Cracking the Code on Club Management Turnover
A White Paper by Harvey & Mark Weiner
Partners of Search
Less than a year had passed and the club’s new GM/COO was already circulating an updated resume. Unusual? Unfortunately, no. The crisis of club management turnover continues to be distressing. Each and every day dozens - perhaps hundreds - of club managers send their unsolicited credentials to search firms and prospective employers hoping to secure their next job, though many have been employed less than a year at their present club. U.S. businesses reportedly spend over $200 billion annually recruiting and replacing their employees. The toll of high management turnover, on a private club, so far exceeds the financial impact that it may, indeed, affect the club’s very viability. Club managers typically change jobs about three times more often than club managers recruited through the proprietary Search America process. Why is that? After almost four decades of representing boards of directors of private and proprietary clubs worldwide we believe we have cracked the code.
Experience has shown that truncated club management tenure is often attributable to a variety of factors, both internal and external, yet by and large within the control of both manager and club leadership.
INTERNAL ISSUES CONTRIBUTING TO MANAGEMENT TURNOVER INCLUDE:
EXTERNAL ISSUES CONTRIBUTING TO MANAGEMENT TURNOVER TYPICALLY INCLUDE:
Further, clubs have been known to employ a manager to simply get them over a current need, perhaps a major renovation, staff restructuring, cost cutting, or an equity conversion, all of which, once completed generally require that this manager seek alternative employment.
We have also found it all too common that club directors and search committee members rely on intuition, or a gut feel, when selecting the manager to run their club, a practice they’d surely resist in their own business or practice. Why do so many club directors, otherwise successful in their own fields, permit themselves to be swayed by wishful thinking and a candidate’s personality rather than the candidate’s track record?
Managers can actually have a psychological predisposition for more frequent job change – and this may be predictable. There is no doubt that job-hoppers follow a pattern and are more likely to be short-lived at their next job than the candidate with a stable background. Mental health professionals believe that personality may be predictive of voluntary separation. When a manager says, “I got myself fired” that may be more accurate than s/he realizes.
We estimate that executive management turnover can cost a club well in excess of twice the manager’s compensation in lost revenue, diminished productivity, related rank-and-file turnover and recruitment and relocation costs. Add to that the insecurity and the sacrifice of project continuity faced by both staff and membership and you’ve got a recipe for long term damage to your club. In short, turnover, or “Club Management Churn” is a complicated issue deserving of more attention than is typically devoted. The tangible and intangible costs related to recruiting, hiring, training and retaining private club executive management should be enough to cause a groundswell of concern and action.
“CLUB MANAGEMENT CHURN”
The manager must be aware of his/her relevance to the success of the club in order to feel valued and secure. It has been said “I don’t care how much you know. Just let me know how much you care”. A manager is more likely to stick around and care about the club and its Members if the manager feels appreciated and their efforts are recognized by the club’s Board of Directors.
Since 1974 we have benchmarked and examined club management performance and turnover trends, board/management interaction, management/staff relations, evidence of management discontent and the resultant associated costs to the clubs. We attempt to predict which clubs may be at greatest risk of executive turnover, and identify those which might benefit from our intervention with a variety of proprietary, club-industry-specific best practices tools, including Board of Directors orientation, upgrading interview and intake procedures, the candidate/club culture matching process, job enrichment, performance evaluation methods, skills development, confidence building, interpersonal issues, and communications assistance. Our studies indicate that a startling number of clubs have no procedure in place for either evaluating executive management performance or for effectively communicating goals, objectives and mutual expectations. These same clubs frequently lack a strategic plan, a mission statement, a capital reserve plan, or a clearly defined leadership vision for their club. Further, the top executives of many of those same clubs themselves have no mechanism for evaluating their subordinate personnel, for succession planning or for assisting the Board in their decision-making. They neither manage down nor train up – two vital characteristics of competent club executive leadership. (Boards of those same clubs often need us to design a process by which they can self-evaluate their performance as directors.)
PATTERNS – FOLLOW THE SCT (SCORE, CHANGE, TREND)
Studies have found that the club manager’s most recent performance score, the most recent performance change, and the general trend of an individual's performance over several evaluation periods can all help predict turnover. Extrapolating from this data we documented a pattern among what we define as high-risk individuals. Diminished self-confidence over time, manifestations of insecurity, low self-esteem, defensiveness, isolation and insulation from others are all characteristics typical of those most at-risk of short-termers syndrome. Those who are managed by exception often state, “I only hear from the directors when something is wrong”. These managers will not remain employed at that club much longer. Ironically, these same senior club managers are usually just as guilty of management by exception and contribute to disproportionate turnover among their subordinates.
