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Bench Marking in the Golf Club Industry

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By Barry L. Morgan, FPCM, Consulting Partner National Private Club Practice

In 2006, the National Private Club Practice (NPCP), Toronto, was asked by the Canadian Society of Club Managers (CSCM) to develop a comprehensive private club industry benchmarking information service. An initiative was launched, and the first reports were issued in 2007. The goal of this program is to provide private golf club managers with reliable information regarding the club industry and to provide a powerful resource tool with which to measure the ongoing performance of their individual clubs against others in the industry. Larry McKenzie, general manager of London Hunt and Country Club in London, Ontario says, “At London Hunt and Country Club, one of the key success factors has been our prudent financial management of the Club.  Having benchmarks and comparators is helpful in this regard.”

The golf club management profession, in spite of the excellent work done by organizations such as the CSCM, The Association of College and University Clubs, and numerous other club management organizations worldwide, tends to be isolated when it comes to its operational information. Most clubs function as a single business unit. Benchmarking “in house” is more often than not, done on the basis of the club’s own prior years’ results or against a budget which may not have been thoroughly tested against industry standards. Those involved with the governance of private clubs often tend to think that their club is unique. In most cases, however, when it comes to daily operating revenues and expenses, they are, in reality, not all that much different from other facilities of a similar size and type. The actual cost of operating a club and the revenue potential from a membership base often does not vary significantly from club to club when all other things are equal.

Being armed with the ability to compare operations, therefore, offers leaders in the club industry a tremendous opportunity to share knowledge and experience to the betterment of their clubs. Club associations such as the National Golf Course Owners Association (NGCOA) and the CSCM offer a forum for this sort of exchange. However, when dealing with groups that are involved in the governance of clubs, it is often necessary to have concrete evidence of industry standards. For this reason, NPCP has developed systems to enable club managers to share and compare their policies, practices, and financial information, confidentially, conveniently, and practically. The service offered by NPCP and available only to CSCM members, provides an ongoing operational performance review for participating clubs. Each club is provided with a secure access point and an online report library. Customized reports, comparing club information against the information of other organizations are readily available from this central location. 

One of the primary challenges in providing comparative data is making the reports relevant. National operating benchmarks are interesting, but it is difficult to compare a small 400 member club located in a rural setting, with a prestigious urban facility with over 1000 members and significant entrance fees charged just to join. Even regional or sectional reports often have an inherent lack of relevance and credibility, if readers are not confident of the similarity of the properties involved.  The principals at NPCP have a strong golf club management background and they understand the importance overcoming of these concerns. We have experienced the challenges of educating club members and management with respect to the private club industry’s many quirks. To overcome this operational hurdle, we developed a system to allow participating golf club managers the opportunity to choose the clubs to which they wished their club to be compared. By limiting the clubs in the comparison, to only those clubs that the manager believes to be comparable, the resulting benchmark statistics can take on an extremely high level of relevance and enhanced usefulness. 

George Pinches, Chief Operating Officer at the Hamilton Golf Club, in Ontario, says, “We have bought into this service for two years even though we have not been in a position to provide normal data due to our clubhouse renewal project. We’ve done this because I believe the data services are important to the Society and that this is an important and useful initiative.” The need to maintain privacy and confidentiality in the club reports is also important. This can be achieved by limiting the size of peer groups to no less than six clubs. Each club is presented with its own data in comparison to the aggregate totals of the other clubs in their group.  Comparing to a small group of only six to ten operations, offering similar services and facilities to their membership increases the value of the benchmark reports. It also allows golf managers to measure their performance against peers who face similar challenges and highlights meaningful differences in the various operations. Improvement is rooted in these differences and because the information is credible, seeking solutions can be more efficient.

Under the NPCP program, individual clubs select a relevant comparison group from a bank of participating clubs. The service currently includes over 100 private and semi private clubs. As more and more clubs become involved, this benchmark information service will become increasingly valuable to both the participants and the industry overall.

Benchmarking the club’s operation against the averages generated by a highly relevant peer group of clubs is a powerful means of measuring the club’s performance.  However, this management tool becomes immeasurably more valuable if performance can be projected over several years to establish trends. In 2009, National Private Club Practice began presenting managers with comparative data from several prior years, in addition to the data gathered for the current year’s budget. This allows managers to see evolving improvement or decline in their operations, and to assess the effectiveness of programs implemented to initiate change.  The ability to compare forecasts also affords the manager with a very useful opportunity to make changes in forecasts which seem out of line, while there is still time to affect the operation.

Benchmark reports are very useful in an industry which experiences relatively high turnover of senior management.  Brian Taylor, CCM, General Manager of Qulichena Golf & Country Club in Richmond, BC noted that, “As a new Manager at the Club, this was a great orientation for me.  Talk about getting up to speed quickly on key numbers and policies.” Board Members and Committees also change each year and enthusiastic new members are often ill informed with respect to the details affecting the governance of the club.  Keeping these members informed as to the realities of club industry and is key to maintaining a smoothly functioning club.

Barry Morgan is a Consulting Partner with National Private Club Practice.  His former career as a professional club manager included General Management positions at several top Canadian Clubs.  A long time member of the CSCM and NGCOA, Barry is a frequent contributor to industry trade journals and serves on a number of Association committees.  He is primarily responsible for the development and operation of NPCP’s Canadian Club Management Information Services.  Barry can be reached by email at barrymorgan@npcp.ca or check  www.npcp.ca

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