No one disputes the value of a hands-on management approach—but there are some things that even the best club managers should probably make it a practice to keep their hands off.
Their clubs’ own members, for starters. While most aspects of your dealings with members and guests will only benefit from getting to know them and their needs as closely as possible, when it comes to anyone from a club’s staff actually making physical contact with them—as in providing massage services—maintaining a relationship that’s more than an arm’s length is probably the way to go.
At least that’s what one club GM decided, after his facility opened a new fitness center and he mulled over the options for how it should be run. Regular use of the center’s workout equipment and sauna were going to be provided to the members at no extra charge (they had already paid for it through capital assessments that helped build the center as part of a larger renovation). So it made financial sense to outsource the management of that part of the center’s activities.
But massages and spa services provided through the center were going to be offered on an additional, pay-as-you-go basis. And at a going massage rate of $60/hour, it at first looked pretty tempting to try to keep that part of the business in-house.
“I looked at the operating costs for having [the fitness center management company] provide the massage and spa services as well, vs. bringing somebody on staff full- or even part-time,” the GM recalls. “With the extra profit margins we would have been able to keep [through an in-house arrangement], it looked like we could have saved—actually made—an extra $20,000 a year.
“That included what we’d have to pay for additional insurance as a direct provider of the services,” the GM continues. “But then I thought about the additional risk and liability we’d be taking on. It’s just such a dicey area—all it takes is one bad accusation where it’s word-against-word, and you’re really leaving yourself open for some serious problems that could easily wipe out those ‘savings,’ and a lot more, in no time.
“You can try to better protect yourself against those problems with cameras or other measures,” he adds. “But that just puts a damper on the whole experience for everyone, and ends up cutting into your potential business and profits.
“The firm we contracted with is big, they handle a lot of fitness centers all over the country,” the GM says. “So they are in a much better position than we are to negotiate better rates and absorb the added insurance costs and risks.
“So in the end, I just decided it wasn’t worth it; it made a lot more sense to let [the outsource firm] provide all of the services, so [our club] would only be in the second-insured position.
“And believe me, the more I think about it and the more we’ve operated under that structure, the more that’s felt like a much more comfortable position for our club.”
Finding the Comfort Zones
Such are the constant tradeoffs that must be weighed when considering whether to outsource any of the services that a club provides, or departments that it operates, or functions that it performs as part of its daily course of business. In addition to fitness centers, the list of areas that lend themselves to outsourcing can include pool and tennis operations, caddying, golf instruction, retail shop management, course, grounds and clubhouse maintenance, food and beverage catering, and business center services.
But outside providers can be found for virtually any aspect of club or resort management. Which ones are used and contracted with for a particular club operation usually hinges on that club’s level of comfort or readiness for taking on a particular area of management on its own.
In some cases, the degree of difficulty involved, or level of specialization required, makes it a pretty easy call. Take, for example, the growing headaches involved with first finding enough seasonal workers for course maintenance or kitchen duties, and then clearing the workers you’ve found so they can be properly put to work and paid.
Because staying abreast of, and complying with, the bureaucratic complications tied to this segment of the labor pool has become so burdensome, a burgeoning cottage industry has sprung up that now makes it much easier for clubs to find sources for obtaining these workers, and their services, on a turnkey, outsourced basis.
The jumbled seasonal-worker landscape, combined with the emergence of more specialized providers, prompted several clubs to begin to use outsourced landscaping or course-grooming services this season for the first time. Many now say they’re wondering why they waited so long to do so, after seeing how smoothly the process could run: Truck pulls up in the morning, crew gets out, reports to course superintendent, executes as-signed tasks throughout the day, gets back in the truck in the afternoon, drives off, comes back the next morning, and starts the entire routine all over again. The club manager, meanwhile, writes weekly checks to the landscape contractor, and never worries about an H-2B visa or quota the entire summer.
Of course, any club manager who sees this as an entirely worry- or responsibility-free solution probably also thinks the question of operating profit won’t come up at the next Board meeting.
Rule number one of outsourcing will always be to make sure you secure every possible assurance that the provider can, and will, deliver as promised. And rule number two will be to never fully trust your research and findings that you made during the rule-number-one process, so you continue to check and double-check on the capabilities and performance of your outside provider, even after a contract has been granted.
