General Manager’s Perspective

collaboration_square.jpgThe private club industry in the United States has been a work in progress for more than 200 years. Clubs are deeply grounded in history and tradition, which may help to explain why the pace of change tends to be slower than in other industries. The evolution of clubs over the last few decades is apparent in areas such as social and culinary trends, but not as easy to recognize on the business side of things, so we turned to a veteran club management professional to get his perspective.

EXECUTIVE PROFILE:
Jim Butler, CCM, PGA
President & General Manager
Grey Oaks Country Club, Naples, FL

As a college student in 1985, Jim Butler took his first club job as a seasonal employee at The Forest Country Club in Fort Myers, FL. Three decades later, he’s moved through the ranks and navigated some significant challenges along the way: golf course and clubhouse renovations, new golf course construction, a transition from developer to member ownership. He currently manages Grey Oaks Country Club in Naples, FL and its two related property associations. In addition to learning the club management ropes from the bottom up, Butler holds an undergraduate degree in chemistry and a MBA in real estate development and finance.

Q: Over your 30-year career, what changes have you seen in the world of club management?

A: I’d say education and research – those areas have advanced since I started in the club business. Today, the education is available to help managers operate the business enterprise and we understand the business from a holistic point of view as opposed to a silo-view. 

Q: Your degrees are in chemistry, real estate development and finance. How does that translate to your career in club management?

A: I enjoy digging into things to understand how they work and that’s been my approach to the club business. Data and research have always been extremely important to me and that’s particularly true at this club. The leadership, meaning the original owners and my board members, are all very smart, business-oriented people. So are the members. They expect to have fact-based discussions about the club, just as they do in their own business environments. As a manager, I have a vested interest in making sure they get the right kind of data – it needs to be relevant to whatever it is we’re working on. I’ve found that when we incorporate data into the decision-making process, it’s easier to maintain a strategic focus and that moves the club forward.

Q: What kind of information is important to you and your board?

A: We rely on all kinds of research. We use the club’s internal financial and operational data as well as a variety of regional and national market research and club industry data. That information definitely wasn’t as accessible early in my career as it is now. What has been done in the club industry in terms of research over the last decade or so has really been transformative. Groups like McMahon, RSM, Club Benchmarking, and Global Golf Advisors have all played a role in progressing the industry to catch up with the rest of the business world.

Q: In your opinion, what have those groups done to move the industry forward?

A: In terms of having an impact, I’d say each group has brought something game-changing to the table. RSM was really the first to do club-on-club analysis by region and club size. They are an audit partner for a lot of clubs in the Florida chapter and their annual trend reports are highly regarded. It’s a comparison on prior year and year-over-year data that we all use and refer to. The Florida chapter considers them an important part of the local industry.

McMahon Group has broadened their approach to include lifestyle and strategic management and research is a key component of that effort. They’ve been working with research scientists like Dr. Jim Fisher for more than 20 years. When you can take a scientific data-driven approach to something as critical as a facility improvement plan, that’s powerful. Clubs are able to make informed decisions with the data. It’s much harder for emotions and politics to get in the way and derail the process.

Club Benchmarking has introduced a level of sophistication in the way we think about our clubs by framing a business model for the industry and bringing it to my desktop. I can access the analytics easily and I use them on a daily basis. My board and I can dig in and really study our business now and being able to filter our comparison sets allows us to look at it from a variety of different angles.

CB also created a level of education that helps managers who maybe don’t have a background in accounting or finance discuss core concepts with their boards. When a question about something like golf course labor expense can be answered with data, it takes emotion out of the discussion. I know my board appreciates the use of key performance indicators that include standard strategic business terms like gross profit and gross margin. That by itself has been one of the most significant changes I’ve seen.

Global Golf Advisors is focused on the industry at a global level and they recognize the need for the private club sector to think outside traditional boundaries. Henry DeLozier is a tremendous advocate for and teacher of strategic management with an emphasis on utilization of data and research. The fact that we’re seeing those concepts taught at the entry level, as young managers start learning about club finance and eventually working toward their certification is certainly a positive shift.

Q: Where do you think all of this is headed?

A: It’s the private club industry, so maybe change doesn’t always happen as quickly as we’d like it to, but it is happening. We’ve made a lot of progress just in the last decade. Boards and managers are already starting to come together around these business concepts in a way that benefits their clubs and that’s going to improve the overall health and stability of the industry.  

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There's a better way to get the information you need...

Apples-and-Oranges

Club general managers and controllers seek information on a regular basis. Frequently, the scenario is a board or committee member asking the manager to reach out to his or her industry peers for information about their dues, member counts, course maintenance expenses, etc. Unfortunately, without context, the numbers being shared don't really mean much. For example, another club's dues number is meaningless without the context of other factors such as number of members, operating expenses, etc. Club Benchmarking uses credible comprehensive data to measure and compare key financial and operational metrics and provide context relative to the club itself and to the industry as a whole.

