Archive for the ‘Uncategorized’ Category

Employee Counseling/Disciplinary Sessions

Monday, December 9th, 2013

Periodically it becomes necessary to meet privately with an employee to discuss problems with his conduct or work performance.  Such meetings can merely be counseling sessions (i.e., discussions) or they can be more formal disciplinary sessions.

The difference between the two depends upon your aims for the meeting.  If you wish to have an exploratory discussion to find out what is wrong and to constructively criticize conduct or performance, a counseling session is appropriate.  If you wish to discipline or punish an employee for more serious or repeated misconduct, a disciplinary session is in order.

Conducting Counseling/Disciplinary Sessions

How you conduct counseling and disciplinary sessions has a lot to do with their success.

First, the meeting must be held in private, in a quiet, uninterrupted setting.  You may wish to include a witness, such as a trusted associate or the Personnel Administrator.  Never use a departmental peer of the employee being counseled.

Second, the tone of the session should match the purpose.

  • If the session is for counseling, the meeting should be less formal, more comfortable, and supportive.  The conversation should focus on constructive criticism, problem discovery, and proposed solutions.  While this should be done in a supportive way, it is also necessary to communicate to the employee the negative consequences of continued problems.
  • When the purpose of the meeting is disciplinary, the session should be formal and the tone serious.  The idea is to impress upon the employee the serious nature his actions, the impending consequences if he does not improve his behavior or performance, and the issuance of the disciplinary report, suspension, or termination, as the case may warrant.

Third, your investigation of any incident or your documentation of a series of problems must be thorough and detailed.  Do not go off half-cocked to write somebody up before investigating.  You may have an incomplete picture of what happened and be embarrassed when the full story comes out.

Fourth, after telling the employee the reason for the meeting and relating the incident or allegations as you know them, give him a chance to tell his side of the story.  He may have mitigating circumstances or a very different version of what happened.  His story may require further investigation or corroboration.  You may need to call other people in as witnesses or to contradict his version.

Fifth, after hearing his side of the story, decide what action you will take and prepare the Record of Employee Counseling, describing the incident or problem, allowing him to offer any response, and providing your summary of the counseling or disciplinary action.

Last, present him with the Report.  Ask for his signature.  If he chooses not to sign, so note it.  Make sure the Report is complete.  Provide the employee with a copy; send one to Personnel Administrator for inclusion in his Personnel File, and save one for your departmental files.

Documenting the Session

The key to successful disciplinary actions is good documentation.  Supervisors have two documentary tools at their disposal – Staff Notes and the Record of Employee Counseling.

As previously mentioned, Staff Notes are daily or weekly notes made about staff performance.  They should contain instances of tardiness, absences, failure to follow instructions and procedures, complaints, arguments or disputes with other staff, instances of outstanding performance, etc.  These brief notes are invaluable in helping a supervisor reconstruct circumstances, give details in review sessions, or document continuing disciplinary problems of a minor nature.

Records of Employee Counseling are to be used for formal documentation of problems when you wish to give the employee a copy.  These reports must be filled out completely and accurately.  If you fail to enter a date, fail to sign it, fail to present it to the employee, or fail to get his signature or note “chose not to sign,” the record may be useless as documentary evidence.

Right to Respond

Each employee subject to a disciplinary action or unsatisfactory performance review has a right to respond.  Such response should come within 7 days of the report or review.

Supervisors should consider the response, amend the report or review if warranted, and attach the response without alteration to all copies of the disciplinary report or review (Personnel File copy and departmental copy).

Choosing Not to Sign

Employees are requested to sign all disciplinary reports and performance reviews, but have an absolute right not to sign.  The absence of the employee’s signature will not affect the validity of the document, so long as you note that it was presented to him.  If an employee chooses not to sign, you do this by writing “chose not to sign” and the date on the signature line.  Do not use the words “refused to sign” as this connotes coercion or lack of choice.

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the hospitality industry and its challenges. From time to time, we will feature guest bloggers – those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking  hospitality managers throughout the country and around the world.

Hospitality Resources International – Management Resources for the Hospitality Industry!

Put a Stop to Petty Pilferage with Clear, Consistently Enforced Policies

Monday, December 2nd, 2013

Pilferage of food and beverage items can cost hospitality operations a significant amount of money.  Not only does pilferage directly affect your bottom line, but it contributes to unsanitary conditions and damages your reputation when seen by members.

