This article originally appeared in the July/August edition of BoardRoom Magazine.
Working with a strategic plan is always a good idea, but there is no better than 2020. Global events can take our economy into a downturn; an election year can send shockwaves in many directions; evolving member needs and competition bring new considerations; technology advancements bring pros and cons; and the employment trends are on the move.
Club leadership is no doubt thinking of its future. So, let’s get ahead of a couple of common conversational topics:
Food and Beverage (F&B) is still a service amenity. Yes, local restaurants are busy. But that’s not the club business. Just a few quick questions to ask yourself about those other restaurants before you try to make your F&B operation profitable like ‘the busy local restaurants’:Do these restaurants:
- Serve 600 – 800 families only? Open unprofitable hours or in multiple locations?
- Know their customers by name and their special preferences?
- Seat customers immediately or do they ask customers to wait 15 – 45 minutes?
- Have one kitchen producing up to 5 different menus at once while honoring over 70% special orders for the tickets coming in?
- Have gratis coffee, fruit, or premium bar snacks available at various locations throughout the day?
- Throw loss-leading special events and theme parties every month or week?
- Employ a true Executive Chef or a Kitchen Manager?
- Pay service staff a tipped wage?
If the answer is yes to all of these, then they are operating much like a private club. If not, it’s not a fair comparison. F&B is an amenity like tennis courts, a boat dock or golf course.
Now, onto the next biggest conversation …. The first line most club leaders look to save money is payroll. It’s understandable and also dangerous to the dues income. Club revenue and most importantly, dues, is directly tied to the members’ satisfaction.
Employees are the ones responsible for delivering exceptional experiences. Staff interact with the members daily making them feel special and welcome, regardless of the request. Before making any cuts, consider opportunity costs, then conduct an exercise called “think outside of the box”. Before making cuts in areas that ‘touch’ the member experience, put everything on the table for operational effectiveness, including sacred cows, antiquated processes/systems and club traditions that may not be serving the club needs today. Very often it is the sacred cows or antiquated processes/systems at the root of high employee turnover and the related costs, which can easily eliminate any savings made elsewhere.
The Society for Human Resource Management (SHRM) reports nationwide turnover rates of 18% and recent studies show turnover comes with a hefty price tag of up to 33% ( up from 20%- 30%) of an employee’s annual salary. For a $45,000 employee, the cost can be as high as $15,000. At 18% overall, that cost can really add up.
Here’s the overall breakdown according to SHRM:
- 13% voluntary turnover
- 6% involuntary turnover
- 3% high-performer turnover
If you are in the market to lower your turnover costs, which will result in more savings and increased revenue than overthinking F&B operations, here are five tips:
- Before you troubleshoot your turnover numbers, take some time to evaluate your hiring and onboarding processes. The most common reason people leave a job is skill or culture mismatch. One of the most important things clubs can do to protect their cultural values is to hire for fit, then train for skill.
- Hiring and recruiting studies depict that opportunities for growth and advancement are key to employee retention. Growth prospects and continuing education will do wonders for retention and employee engagement.
- Foster social connections; give employees the sense of belonging.
- Solicit, listen, then act on employee feedback.
- Serious retention goals require serious data tracking. Valuable data includes employee training progress, turnover rates, referrals, engagement year to year.
A healthy bottom line doesn’t just happen. We must stay alert to changes in member needs, spending behavior and employee engagement trends. There is no one-size-fits-all approach to a club’s overall success, but there are best practices, benchmarking data, and industry trends to guide us. Let’s use them!