The Origin
Going back to its roots, “benchmarking” was a term used mostly by land surveyors who relied on one fixed point—a benchmark—to serve as a reference point from which all their other measurements were made. The word made its way into corporate vocabularies in the early 80s when an increasingly competitive global market left companies like Xerox, Ford, AT&T and Motorola desperate for customers and struggling for survival. As an example, Xerox lost 69% of its marketshare between 1974 and 1984 and the company’s profits dropped from $1.15 billion to $260 million between 1980 and 1984. While the numbers are significantly larger, there are obvious parallels between those circumstances and the economic challenges currently being faced by many in the club industry.

As they went to battle to save their companies, those companies were among the first to adopt the word “benchmarking" to describe the practice of systematically studying their own business performance relative to their peers and competition. The goal of benchmarking, then as now, was to gain actionable information in order to improve financial and operational performance. In the club industry, Implementation of formal benchmarking through CB is producing some interesting results.

The Difference
In Best Practices for Benchmarking, business author David Stauffer warns that those who benchmark “must be careful to analyze the best practices of others in light of their own culture and circumstances, or they may find that their efforts do more harm than good.” In the club industry, dues are a classic example of the dangers of data without context.  We know that dues are essentially a two cylinder engine: how many members a club has; how much each member pays. That engine must be balanced with the actual financial needs of the club, so there is no value in understanding only one cylinder and having little understanding of the needs side of the equation. In informal data sharing, questions like ”What are your dues?, Are your dues going up this year? How much did your dues go up last year?” may elicit a response, but the reality is, without additional detail and proper context, the answers to those questions do not provide a sound basis for deciding whether one's own dues level is appropriate.

To be effective, benchmarking must be both a comparative process and an investigative process where anomalies revealed by comparisons are explored and data is analyzed and put into proper context. Simply put, knowing whether your result in a particular area is lower or higher or even the same as another club without understanding why your results differ is not enough. Club Benchmarking gives you the reliable, actionable information you need to make the right decision for your club.

 

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woman paperwork frustrated 300Three Good Reasons to Rethink Data-Sharing in the Club Industry

One of the most remarkable things about club industry professionals is their willingness to share ideas and information. Unlike many other industries, when a fellow club manager is in need of information, camaraderie almost always trumps competition. Networking and conversational exchanges are an important part of that friendly culture, but another very common practice – informal data-sharing in the form of spreadsheet surveys circulated via email and telephone round-robins – is problematic for a number of reasons you may not have considered:

1) Time is Money

Take a minute to think about how much time you and/or your controller have spent over the last 12 months responding to information requests from your local and national industry peers including fellow chapter members. Many club managers have told us that over the course of a typical year they get at least a dozen emails or phone calls with questions like “how much did your dues go up last year?” “What’s the starting age for your senior membership category?” or “How much are you charging for a martini?”

One of the primary drivers behind CMAA’s annual survey effort is to develop a robust centralized database via the Club Benchmarking platform so that any time you or a colleague need information, it’s right there waiting for you. The answers to the three questions above plus hundreds of others are readily available in the CB database.  As a CMAA Chapter member, you can save time by entering your information one time, in one location, as soon as you’ve finished your year-end closing. Then the next time a question comes your way, remind the interested party that they can find what they’re looking for in the Club Benchmarking database and CMAA’s Club Industry Reports.
Club Benchmarking Member List

2) The Right Stuff

The obvious motivation behind informal data-sharing is a desire for information, but if that information is going to be put to use for the benefit of one’s club, it needs to be credible, reliable and actionable. The right data can help you make a critical decision, validate current management performance, or modify a course of action. The problem with informal surveys is that the end product is often not much more than a stack of numbers in an excel spreadsheet. Whether or not those numbers are accurate depends on how comfortable respondents felt participating in such a public exchange of information, and sample groups are often too small and incongruous to produce any conclusive information. Without proper analysis and the additional information necessary to put the findings in context, there is really no way to safely apply or take action on the information at your own club.

CMAA made a decision in 2010 to adopt Club Benchmarking as the platform for the Association’s annual surveys and endorse it as a reliable resource for CMAA members based on CB’s ability to gather, analyze, and interpret comprehensive, actionable industry intelligence.

3) Law and Order

The most overlooked pitfall of informal data-sharing is the lack of anonymity. In addition to the fact that open exchanges may compromise the quality of the information gathered as mentioned above, it is important to note that sharing data in a non-aggregated format where the source is easily identifiable is prohibited by Federal Trade Commission Antitrust regulations. The Club Benchmarking platform and reporting functions are designed to provide complete anonymity for survey participants, and built-in safeguards in the filtering tools ensure that sample group sizes comply with FTC regulations.

As a Chapter member, making strong local and national participation in the CMAA annual surveys a priority is a win-win; for your club, for your Chapter and for the club industry as a whole. 

 

 

 

 

 

 

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