The best way to reduce pilferage is to have a clear policy that is explained to new hires during the onboarding process and constantly reinforced and enforced by all supervisors.  It is also essential that all supervisors set the example and refrain from “snitching a bite” from buffets and the kitchen line.

Here is a sample policy:

A.  Policy.  It is the policy of the Club that employees are not allowed to eat food prepared for service to members or guests.

B.  Discussion

  1. Definition.  “Grazing” – Employees helping themselves to food that is being or has been prepared for service to members or guests.
  2. Employees are not permitted to take or eat food other than the Employee Meal or eat at times other than their meal break unless authorized by their Supervisor.
  3. “Grazing” by food service staff in the kitchen or from buffet lines in the dining room will not be tolerated under any circumstances and no excuses will be accepted.
  4.  This policy is taken seriously and will be enforced by all supervisors.  We ask that you understand the necessity of such a policy and realize that it is essential for a number of reasons, including cost control, sanitation, professional appearances, and good member relations.  Please cooperate so that none of us is put in the position of having to play “food police”.

A further policy is that no food or beverage items whatsoever will be removed from the premises including leftovers or unconsumed employee meals.

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the hospitality industry and its challenges. From time to time, we will feature guest bloggers – those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking  hospitality managers throughout the country and around the world.

Hospitality Resources International – Management Resources for the Hospitality Industry!

What You Owe Your Boss – Loyalty and Support

Monday, June 17th, 2013

In Leadership on the Line, we talked about managing your boss with a “State of the Union” report, timely and accurate information about your plans and projects, as well as the progress of your initiatives.  In doing these things you keep your boss informed and assured that you are properly attending to the needs and requirements of your position.  The ultimate purpose of managing your boss is to make her job easier, allowing her to focus on the other pressing issues of her position.  Beyond this, what do you “owe” your boss?  Most importantly you owe her your undivided loyalty and complete support.

Hopefully your boss is an active and engaged leader who has a plan of improvement and works diligently toward its implementation.  In the process of implementing her agenda she will develop plans and programs and issue directives for their accomplishment.  It is your responsibility and duty, then, to wholeheartedly support her agenda in its thorough implementation within your area of the operation.

But what if you have doubts about the wisdom or efficacy of her program?  In this case you as a leader have a duty to fully and frankly express your reservations to her.  However, this should always be done in private in a calm and deliberate way.  Your purpose here is to convince, not attack or criticize.  Clearly, rationally, and with suggestions for alternative courses of action, you must express your reservations and persuade your boss of other means to her desired ends.

If, after exhausting your powers of persuasion, your boss is unmoved and insists upon her original instructions, you have but two choices-to completely support and devote yourself 100% to accomplishing her directives or, if sufficiently opposed, to resign your position since you are unable to fully support her initiatives.

Why is the choice so stark?  Is there no alternative between these two extremes?  No!  Either you fully support and implement her program without grumbling, complaining, or hesitation-as if the initiative was your own-or you step aside because you can’t.

The most damaging thing you can do is to undermine your boss’ efforts by publicly criticizing her plan or by failing to actively and aggressively implement it.  Both send a clear message to your employees that you neither agree with nor support the plan.  This will quickly set up divided loyalties in the workforce.  Its impact on employees will be similar to the well-known phenomenon of parents sending mixed behavioral messages to their children.

Even worse is to pretend to support your boss’ agenda while secretly acting to sabotage it.  This passive-aggressive behavior is unfair to the person who hired you and is damaging to the organization.  Your employees will readily understand your lack of commitment and ultimately your boss will recognize it too.  In this instance, your boss’ only recourse is to discharge you-and you will certainly deserve it.

The bottom line is that you have a responsibility to fully support and show loyalty to your boss.  If, for whatever reason, you have come to lack respect for your boss, it’s time for you to move on.

Still unconvinced?  For one moment put yourself in the position of the boss-how long could you tolerate a subordinate manager who, either actively or passively, worked at cross purposes to your plans?

Ed Rehkopf, Excerpted from Leadership on the Line – The Workbook, Clarity Publications, 2009

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the hospitality industry and its challenges. From time to time, we will feature guest bloggers — those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hospitality hardworking  managers throughout the country and around the world.

