At what cost?

Inside Golf - - Starters -

Fol­low­ing on from last month’s col­umn about busi­nesses and com­pa­nies that are fo­cus­ing more on prof­its than on cus­tomers, i’d like to ad­dress a re­lated topic that is just as wor­ry­ing: cost-cut­ting to ex­cess.

in busi­ness, there are (ba­si­cally) two ways to boost prof­itabil­ity: 1) in­crease rev­enue, or 2) cut costs. lack­ing the abil­ity to ad­dress the for­mer (via in­creased fees/subs/etc), many golf clubs are fo­cussing more on the lat­ter.

The prob­lem is, some are cut­ting their costs too much for their (and their mem­bers’) own good.

To be clear, cut­ting costs is a proven way to im­prove your bot­tom line; get­ting bet­ter elec­tric­ity rates, re­duc­ing food & bev­er­age costs, rene­go­ti­at­ing cer­tain con­tracts, etc, are cer­tainly ben­e­fi­cial. But in to­day’s world, it’s just as im­por­tant to main­tain qual­ity in prod­ucts and ser­vices.

we see this regularly in the non-golf world: costs get slashed to a point that the prod­uct or ser­vice suf­fers. Cheaper ma­te­ri­als can of­ten lead to weak/in­fe­rior prod­ucts. Pretty soon, you hit the bot­tom, and can­not cut prod­uct costs fur­ther, so you source cheaper labour, which some­times leads to shoddy work, etc. Re­duc­tion of staff is also a com­mon prac­tice: Mid­dle man­age­ment or other sup­port staff get re­trenched, forc­ing re­main­ing staff mem­bers to “wear more hats” (or a ju­nior staff mem­ber forced to op­er­ate above their skill level), and thus projects can of­ten be rushed, short­cuts can be taken, and the over­all qual­ity can be di­min­ished. These in­di­vid­u­als can also ei­ther suf­fer burnout or ex­treme stress.

And this cost-cut­ting trend seems to be hap­pen­ing more in golf clubs as well. For ex­am­ple, some pro shops are stock­ing prod­ucts that are (per­haps) more about max­imis­ing profit for the club than they are about prop­erly ser­vic­ing the mem­bers. This is ben­e­fi­cial for short-term prof­its, yes, but in my opin­ion, this can only back­fire in the long term.

Another cost-cut­ting trend that has re­cently popped up (and is ex­tremely dis­turb­ing) goes all the way to the top. it seems that, in their en­deav­ours to dra­mat­i­cally re­duce a ma­jor cost in the busi­ness, a hand­ful of club Boards have cho­sen to elim­i­nate the po­si­tion of gen­eral Man­ager, with the du­ties of the role then del­e­gated to a Board mem­ber or com­mit­tee.

To bor­row an old (though apt) anal­ogy, a gen­eral Man­ager is like the cap­tain of a ship. with­out a cap­tain at the helm, the ves­sel could go any num­ber of ways; ahead, astern, aport, as­tar­board...or worse, adrift, aground or into the abyss. And when you try to pi­lot a ship by com­mit­tee, things can get very chaotic (es­pe­cially when

...a hand­ful of club Boards have cho­sen to elim­i­nate the po­si­tion of Gen­eral

Man­ager... you con­sider that some golf club com­mit­tees/boards these days can­not even agree to the type of toi­let pa­per to be pur­chased.)

Each month here in in­side golf, we show great ex­am­ples of ex­cel­lent gen­eral Man­agers help­ing their clubs to ac­com­plish amaz­ing things. A good gM re­flects the energy, per­son­al­ity and pro­fes­sion­al­ism of a club. They em­body the spirit of the mem­ber­ship. And with their unique skillsets, knowl­edge and train­ing (gained at this month’s gMA Con­fer­ence, for ex­am­ple) they can lead clubs to the next level of suc­cess. Don’t get me wrong. Ev­ery club is dif­fer­ent. And many small coun­try clubs are do­ing fine with non­tra­di­tional gen­eral man­age­ment and cost-man­age­ment prac­tices. But for the vast ma­jor­ity of clubs out there, the “cut cut cut” at­ti­tude just isn’t sus­tain­able.

in­stead, why not con­sider giv­ing MoRE to your mem­bers? Maybe adopt a more mem­ber-friendly ap­proach like that found at, say, the new Eastern golf Club in Mel­bourne: mem­bers get com­pli­men­tary range balls and comp fees in­cluded with your mem­ber­ship. other clubs, for ex­am­ple, of­fer plat­ters of food on wed­nes­day and Fri­days for mem­bers af­ter the comp. in­stead of look­ing at these small items as “costs”, these clubs con­sider them as “ben­e­fits” to the mem­bers (and the mem­bers ab­so­lutely loVE it.)

or, if you are re­ally look­ing to con­sol­i­date some of your costs, why not con­sider out­sourc­ing some oper­a­tions to proven man­age­ment busi­nesses like golf Ser­vices Man­age­ment or Troon golf, for ex­am­ple, which have all the staff, knowl­edge, abil­i­ties and in­fra­struc­ture in place. There are many clubs who are kick­ing some se­ri­ous goals via out­sourced oper­a­tions like these.

The key point here (in my opin­ion) is to avoid be­com­ing a slave to the bal­ance sheet, and to keep the mem­bers (i.e. cus­tomers) front-of­mind for ev­ery de­ci­sion you make.

The al­ter­na­tive is cost pro­hib­i­tive.

Richard Fell­ner Group Editor richard@in­sid­e­golf.com.au

@in­sid­e­golf

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