291:Board Chats- Pt.1 Board Diversity and Navigating Club Health w/ Jordan Peace & Christian Dunn

Speaker 1: 0:00

Hey everyone, welcome back to Orchats here on Private Club Radio, presented by our friends and partners, concert Golf Partners, boutique owner-operator of Private Golf and Country Clubs nationwide. If you and or your club or a club that you know is looking for recapitalization, head on over to ConcertGolfPartnerscom and set up a confidential phone call with Peter Nanula. I sit down with Jordan Peace and Christian Dunn, both of Concert Golf Partners, two knowledgeable experts who take us on a deep dive into the complexities of managing a successful club. This two-part series is all about understanding successful board structures and optimal club health. In part one here we talk about the optimal number of board members, because too many can make decision-making very difficult and too few can hinder the representation of the membership as a whole. We talk about being proactive, engaging the club's health, because that is essential, which means listening to your club members to ensure a healthy membership experience and being ready to make changes when necessary. So let's welcome to this episode of Board Chats Jordan Peace, svp of Corporate Development, and Christian Dunn, director of Corporate Development at Concert Golf Partners. When it comes to boards and board structures, how big is a good-sized board? Is there too big, too small? What's the sweet spot?

Speaker 2: 1:34

Yeah, I can think of this. We talk to boards every day. So we see, honestly, the percentage of boards that we talk to that seem to be running really well and really healthy is shockingly low. I don't know Christian 10%, 15% that were like man, that's a great board. No politics, they all seem to be alive, no personal agenda. It's actually a disappointingly low number. That's not to say you can't operate dysfunctionally. I think that happens a lot, but I would say that the bigger the board gets, the harder it gets, and so you see a lot of probably nine people boards nine, 12, thumb seven, but I'd say around nine is probably a number. We see that and that's still hard. I was the one part of an association that merged with another association. I was on the board and then merger by-law and through, okay, we have both boards. So it was like 24 board members for a year before it went back down to 12. And board members were a mess. I mean, it was miserable. It was 24 people and I know that there was a unique time and a unique scenario. But I'm saying that to emphasize the fact that it's hard to get anything done and there's always opinions in the room and so you have to have really, really strong leadership. I would never want to be on a board that had more than about nine people. I just think it starts to add complexity, it starts to add agendas, but too small, and then you probably aren't representing the club the way that your goals are to represent it.

Speaker 3: 3:19

Christian, what would you say? I would tend to agree that I think too many hands in the pot spoils the soup for sure. I think that I would argue that the most successful boards that I've seen and interacted with are ones where there's poignant leadership that is trusted by the other board members. I think it's really important. Normally what Jordan and I see is 12 board members, four of which hold titled positions. So if you have a president, a VP, a treasurer and, say, a secretary, it's sort of your four primary board members and they may be carrying a large portion of the workload, and then you've got maybe eight or six more governors or board directors that are there to support them, as Jordan stated, represent a little bit different side of that conversation or opinion or perspective, in order to round out the agenda of the board and ensure that they are representative of the membership. I think that's the most successful. For me is to have that core group or really pretty business, pretty pragmatic and member oriented board president is really wonderful, not just the number of them, but we hear a lot about kind of bringing the integrity back and the respectability back of the board themselves and that's kind of great If there's a period where a membership or the rest of the board is in super confidence, it's much more difficult to get things pushed through. So I think equally important to the number of board members is the representatives of the board and sort of how they function together and, in larger part, to represent the club itself.

Speaker 2: 5:04

Christian made a great drawing sorry, christian had a great point and drawn on my own experience when I've been on boards. I was on a board for six years. That turned over a lot and I've been on a few boards, but in the season where that board worked the best was definitely when the executive committee so the treasurer, the vice president, the president, the past president, the secretary when they were working well together. They're the ones who are really making the decision to bring things to the rest of the board, and when they were working well together whether I was on it or not on, it Made everything way easier. If the executive committee recommended something and everybody trusted the executive committee, it was gonna be unanimous board and and so I think that is critical it's having a good structure. It's where your executive committee is really strong, because you know nine people can't do it all. But if you have a few, three or five you know really trusted that are spending the most time on it, that's. That's where you'll get an elite, is there?