Curiously, even among those clubs that do routinely conduct on-the-job management performance reviews, few use data accumulated over time to help predict and more effectively manage those whom they’ve evaluated. Analyzing performance trends is useful not just as a tool to address turnover but can aid in identifying those capable of top performance: those potentially valuable to the club but who may have had flat or declining performance appraisals and are therefore at greater risk for turnover. By examining only current performance scores, these potential stars may appear as average (or even slightly above average) performers; the trend may, however, reveal a likelihood that they will soon leave. Once identified, remedial attention can be paid by focusing on education, networking, compensation adjustment, or other environmental modifications. This may help a club retain an otherwise dedicated manager who has historically performed well, may be beloved by many Members and staff, and remembers events and issues better than directors who themselves, per club bylaws, must turn over every few years. Inaction will inevitably result in the loss of an otherwise retrievable, important and potentially productive manager.
Sadly, many clubs prematurely launch their search for a new manager without first addressing the underlying cause of prior turnover. These clubs face both the recurring expense and the likelihood that they will attract candidates who look great on paper but prove to be no more suitable than the incumbent –who, you will remember, also used to look pretty good.
We have concluded that club management turnover, more than anything, can be most positively influenced by routinely communicating mutual expectations, treating people with dignity and providing them with the tools needed for success. Sounds simple, but deep-rooted practices of egregious behavior, by both private club management and club directors, will not be altered without timely and effective intervention.
SUCCESSFUL CLUBS VALUE CONTENTED MANAGEMENT
Successful clubs recognize that management retention is integral to sustained dominance and continued growth in their market. Becoming an Employer of Choice by retaining high-producing employees in today's labor market should be uppermost on the Board’s agenda and is dependant, to a great extent, on stability in the club’s most senior management position.
You are more apt to bring guests and professional associates to your club if you can confidently anticipate a predictable experience. A contented club manager generally surrounds him/herself with a cheerful team which, in turn, tends to treat Members accordingly. Happy Members tend to remain Members. Club directors dislike Member turnover more than they loathe management turnover. Consequently, securing staff loyalty through reduced club management churn can dramatically reduce team turnover, while improving Member satisfaction and the club’s financial performance. When you visit your club and are recognized by the same server year after year, you feel more at ease, more secure. Reduced management turnover contributes to the overall Member experience, lower membership attrition, and the club’s bottom line.
TIES THAT BIND US TO A COMMUNITY
Multiple links can tie a manager to a club. Let’s examine together how solidly your club’s manager is involved in the job and community. What might the manager sacrifice by moving on?
Perhaps spelunking is his/her thing and the best caves are right here. Will a headhunter be successful in pitching Kansas to a mountain-climbing enthusiast or The Rockies to someone whose spouse can’t tolerate high altitude? Clubs in need of a new manager should evaluate prospective candidate emotional and practical ties to the community in which they now live and work. Once the position is accepted will the new manager be likely to put down roots, buy a home, affiliate with a place of worship, sign up his/her kids for scouting and other youth activities? In other words, you must ask yourselves, “What are the binding ties which increase the likelihood that this manager will stay awhile?”
UNDERSTANDING INTERVIEW DYNAMICS
A job interview is a two way street. The club’s Board of Directors may be meeting a candidate for the first time but the candidate has probably not yet experienced the club’s or the community’s culture. Each is evaluating the other and exaggerating their assets while minimizing their weaknesses, and simultaneously buying and selling. The ultimate cost of deceiving each other into this marriage and then, soon thereafter, parting ways once each realizes they’ve been duped, is far greater than keeping the job open until the right match is possible. Why risk lost productivity, sacrificed board credibility, and Member dissatisfaction? Search America’s client club partners know that the firm’s proprietary process effectively addresses these issues. General Managers and Chief Operating Officers recruited through the firm’s time-proven method remain at their new club about three times longer than the industry average. Let’s explore the reasons why.