Hospitality Resources International – Management Resources for the Hospitality Industry!

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Impediments to Quality and Service

Monday, October 29th, 2012

We frequently write about those steps that a club must take to promote excellence.  As an alternative let’s examine those things that act as impediments to quality and service.

Think about each of the following obstacles to a smooth-running operation where quality and service are paramount; then decide whose responsibility it is to remove the impediment:

  1. Lack of culture or failure to consistently reinforce the culture
  2. Lack of standards (stated expectations)
  3. Lack of communication
  4. Lack of leadership, leadership consistency, and example
  5. Lack of organization; toleration of a chaotic work environment
  6. Lack of disciplines to hire the best staff
  7. Lack of planning, operational review, and process improvement
  8. Failure to remove obstacles to efficiency
  9. Lack of training or training consistency
  10. Lack of teamwork, morale, and enthusiasm
  11. Lack of understanding about what members want/expect
  12. Lack of member relationship management plan
  13. Lack of employee empowerment
  14. Lack of accountability

If you have a true understanding of the responsibilities of leadership – that a leader is responsible for everything his or her unit does or fails to do – then correcting every one of these impediments is a function of management.

Intrinsically understanding this validates that W. Edwards Deming was right when he said, “The worker is not the problem.  The problem is at the top!  Management is the problem!” and “There is much talk about how to get employees involved with quality.  The big problem is how to get management involved.”

Understanding what causes a problem is the first step to correcting it.  So take the next step and read The Quest for Remarkable Service which provides an overarching plan for excellence in club operations.  Then begin implementing the processes and disciplines that will remove any and all impediments to quality and service.

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the club industry and its challenges. From time to time, we will feature guest bloggers — those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking club managers throughout the country and around the world.

Club Resources International – Management Resources for Clubs!

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Improve Quality – Lower Costs

Monday, February 20th, 2012

Common wisdom tells us that quality costs more, but according to one of the foremost experts on quality this is not the case.

W. Edwards Deming, statistician, professor, author, consultant, lecturer, a man who made significant contributions to Japan’s reputation for high quality products and its rise to an economic power in the latter half of the 20th Century, wrote extensively about how a focus on quality and the use of statistical process control actually reduces costs while providing a number of other benefits. Convincingly, his ideas and methods were proven true by numerous success stories – most dramatically the rise of Japanese manufacturing to world class status after World War II.

On page 3 of his 1982 book, Out of the Crisis, written as he said with the aim of transforming American management, he provides a chart that shows the logic of his methods.

  • When you improve quality,
  • Your costs decrease because of less rework, fewer mistakes, fewer delays and snags, better use of time and materials.
  • This improves productivity,
  • Which drives increased market share with better quality and lower prices,
  • Which allows you to stay in business, and
  • Provide more and more jobs.

He also clearly states that quality is not the job of production (or line) workers, it is the job of management. To this end he stipulates the 14 Points for Management which he describes as the “basis for transformation of American industry.” They are:

  1. “Create constancy of purpose toward improvement of product and service.
  2. “Adopt the new philosophy that comes with the new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.
  3. “Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.
  4. “End the practice of awarding business on the basis of price. Instead minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.
  5. “Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.
  6. “Institute training on the job. Training must be totally reconstructed. Management needs training to learn about the company, all the way from incoming material to the customer.
  7. “Institute leadership. The aim of supervision should be to help people and machines and gadgets do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.
  8. “Drive out fear, so that everyone may work effectively for the company.
  9. “Break down barriers between departments.
  10. “Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.
  11. “Eliminate work quotas. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.
  12. “Remove barriers that rob the hourly worker of his right to pride in workmanship. The responsibility of supervisors must be changed from sheer numbers to quality. Remove barriers that rob people in management of their right to pride in workmanship. This means abolishment of the annual or merit rating and of management by objective.
  13. “Institute a vigorous program of education and self-improvement.
  14. “Put everybody in the company to work to accomplish the transformation. The transformation is everybody’s job.”

While his life’s work was primarily with manufacturing industries, he categorically states that the principles of statistical process control that produce quality in manufacturing and “all that we learned about the 14 points and the diseases of management applies to service organizations.”

