The repurposing and reimagining of club facilities, amenities, and member-use areas will continue

The pandemic pushed to the fore the need for clubs to adapt their facilities to match changes in the ways members use and enjoy their clubs.  A combination of practical evolutions for health and safety and circumstantial evolutions drawn from widespread ability for members to work remotely created increased desire for clubs to offer more casual outdoor dining options and spaces to enable members to conduct work while at the club.

Partner Stephen Johnston believes these sentiments will continue to near-term facility improvements at clubs.  “With more flexibility in the workplace and members working from home periodically, there will be a need at the club for members to do work or take calls before their tee time or their lunch date,” he said.  “It has been evident for some time that members generally prefer to enjoy outdoor dining and since, throughout the pandemic, it has become apparent that guests draw greater comfort in outdoor experiences, I see a greater demand for outside patio and food and beverage service.”

As society begins to reopen and communities begin to stabilize, time can only tell precisely how clubs will continue to evolve their operations, whether that be scaling back pandemic-relevant operations or doubling-down on new services and efficiencies.  Evident in our work with clients are significant efforts to reorganize club leaders, reevaluate operations, and retool plans for a successful future in the new normal.  Here are a few highlights of efforts clubs are making for the next normal:

 

  • Reinvigoration of governance processes and engagement of leaders to ensure alignment between boards and club strategic plans.
  • Renewed surveying of members to keep a pulse on how sentiments have changed from pre-pandemic, during pandemic, and currently as communities stabilize.
  • Enhanced adoption and application of electronic voting as clubs reevaluate membership structures, governing documents, and operating policies amidst “displaced” members.
  • Reconfiguring of budgets, capital plans, and long-range financial models.
  • Refinement and advancement of membership marketing strategies, tactics, and materials.
  • Tightening relationships between facility planning, capital improvements, and member communications campaigns.

Turning Insights Into Action

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GGA Insights exists to support you as a club leader, offering you solutions, tools, and tactics today that can help you improve your work life tomorrow.  But putting change into practice can be a challenging endeavor. GGA Director, George Pinches, offers a road map for translating genuine insights and data into meaningful boardroom action.

Most private clubs are like cruise ships; they do change direction, but very slowly. They are often steeped in tradition, and while this is a powerful asset, it can also hold clubs back.

In reality, clubs need agility if they are to respond and adapt to the fast-evolving demands of changing markets, new technology and generations of new members.

But don’t lose hope; with more data available to us than ever, there is reason for optimism.

Data can clarify the changes that need to be made, shape the direction of travel, and safeguard clubs from the obstacles and pitfalls they may otherwise run into.

But the truth is, before data can be put into such effective practice, many clubs and boards require a cultural shift to recognize the value of it.

Commitment first

When my GGA colleague, Fred Laughlin, first introduced the Club Governance Model, he stressed the importance of obtaining a board commitment before undertaking transition.

This is because research demonstrates it usually takes three administrations for significant changes to be fully adopted by a club board.

In order to move away from what we typically see – decisions based on anecdotal evidence rather than genuine insights and hard facts – this is the process to follow: commitment first, then change follows.

For you, obtaining commitment from your board and committees means convincing them that the use of data-driven decision making is mutually beneficial.

Once your board members start asking “What are the facts? Do you have comparable data or industry benchmarks to support this recommendation?”, then your club will be on track to a brighter future based on genuine insights.

Shifting the dial

It’s clear that clubs can no longer rely on decisions based on institutional memory and personal opinion. But how do you (in practical terms) achieve such long-lasting change?

When it comes to shifting the culture, timing is key.

One of the best opportunities to start a culture shift is at the beginning of a new tenure. This tends to be a ‘honeymoon period’ for the new GM or COO, when support and expectations are running high.

Take the opportunity to assess the culture and seek ways to introduce change: commitment first, change to follow. If your board has an annual board retreat, this can be an opportune time to take action.

Beyond that, I’d recommend focusing on these three key areas to encourage a sustainable culture shift towards a data-driven future:

  1. Board recruitment and development – The nominating committee can add “an aptitude or understanding of data-driven decision making” to the list of attributes when recruiting nominees for the board. The GM/COO can use the same criteria when filling senior management positions.
  2. Board policy – Alterations to the Board Policy Manual (BPM) can ensure that the decision-making policy stipulates the required data, back-up information, and consultation necessary to support a recommendation. Proponents, be they committee or management, soon learn what is expected by the board before considering an initiative or making a decision.
  3. Education – Club industry resources that extol the virtues of data-driven decision making can be shared during board and committee orientation to support the culture shift away from anecdotal to fact-based practices.

Finding ‘your’ way

Process and structure will help, but a true shift in culture can only be achieved through intelligent and thoughtful execution. In some cases, this means finding the unique tactics which work best for you and your Board.