MANAGER CHURN IS COSTLY TO THE CLUB
High club management turnover would appear to indicate that many individuals must begin looking for the next job as soon as they start on a new one. It can take no more than a few months for the new manager to understand enough about the club to be able to update his/her resume with accurate information. Then the manager may need a couple more months just to reconnect with contacts. It has been shown to take approximately one month for every ten thousand dollars of compensation to find a new job. If unemployed though, you can multiply this by 150%. Done the math? How productive is this short-termer going to be while concentrating on finding the next job? Therefore, if at any given time, a large percentage of club managers are at least thinking about their next move, many club managers have already emotionally left their club. Proactively addressing retention reduces management churn.
WHY CAN’T CLUB MANAGERS KEEP THEIR JOBS?
How does one define the relationship between the club’s manager and Members of the club? The manager is generally expected to be the primary business person in the club, the go-to person for everything dealing with the day to day issues of running a multimillion dollar business. Many clubs have moved, at least in name, to the Chief Operating Officer concept, whereby all departments, including clubhouse, golf, grounds, pool, fitness, tennis, accounting, etc. report to the COO. But just try disciplining the veteran (read tenured) golf pro or green superintendent and you quickly learn the limitations of your authority. Every GM/COO is a hybrid based on the realities and relationships established over time at each club. The fact is that the club manager, vested with full responsibility, but limited authority, will inevitably be the lightning rod when problems occur.
The real power in a club typically resides in a small group of Members who may have long-term, established relationships with certain employees. In any club that has been around more than 24 hours, those few can and do influence the many, if they are the right few. These power-brokers are usually not on the Board of Directors but wield the authority of family ties, markers, church, golf, and business links. Debts will be paid one way or another. The astute club manager ignores this truth at his/her peril. Longevity is all about acknowledging who, in the club, possesses the real power.
Look, for a moment, at the demographics of your club. Who are the quietly powerful, influential Members? They are usually the credible business and professional leaders of the community, high (or just higher) net worth individuals, accustomed to being attended to and graciously served. They are decisive and trust in their ability to make sound decisions. They may resent having to devote time to issues they thought were entrusted to a professional. The question may not be what is best for the club but who has the authority to define “best”. The majority of Members, even directors, will, as a rule, defer to the one or two strongest personalities for reasons which may, superficially, appear to defy logic. The astute club manager quickly identifies these individuals, wins their allegiance, builds support for the authority vested in the manager while avoiding any direct challenge to their customary, albeit unofficial, powers.
CRACKING THE CODE ON CLUB MANAGEMENT TURNOVER
Directors of private clubs seldom appreciate the cumulative price tag of club management turnover and consequently under-attend to reducing it on their watch, preferring to pass it on to their successors on the board. Just as in any business, retaining skilled, high-potential management is fundamental to sustaining a competitive edge. The key to club management retention? Understanding the real causes of turnover from the club manager’s perspective. Let’s do that as we conclude this white paper.
Interestingly, unlike most other fields, job-hopping club managers often remain in the club industry. Revealing, is it not, that we seldom see actual career change, just job change? Too often directors claim they want new leadership but no sooner is the new manager hired than they do their best to undermine the manager’s authority. The new manager may appear to be adjusting to the job but, before even becoming familiar with the club’s culture, becomes emotionally disconnected from the club while preoccupied with an exit strategy. The mind and heart of that manager have already left the building.
Our entire society has become accustomed to instant change: use the remote if you don’t like the TV show; get divorced if your spouse gains too much weight; patronize the restaurant with the biggest, most varied menu; trade in your car whenever the new model become available; send back the appealing but flavorless dessert; click delete if the Email doesn’t immediately capture your attention. We have powers today that earlier generations couldn’t even imagine.
Envision the dramatic improvement, therefore, if we could strike a positive blow at the root causes of club management turnover. Instead of changing managers let’s agree to correct the trend which contributes to the phenomenon. If we feel empowered to demand change in other aspects of our lives why would we fail to revolutionize practices which have led to unacceptably horrendous management turnover and undermined the vitality of not only our own clubs but the private club industry in general?
Club management turnover can be reduced by addressing factors within the control of both the manager and the club’s leadership. First, however, the industry must acknowledge that a problem exists and commit to collaborating in search of a solution.
Harvey Weiner is founder and Mark Weiner is a partner in the executive search firm Search America® Dallas-based collaborative consultants to boards of directors for the recruiting and selection of senior club management since 1974. They may be reached at 800.977.1784 www.SearchAmericaNow.com or [email protected] © Search America
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