Club Strategy - Governance Best Practices
In the past, sitting on the Board of a typical private club meant dealing with golf course conditioning, approving new equipment budgets, clubhouse renovations, keeping the dues and operating costs down and strategizing on who the next round of Board nominees would be. Other than the 4 to 5 hour Board meetings, the obligations were not overly demanding.
Today, the Board of Directors of a typical private club find themselves in unfamiliar territory. They are now watching the unraveling of the private club economic model that has served clubs since World War II. They are witnessing a seismic shift in the demand for private clubs, dropping in the aftermath of unprecedented growth in new, "high end" developer-subsidized private club communities. The makeup of new potential members is complex, even more complex to attract.
Club revenues are falling, expenses increasing, human resources issues growing, and the Directors' roles, responsibilities and decisions are undergoing new levels of member scrutiny. Governing private clubs has become nearly as complex as sitting on the board of a major Fortune 500 company, but without director compensation.
When crisis hits a private club, its fundamentals are rigorously and relentlessly tested. If the club has a strong underpinning, (i.e., financial resources, capital assets, governance practices, organizational structure and management), it cannot only see a crisis coming, but it would, by its very nature have already developed a strategy in advance. To achieve this, a club’s Board must be structured and disciplined in its methods and approaches. It must have the skill sets present within the Board and management and pre-positioned on member-level committees (i.e., "succession planning") to call upon for the appropriate research and recommendations on a timely basis.
The organizational structure (i.e., the Bylaws) must be well-thought out, reflect modern conditions, and have the flexibility for the Board to act to preserve and protect the club’s assets for the current and future enjoyment of its members.
Where is this new trend in governance going? More importantly, what can the current Board do to navigate the rocky shoreline that most clubs have recently found themselves cast upon. The answer might just be found in a simple concept: "Governance Best Practices."
The Club Managers Association of America (CMAA) recognized a need for a proper, fundamental approach to governance and its role to the General Manager/Chief Operating Officer. In 2003, the CMAA published the Directors Guide to Understanding Club Governance. Similarly, McKinsey & Associates recognized the same need in the Not-For-Profit community. Each developed a set of "Best Practices" for the Board of Directors to measure against. There are literally hundreds of "Best Practices." Here are a few examples:
- Common Understanding of the Club’s Mission and Vision
- Process for Strategic Planning
- Evaluating and Developing the GM/COO
- Financial Needs Assessments
- Board Transparency and Integrity
- Ability to Take Bold/Unpopular Action
- Developing Performance Metrics
- Succession Planning
- Obtaining Member Feedback and Input
- Annual Board Planning Retreat/Workshops
- Action Plan Goal-setting and Measurement
- Self-Evaluation of Board Performance
These are just a few of the areas involving a set of Governance Best Practices. Club Resources, a private club consulting firm, specializing in strategic planning, membership marketing and club governance consulting, has developed a complimentary online “Club Governance Best Practices Tool, an online board self-evaluation tool available on its website is at www.club-resources.com.
To be prepared for the challenges of today, it is critical that club Boards become organized, focus on strategy and monitor operations, and develop a long-term, fundamental and systematic approach to governing the club that is guided by industry "Best Practices."
Bob Bodman is the Principal of Club Resources, a club consulting firm specializing in membership marketing and sales solutions and club strategic planning. Contact: Bob@ClubResources.com