Speaker 1: 6:06

a way to Determine how many people is the best size for each individual club in situation like I don't want to say criteria, but you know, is there, like a certain, like you know meaning, you know, is there a way that somebody can, might determine if they're, you know Board is maybe too big or too small, which I mean obviously you could just kind of answered, but you know, is there a criteria to like determine exactly how many?

Speaker 3: 6:36

it's a fair, fair question. I I think for most clubs it's in the bylaws how many, how many seats there will be. So it's not something that's probably Discussed much at all. Gotcha, you know I'm Jordan. I would tell you that that's that's where we feel that concert can be very Advantages and that's our experience and kind of our model, but when maybe they should be having a discussion about how many board members and what they're, you know, and defining a little more rule clarity. And yet they're not, just because of the way that it's always been done.

Speaker 2: 7:05

Yeah, and it's very difficult to change those bylaws, takes a process, and a lot of times you don't want to go through the boat, you don't want to go through the process. It has to be something really critical in order to go through. You know the process about these are volunteer board members, for example, right, so it's got to be something that's really critical to the club, and sometimes, changing from 9 to 11 or 11 to 9 May not be something people want to spend the time on because they have more pressing matters, they have capital needs, they have assessments to consider and they've got hires to make, right. There's now, though there is no formula like if you have this many members, you should have this many board members, right, I think it's. You know how many types of members do you have young, old, sports, non sports, social, and and making sure you have a fair representation on the board of Kind of the subsets of your membership. I think that's the most important piece of that would be. What I was thinking about around a board is if I felt like we had Seven different you know kind of types of, like I just outlined types of memberships, that we had a nice diverse Representative, you know board of those people and if you have tons of just golf you know members, for example you may want a few of those to represent the board, but you want to have everything represent Kind of how. I think about it. So says that seven, is that nine? Is it 12, 15?

Speaker 1: 8:32

Fins on the club, but that's kind of the filter I would run is there, you know it's there. You know it's fresh perspectives, keeping it young, keeping it fresh is very important. Then, also, while maintaining the member experience and that sort of I think relates and goes back to the boards and how malleable they are and willing for change. How is there a length like the ideal board length? I'm assuming some clubs might have things like their bylaws, but how long should a board member ideally serve?

Speaker 3: 9:10

Yeah, I think Jordan and I both share the opinion that one year is probably not the best. Only because most of these, the folks that are donating their time as a volunteer, you know to operate as in governance for their own club. They do something else for a living, of course, and they're typically very successful in those other things. I mean country clubs are, you know it's, you've earned the right to be there and they often are very successful in their professional lives. But very few people can probably appreciate how dynamic a country club is. They've got, you know, 90 to maybe 115 employees. They have pools, they're driving ranges, a massive golf course with that huge maintenance crew operating industrial equipment. They've got a hospitality service piece. That's important, you know. So there's just a lot of variables and moving parts and they probably, you know how could they really understand everything at an in-depth level. So I would say I think maybe three years for a board member is appropriate, because you do spend a little time navigating internally and finding some direction, learning about what's happened historically, and it gives you a little bit longer you know 10 years just to understand what was successful and why and then be able to see through some projects If they do happen to have a longer project. I don't know when the last time you called a contractor to have a home renovation was, but they don't show up the very next day typically, and they don't have the project completed the day after that typically. And so to see through a bigger you know the scope of a larger scale project from start to finish, and have not singular but an agreed upon plan that you're able to, you know, start to finish, follow through, I think is really important, and I think three years probably sets that up for a little bit more success. Potentially you could argue two years, but I find that a lot of the board members we speak to it's not their first go around. Also, you've got sort of a segment, a pie piece of the total membership that is interested in governance and so they may have, you know, sat as a just a board member and now they're VP or treasure or something. So I think if you went much further than three years, if somebody in a 10 year span had two, four year terms or five year terms, I think you'd start to really, you know, you just need to be aware that you don't want one person making all the decisions all the time because, as Jordan alluded to previously, you know I'm a golf guy. I respect that there are golf people that are going to be interested in strictly the golf course and its maintenance and the quality and speed of the greens and how beautiful the tee boxes are and that type of thing, and that's just not representative of everyone at the club. So you need to have voices and, yeah, I would say three years, I think, would be my answer.

