People Strategy

Over time, while completing executive placements for private clubs and when reaching out to top-performing general managers, we have consistently been surprised to discover that in many scenarios there is a subjective process for performance evaluation or not one at all.

This is concerning as we often see a connection between managers who aren’t receiving feedback and managers who are being let go from their positions.

As we noted in Part I, “It’s YOUR Club … But It’s MY Life!” (BoardRoom magazine, January/February 2024), clear communication and alignment of initiatives are essential for a GM’s success.

Transparency is vital for a new GM and it is equally as important to maintain that transparency as time goes on. There should not be any blind spots for the club’s leader, and without regular feedback on performance or a system in place, there likely will be.

While some managers may be comfortable not having a specific and measurable review process, we see that top-performing clubs and their executives have formal annual goal-setting/feedback processes and meet twice annually to review these goals. These are reasons we believe managers should instigate the implementation of such practices:

• With a formal system in place, there’s no denying that the review is fair, mutually agreed upon and measurable. The system also helps avoid challenges presented by board turnover.
• Without a review, the GM doesn’t know the perceptions, priorities or preferences of others, and this creates blind spots. When the GM is made aware of blind spots, they can then work to communicate better or overcome these situations.
• In the absence of measurable goals, there is the risk that an uneducated president or board could deny a portion of the GM’s bonus simply based on their opinion(s).
• Accountability at every level is becoming mainstream in businesses today. It is only a matter of time until a board member or club president begins to question the process.
• The best GMs in the business seek feedback and strive to constantly improve. Seeking feedback is proactive. Would the GM rather the board/executive committee/club president design the review process, or would the GM like to lead that charge?
• As feedback becomes more prominent with younger generations and in business practices, allowing feedback to flow through the entire organization will become increasingly important to club success.

We recommend the GM and club president/executive committee calendarize the review process so it isn’t forgotten about. At the beginning of the year, goals should be established together, then reviewed mid-year review and at end-of-year.

Managers and presidents must understand the importance of these meetings as they create synergy and avoid disconnects in club leadership. We believe these conversations should be kept to a group no larger than the executive committee, and the criteria should be determined and agreed upon by the GM, the club president and/or the executive committee.

While some clubs base a GM’s bonus 100 percent on financials or on beating the budget, we believe that is a mistake. We also have seen bonus potential of up to 50 percent of a GM’s annual salary and some with no bonus incentive. We recommend a bonus potential equivalent to 20 percent of the GM salary and based on measurable and mutually agreed upon goals.

The GM should have some input as to what he or she is being reviewed on and by whom. Those involved in the process should be a select group of objective people who know and understand the GM and the criteria based on agreed upon areas. The most common areas include:

• Member satisfaction/Net promoter score – Must have surveying in place for one year
• Employee satisfaction/Net promoter score – Must have surveying in place for one year
• Financial management
• Membership management – Net growth/Waitlist management
• Human capital management
• Capital management
• Strategic leadership
• Building maintenance/FFE management
• Communications

We suggest integrating the five strategic pillars relevant to running a successful club into the bonus/review process and attaching key performance indicators to each of these areas to ensure clarity and measurability. For example:

Financial Sustainability (20 percent of bonus): Operating the club in a way that supports the club’s mission, maintains healthy membership levels and all operating needs as well as capital investment.

• KPIs to measure:
  • Achieve club annual budget
  • Ensure all club departments achieve their departmental budgets annually
  • Achieve/maintain 1,500 total members by yearend.

Effective Leadership (20 percent of bonus): Leading the club through transparency, effective communication and adoption of best-in-class governance practices.

• KPIs to measure:
  • Update and improve leadership onboarding to ensure a comprehensive approach, vital sharing of information and systems that will create successful outcomes
  • Design and deploy ongoing leadership development processes to ensure key staff leaders are consistently educated, developed and invested in.

Member Engagement (20 percent): Cultivate deep engagement with the membership by ensuring frequent usage, meaningful relationships and emotional connection to create passionate ambassadors who embrace an ownership mindset.

• KPIs to measure:
  • Achieve/maintain net promoter score of ___ or higher
  • Achieve/maintain previous year member usage numbers or higher.

Human Capital Management/Operational Excellence (20 percent): Building a well-trained, best-in-class, highly functioning team of professionals by actively attracting, retaining, developing and rewarding the club’s most valuable assets.

• KPIs to measure:
  • Maintain/improve team member net promoter score of ___ or higher
  • Design and deploy standard operating procedures for all front-line positions to ensure club standards are consistently met in all areas of the club
  • Establish an effective retention plan to reduce employee turnover to ___ percent or less.

Capital planning (20 percent): Capital asset planning includes equipment, machinery, amenities, buildings, infrastructure and land needs being maintained, reinvested in and replaced in appropriate time frames to ensure facilities are fresh, relevant, functional and appealing.

• Create a capital reserve study to ensure all club assets are documented
• Execute kitchen renovation on time and on budget
• Effectively enhance the employee break room based on responses from employee surveys while completing on time and on budget.

The “weight” of each item and the “weight” of each KPI should change based on the importance of each to the club and its overall goals. How heavily each is rated should be mutually agreed upon by all parties. In addition, board discretion should be used when necessary. Taking the COVID19 pandemic as an example, boards should have the ability to alter, modify or amend the payout plan in the best interest of the club in the event of unforeseen events impacting the operation.

Overall, when creating a review/bonus plan, the following questions should be answered with yes:

1. Do the goals support our strategic plan?
2. Are the goals SMART? Can we define what success looks like?
3. Does the plan reward team and individual performance – not one at the expense of the other?
4. Upon accomplishment of these goals, will our club be materially closer to our vision?