‘Shifting culture’ will not appear in many job descriptions of club leaders. But, for a lot of clubs it should be at the very top. It holds the key to disrupting what can be a perennial cycle of decisions based on what those in power ‘think’ is right.

My advice: think long-term (beyond 5 years), actively gain the buy-in and commitment of board members, and put a structure and process in place to ensure data and intelligence are at the heart of how your Club operates.

2018 Club Governance Model Executive Summary

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The Club Governance Model (Model), which was developed in 2007 and updated in 2018, is built upon accepted principles and best practices in nonprofit governance. Although this Model is directed primarily toward member-owned clubs, the principles embodied in the Model are no less applicable to clubs with a different ownership structure. The primary purpose of the Model is to optimize the most fundamental quality of a governance system – the smooth flow of authority from the club owners to the club staff and the corresponding flow of accountability from the staff back to the club owners. The Model, as shown in the flow chart below, is simply a set of principles designed to keep communications throughout the organization clear and the roles of key participants unambiguous.

The extent of the changes required of a club to implement the Model will depend on the governance system that it presently employs. However, the ease of implementing the Model will depend less on the number and extent of changes needed and more on the commitment of the club’s leaders, namely, the President, the Club General Manager/Chief Operating Officer (GM/COO), and the Board members. A club that is considering the Model for its governance structure and processes must not only assess the necessary steps in moving to the Model, but it must also measure the resolve of its leaders to follow through on the implementation. The caution to be followed here is “don’t start the process unless you have the commitment to finish it.”

Implementing the Model will usually involve amending the bylaws, although the changes recommended are usually straightforward and non-disruptive. The implementation step that will call on the greatest effort, and therefore commitment, is the development and eventual employment of a Board Policies Manual (BPM). From the time that the Board approves the initial version of its BPM, this important document can serve as a governance management system that provides a clear-cut path to success. As with any good system that is utilized on an on-going basis, the BPM will be continually modified and refined to respond to a changing environment. As the Board rely more and more on the BPM to be its single and clear voice, it will reinforce the underlying principles of the Model and allow the club to accrue the substantial benefits of an efficient and effective system of governance.

Overarching – From a high-level perspective, boards are meant to only serve a strategic role whereby their main function is safeguarding assets and evaluating and developing long-term strategic options. The role of management is to operate the club, while committees are meant to only serve an advisory function, with no authoritative or executive powers.

Board Members – Board members are, of course, club members. As such, they are customers, and volunteers. Board members are also trustees or governors in that they are elected to govern the affairs of the club subject to limitations that may be set out in the bylaws. But Board members have the authority to govern (i.e., are “governors”) only when they are taking part in an official Board meeting. Even though Board members are often active in committee meetings or efforts to assist the GM and his or her staff, when Board members are not in an official Board meeting, they are serving as volunteers and not governors.

Club Officers – Club officers, typically the President, Vice-President, Secretary, and Treasurer, are normally Board members with special responsibilities in addition to their duties as Board members. They are usually elected by the Board and subject to the Board’s authority and direction. As such, they have the authority only when it is granted by the bylaws or the Board. This means that the President does not represent a separate level of authority and does not supervise the GM except as specifically authorized to do so in the Board Policies Manual. The President is almost always the Chair of the Board and is responsible for maintaining the integrity of the governance structure and related processes. He or she normally is the chief representative of the members and the spokesperson for the Board. As Chair of the Board, he or she sets the agenda of Board meetings and ensures that the Board stays at an appropriate level with its thinking, discussions, and policy development. The President is often an ex officio member of all committees. Therefore, he can serve both in a coordinating role among the Board Committees and in a leadership role in keeping them focused on their respective scopes of responsibility. The duties of other officers are not discussed here because they have less to do with the governance structure and processes.

Committees – As shown in Exhibit I, the Model contains two types of committees. The Board Committees support the Board in Board-level functions (e.g., Governance, Finance, and Programs) while the Operations Committees (e.g., Golf Committee, Green Committee, Tennis Committee, Food & Beverage) support the GM. Board Committees study issues and recommend policies that support decisions at the Board or strategic levels. Operations Committees serve the GM by offering critical member (customer) input and in sharing the workload by helping with events and activities. As critical as the committees are in supporting both the Board and GM, they serve in an advisory capacity, not from a position of authority.

General Manager – The GM is the single agent of the Board with responsibility to carry out the purpose of the club within the policy boundaries set by the Board. Therefore, he or she has operational authority to employ and allocate the resources of the club to serve its members so long as he stays within the boundaries set by the Board in the Board Policies Manual.

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This article was authored by George Pinches, a Director at Global Golf Advisors, who specializes in Club Governance. Reach him at gpinches@globalgolfadvisors.com.

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