Speaker 2: 12:10

Yeah, I agree, and we also, though, are seeing. The problem is we're seeing that you know I talked about having diversity in your board. We're saying that it's it's becoming harder and harder to find people willing to serve on your volunteer board. That represent meaning that most people who want to volunteer have a lot of time, may maybe typically retired. They may be somebody who's at the club seven days a week. Well, they think a lot differently about the club and the decisions being made at the club than Christian would, who is a member of his club. That's a few minutes from his house, and he shows up, plays nine holes for the son in the afternoon. He may play a weekend round. He may have one bill a week with his family at the club. They're just busier. They're doing more stuff with their kids. They can't be at the club near as much as somebody who's playing you know, standing tee time four days a week, and so you do have this problem of getting the right people who actually volunteer. You can run into some issues at a club, and so that's another, I guess, issue with the timeline. There's a lot of times you have three years. It's like, oh, I'm not doing three years. Well, that is the appropriate amount of time, Because if you do one year, roll off and on you can't, you know you're learning how to be a board member and then you roll off, and so you know it's important to stagger too right. A couple seats open up a year so you always have a lot of congruency on the board. But that's becoming more and more harder and harder to do, especially as younger generations come. You know, grow or growing up in the club.

Speaker 1: 13:42

So yeah, we're talking a little bit about evaluation. Can you, how do you evaluate your clubs board health? You know, like so I'm, I'm Mr X Y Z, I'm on my board, I think you can almost tell. But are there some? I don't want to say flags, but how can I look at my board health and go like I should probably reevaluate this?

Speaker 2: 14:07

I mean you know, I hate to say like that I want to, don't want to be that, so I don't want to not be that scientific, but, like we were recently talking to a board where we found the treasurer to be super thoughtful, very successful business guy. He was just being pragmatic to understand everything that was in his arsenal right to help his club. So he was talking to us and he took our conversations that we had a lot of and had some very thoughtful conversations about how we could fix some capital needs, that they had some very long term defensive capital needs and he took it to the board and there were a few board members that just you know, were mad that he talked to anybody without them knowing it had nothing to do with with concert golf or X or a bank. He had talked to banks. It was just the whole board meeting was spent on wait, you did this work without us knowing you were doing this work. And he was kind of like, yeah, I thought, I thought I was being helpful. You know like he was totally stunned. And so you see that board meeting became a board meeting about just politics or, you know, kind of drama versus anything practical about where the club was headed and so he knows you know his comment. His comment to me was I can't wait to roll off this thing after that meeting, right? And I was just surprised about that and, like I said, nothing to do with even our conversations or anything Like it, was just literally board politic. You know power control. You know I'm on the board for a read and those are, when you start getting you know, dangerous for your club. You know there's a lot of decisions that can be made that can run your club into the ground and it seemed that happened a lot before.

Speaker 3: 16:00

Yeah, I would add to that that you know a lot of what Jordan and I do is, of course it begins with a conversation. That's the starting point. They somebody had a club or representative, whether it's ownership or a board member, you know, depending on the type of the club, they want to learn a little more, they want to find out, they want to gather information so that they can, you know, articulate to anyone else that might be in the decision making room. You know what their options are, and so we tend to think of those that are willing to consider all their possibilities as pretty sharp representatives of the club. And you know the instance that Jordan's describing it. It's sort of too bad that here you have someone who's willing to go above and beyond, who is willing to think a little outside the box and really has the best interest of the club in mind, who's not enjoying their time on the board or is eager to be removed from the board as a result of the lack of support and teamwork that they're experiencing. So I would say that they sort of they being the board members that we speak and interact with, skate to and interact with they kind of enlighten us as to whether or not the board is healthy and how functional it is. Some periods, you know, as we referenced earlier, you've got a consensus about a style of governance and when they do they can achieve wonderful things and they can move a lot of projects forward and they can listen to the membership and attend to their needs and wants and address concerns. And if they don't, or if they're sort of agenda driven, which happens, you know it's really the member loses out, right, it's the. At that point they're an equity member, paying customer at the very least, and they'd like to show up and make sure that if they need a chicken sandwich on the menu that it's there and that the tennis courts are resurfaced and that the golf course, of course, is maintained nicely, that the swimming program has adequate support and training and lifeguards if their children are down there, and so there's just so many different kind of perspectives of how people use the club and what they expect from it and get out of it, and I think overwhelmingly that's the most important part of the board role is to listen to those voices and do the best they can to address them and ensure a healthy membership experience.