Lastly, a case can be made for incorporating 360-degree performance reviews into a club’s performance management system. When considering implementing 360-degree performance reviews, we recommend participants are mutually agreed upon and that all department heads, some board members, some committee members and some members at large are included in the process. This doesn’t necessarily need to be an annual process, as a bi-annual 360-degree performance review is sufficient.

Clear feedback, as a dynamic exchange, benefits the GM/COO, the team, the board and the club as a whole. When GM/COOs actively seek feedback and participate in goal-setting, it demonstrates their commitment to personal and professional growth.

This commitment significantly contributes to the club’s success and fosters a positive, forward-thinking organizational culture. Such a culture not only meets the expectations of younger managers but also positions the club as an attractive workplace for emerging leaders eager to contribute to their own growth and the club’s overall success.

BoardRoom – March/April 2024

Nearly two-thirds of respondents to the Outlook 2024 Pulse Survey chose workforce issues as their greatest area of concern when choosing from a list of factors that could affect their clubs in 2024 and the remainder of the decade. A separate open-ended question about the greatest challenge currently facing the club industry yielded many other responses related to staffing and the workplace, including:

“Securing appropriate staff to fulfill the demands of the new generation of members.”
“The generational shift in work attitudes.”
“Losing key staff to larger clubs with higher pay scales.”

These challenges and more will be top of mind for club leaders throughout 2024. The labor market will continue to be tight and for any club to successfully compete for top talent and retain its high performers, all these issues will need management’s full attention:

Employee well-being. Club leaders need to go beyond the traditional approach of providing basic employee needs such as a livable wage, affordable healthcare and retirement/ pension support. They must also start to take action on work/life integration (as opposed to work/life balance) by addressing management burnout with flexible work schedules, urging people to take paid time off and redefining reasonable workloads.

AI Integration. Artificial intelligence is coming, whether it’s wanted or not. So how are clubs proactively integrating AI into their hiring processes, operational efficiencies and employment policies? AI is redefining roles within club organizations along with the skills that are necessary in any position. Updating job descriptions, job postings and performance criteria to reflect this change will be important.

Human skills development. This is not a new focus, but one that is more critical than ever. Managers need to be trained on effectively leading their teams. Continuing to promote from within is great, but failing to arm new leaders with the skills they need to effectively lead their people is not so great. Shortcomings in this area not only affect a club’s ability to retain top talent, it also negatively impacts the member experience.

Securing a dedicated HR leader. Talent makes a club successful. Having a dedicated, strategic HR leader who serves as a talent strategy quarterback will provide a leadership team with a strategic partner who can create recruitment, retention, engagement and leadership development strategies that will take the member experience to the next level. Clubs that do not have a dedicated HR leader need to add one.

Digitizing the employee experience. HR technology is a critical component not only for operational efficiencies, but recruitment and retention. Members of Gen Z expect a digital experience with their employer. Paper applications, file cabinets for employee files, table tents in the employee breakroom and flyers attached to paychecks are all now a thing of the past. Integrating technology into the employee experience through enhancements such as an employee app, electronic application and onboarding processes, self-service access to time-off requests and shift changes, and online performance feedback are just a few examples of how clubs now need to evolve.

Pay transparency. States are quickly adopting laws requiring organizations to be transparent about pay rates. What does that mean? Job postings will require clubs to disclose pay rates for their positions. How people are paid matters, and if a club’s compensation rates are inconsistent with no justification, this will create not only liability from a potential discrimination standpoint, but also employee morale and retention issues. To get ahead of this issue, clubs need to document their compensation philosophy, pay ranges and performance/merit increase policies.

Blowing up the performance-review process. Traditional annual performance reviews no longer work. Top-performing organizations are moving away from the sterile, ineffective annual performance-review process to a more agile, frequent and informal feedback process. Younger generations want more regular feedback and interactions with their managers.

Club Trends – Winter 2024

Jodie J. Cunningham, SPHR, SHRM-SCP is a HR/Talent Strategist, Consultant and Search Executive with KOPPLIN KUEBLER & WALLACE. She can be reached via email: jodie@kkandw.com.

If your club is searching for a new GM/COO or another department head position, establishing a search committee is highly recommended. Creating a smooth, effective and efficient process should be the goal for any club hiring a key position. According to Kopplin, Kuebler and Wallace, the most important factor for determining success in hiring a key position is the establishment and makeup of the search committee.

A separate search committee should be formed for each key position and members should be purposefully and carefully selected for each committee. They should meet a certain criterion and possess a willingness to invest the time and energy required for the role. Sitting on a search committee is a responsibility that should not be taken lightly.

The composition of the committee should include five to seven members who represent various demographics of the club. Odd numbers are best in case of a tie and smaller committees are better because too many opinions hinder the efficiency of the process. Members selected should be frequent users and big supporters of the club. When searching for a key position such as the head golf professional for example, it would be ideal to include golfing members of all ages and abilities on the search committee.

Kopplin, Kuebler and Wallace believe the most vital element of any search committee is confidentiality. Search committee members must never reveal any information about the candidates or their current positions until it has been officially announced by the club. Even the slightest inkling to a friend who may know a candidate or someone at a candidate’s current club could jeopardize the search. Candidates’ jobs could be at stake and the club may lose good candidates or their organizational credibility through the process.

It is also vital to recognize that candidates will be observing search committee members to get a feel for the club culture and whether it aligns with their career goals. Members serving should be positive representatives who thoroughly enjoy the club. While the hiring of department heads ultimately falls under the GM/COO’s responsibilities, including members in the process helps create buy-in and consensus on the decision.

Private Club Advisor – December 2023

Contributed by Richard Kopplin, Kurt D. Kuebler, CCM & Thomas B. Wallace Ill, CCM, CCE, ECM, Partners at KOPPLIN KUEBLER & WALLACE.