Satisfaction From Stability
Sometimes, however, the signs are harder to read, and instincts are not as sharp or reliable. Take, for example, the case of the Maryland country club that opened a new fitness center and opted to outsource day-to-day management to a company that ran the operations and hired and supervised trainers.
For the first year, it looked like a great move, as membership in the center (which the club had established as a separate profit center, with additional dues) more than doubled. As fast as the center grew in that first year under outside management, however, it came to a screeching halt in year two. Membership leveled off and even worse, the country club’s management began to pick up clear signals from its members that the contractor did not seem to be interested in developing, or maintaining, the personal touches that are critical to fitness center success.
“It became readily apparent to us that the success of fitness training is very personal and built largely on the relationship between trainer and trainee,” the club management said in explaining a decision to hire an in-house director and individual trainers. “With outsourcing, the trainers were transient and the management focus was not enough on relationships.”
This club saw both membership and fitness center profits resume their rapid growth almost immediately after making the shift to in-house management. Stability in the training staff and center’s operations also translated to “dramatically” improved levels of existing member satisfaction.
Overall, the club developed enough confidence that in-house management was the right long-term solution for running the fitness operation as a profit center that it went ahead with plans to expand the facility.
“Our profits are definitely fatter—and our members are noticeably thinner!” the club’s management said in relating its experiences. “The mor
al of our story was clearly, ‘Don’t outsource the profit center.’ “
Does She Work Here?
In the end, the key to successful outsourcing lies in how well the lines are blurred between “out” and “in.” If fitness, pool or tennis management companies are hired to run those aspects of a club’s operation, their representatives should still be included in staff meetings and they should be encouraged—expected—to not only find ways to have their departments participate in club-wide initiatives, but also to bring in some ideas of their own.
Certainly, the more that the management from outsourced entities can appear to be, and function as, full-fledged members of the club management team, the more effective the relationship will prove to be.
In fact, among club members and guests who aren’t involved with the Board or committees, the best test of how well an outsourcing arrangement is working is whether it’s even known that the outsourced department head is not a full-time club employee.
For pool and tennis outsourcing, the best way to create this impression is to get the department head as fully engaged with the membership as possible, through instruction, team coaching, clinics, camps, and the like.
More subtly, department heads can be given some added responsibilities such as maintaining small retail counters from which to sell branded club merchandise that’s related to their department (swimsuits, water bottles, visors, etc.), or by taking the lead to organize member walks, runs, outings, tournaments or other events.
All of these objectives can be written into outsourcing contracts, and financial incentives can be tied to performance. The outsourced department heads can be evaluated, even before contracts are up for renewal, on the same basis as full-time, in-house staff, in relation to goals that reflect overall objectives of the club for membership growth, profitability, operating efficiencies, or other key measures.
But while those are all sound business practices that should be followed according to the principles of any contractual situation, it really shouldn’t have to be formalized to that extent. A good provider of outsourced services will want to form a true partnership and seamlessly become part of the overall operational team. And a good club manager will want to gain assurances through the screening process of potential vendors, before any contracts are signed, that a company, and people, have been found that can truly be consider extensions of the club’s own staff.
There have, in fact, been situations in clubs where individual relationships begin through outsourcing and eventually become full-time, in-house hirings. Some clubs even go into outsourcing with that intent, either because the level of operations doesn’t yet justify a full-time position, or because they want to test out a potential department head in that fashion.
But even if none of those factors are in play, at some point before an outsourced relationship begins, the club manager should ask, “If I could, or if I wanted to, would I make this a full-time, in-house hire?”
If the answer comes out as anything but a confident yes, that’s a clear “hands off” signal. C&RB
Summing It Up
• Make sure assessments of the tradeoffs between outsourcing and in-house operations account for the full extent of potential exposures.
• Staff stability and stronger personal relationships with members are generally more difficult to achieve in outsourced situations, but not impossible.
• Outsourced department heads should be included on an equal footing with in-house staff and encouraged to not only participate in club-wide initiatives, but offer ideas.
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