Speaker 1: 18:22

So this all boils down to kind of taking a club and hopefully, you know, when it's at its peak it knows how to maintain and kind of keep that. You know that important club health, how do you monitor and evaluate, you know, the ongoing health of the clubs, you know. So we just kind of went from like the boards, you know. Now how do you like evaluate the overall club health? You know, let's just say from a, from a board member, and also just from like a member's point of view, like how can I, as Mr Joe member who's not on the board, and just like an, you know, an average Joe, you know how can I look at my club and be like hey, you know how can I start to maybe see some writings on the wall?

Speaker 2: 19:01

There's a few aspects. I mean, it is hard for any private club board member. Oftentimes what you hear as a board member or what you hear as a general manager is the negative stuff. It's easy for people to come up and complain about something that they want to, and then there's oftentimes a subset of members who have never had anything to complain about, very positive people. You can't make them mad if you try, and those are normally friends because they're easy to talk to, right. But what's the middle? How do you really dig in to understand? How do the people that aren't upset enough to complain and aren't happy enough to come to you and tell you? How do you get feedback from them to really manage your club? And there's a few ways to do that. There's companies that do surveys and obviously the better general managers or board members or companies are going to be asking. They're going to be trying to find pragmatic people that they know that wouldn't talk to them anyway. So I think, from a member satisfaction perspective, you have to be proactive about it, because if you're reactive, you're only hearing the things that people want you to hear, and it's not always. You know. It's like the news media today. Right, you hear these polarizing things, but reality is probably in the middle of those polarizing things for most people, and it's the same at clubs. And so I would say from that perspective you know member satisfaction, that's how you can monitor it. But then there's the financial piece, which I think is more important, right? I mean understanding what healthy debt ratios are. I think you've had some people on here talking about club benchmarking, maybe talking about debt. You definitely don't want to take on too much debt. To understand. If you're a board member, if you want to do capital improvements, you know how do your capital reserves work. What are you charging members? What are you assessing and will an assessment pass right? Because there's a lot of times, especially younger members the younger, the member under 50, they do not want assessment, they just don't. They don't care as much about the club as the people who are older. They don't care about the Gill hands redesign, even though they would like it, they don't want to pay. You know $15,000 for it. And so you really have to understand your financial health as well and understand what. You know what's coming up. We've done a capital study. There's a lot of different capital reserve studies that are done. Clubs understand over the next 10 years. How much capital do we need? How are we going to pay for that? So the thoughtful boards are really digging in to make sure this is not a three-year. You know this is not a three-year business, or you know it is a. How are we here in? legacy years, right, and there's a lot of things that have to be done. Yeah, there's a lot of things that have to be done. The capital has to go in year after year after year after year in order to be here in 50 years. And if you're just spending money on discretionary things or things that aren't valuable, you're assessing members for a new fitness center that only you know 10% of the members want. Well, that you know you're going to run into problems with membership problems or running problems with not being able to rate the capital that you need.

Speaker 3: 22:19

Yeah, there's a component also and this is just sometimes your staff, and especially general manager or head pro, some of the leadership roles inside the club Hide. Visibility is really crucial. Being out, interacting and, of course, hand in hand with that is just open communication. That can never really be too much communication. So I think, as a member, if you see the, you know focal points of your leadership team at the club and they are available and you they're there to receive questions, even just casually. You know you're entering the clubhouse from the parking lot, you're just going to dinner. Then you see them and there's something that was on your brain earlier that week or right in that moment, or whatever it might be hey, what's with all the cars in the back section? What are those folks doing? Or whatever it is. It's just lighthearted stuff, but it certainly supports healthy communication about what's happening at the club and I think you feel more involved with what's going on. And then maybe something peaks your curiosity or your interest and you know that that moves the conversation along into something that's a little more meaningful than just the granular stuff that you're curious about. Maybe it gives you some insight as to what's really happening. Or they say hey, speaking of, we have some programming along that line next week. You know, did you make sure that you signed up for the Easter brunch, you know, or whatever it is, they can read into your questions and your curiosities and they can give you some feedback that points towards what's going on in their world. So, while the financial component is a little little tougher, I think that's mostly the board that handles it and should be, you know, hopefully responsible for it. I think a lot of that just is made up by a great staff. I mean, at the end of the day, it is a hospitality industry and offering great service to, you know, members and staff as a, as a crucial component in my opinion.

Speaker 1: 24:10

Hope you all enjoyed that episode. Part one Began to look out for part two, which is probably going to be right after this one. Catch you on the next one.