Deming goes on to compare and contrast the challenges of manufacturing a product and delivering a service. These are instructive to anyone in service who wants to improve quality. As an example he provides an observation contributed by William J. Latzko, a consultant who works with clients on quality and service:

“One finds in service organizations, as in manufacturing, absence of definite procedures. There is an unstated assumption in most service organizations that the procedures are fully defined and followed. This appears to be so obvious that authors avoid it. Yet in practice this condition is often not met. Few organizations have up-to-date procedures. Consider a manufacturer who has full specifications for making a product, but whose sales department does not have guidelines for how to enter an order. A control on error on placing orders would require procedures for the sales department. I have seen numerous service-oriented operations functioning without them.”

How does a company measure or quantify the cost of confusion, mishandled or incomplete information, time to investigate and correct errors, and customer dissatisfaction? Without well-defined procedures how can a company consistently train its workers to do quality work?

The bottom line is that poor quality and disorganization is a major driver of costs in manufacturing and service organizations. In the service industries an improvement in quality not only lowers costs but also improves service. The combination of lower cost and better service makes the business more competitive and successful in the marketplace – and isn’t this the very job that management is hired to do?

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the club industry and its challenges. From time to time, we will feature guest bloggers — those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking club managers throughout the country and around the world.

Club Resources International – Management Resources for Clubs!

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Guest Blog: How to Become a Self-Starter

Monday, December 19th, 2011

Consider yourself lucky if you have an amazing boss. Unfortunately, mentors are not easy to come by. Whether or not you are one of the lucky few to work with a great motivator should not make a difference in what you are able to accomplish. Even with a talented mentor at your side, it is important to learn to be a self-starter.  Don’t wait for things to happen, make them happen yourself.

Becoming a self-starter can help you achieve any goal. Self-starters can stand up and take control of any situation. Moreover, they can get more accomplished in a shorter period of time. This ability can help you reach your goals faster and on your own terms.

Set Clear Goals

You must define your goals before you can start working toward them. If you want to be successful, start by defining what success will look like to you. Be as specific as possible about what you want to achieve.

After you know what you’re working towards, you need to set up long and short term goals. Start off with something you want to accomplish within a year, and then set up short term goals that will help you get there. Using short term goals as stepping stones for long term goals will help create a plan of action.

Make Detailed Plans

Once your goals are defined, it is time to figure out how you will achieve them. The key to reaching your goals is to create a specific action plan.  Your plan should be comprised of short, actionable items that can function like a checklist. Set up action steps with deadlines that will keep propelling you forward.

Treat self-imposed deadlines the same way you would if they were provided by a boss. Being able to stay on task is a huge part of becoming a successful self-starter. Just because you set the deadline doesn’t mean that you shouldn’t be accountable for keeping it. Consider sharing your plan with a superior or team member. Making someone else aware of your deadline can help you keep the necessary sense of urgency.

Never Put Things Off

Procrastination is a self-starter’s mortal enemy. Putting things off won’t help you in the long run.  Though it might seem easy to set a task aside, it will only add more stress as the work piles up. It might be tempting to push back a deadline if you’re really busy, so you have to remind yourself of why you made the deadline in the first place.

Every task, step and deadline affects your goals. One missed deadline can easily snowball into more. The point of being proactive is to assure that you accomplish everything possible to help you reach your goals. You will make things a lot more difficult for yourself if you make a habit out of putting things off.

Keep Track of Your Successes

Motivation is a driving force behind a self-starter. When you are working toward larger goals it might feel as if you will never get there. One of the benefits of creating a plan based on actionable steps is that you will accomplish many of your short term goals along the way.

Remember to acknowledge the small accomplishments that you’ve made. Each step brings you closer to reaching that final goal. Keeping track of your successes will remind you of how far you’ve come. Moreover, you can use your successes as a learning tool. Think about what you did right and what you might have done differently. Use what you’ve learned to increase your efficiency for your next step.

Remain Positive

Worrying about failure is a waste of time and energy. Instead of fretting, keep your energy focused on the work. When stresses come up, refer back to your action plan. Redirect the stress into a specific action. Working through your worry can remind you that you are on your way to reaching your goals.

Bumps in the road are inevitable, but it’s how you handle them that will determine whether or not you are successful in the end. Keep an optimistic attitude and power through. Every successful task should help alleviate your misgivings.

Becoming a self-starter will help you achieve professional and personal goals. Organization and focus will go a long way towards helping you reach those goals. Stick to your action plan and don’t let doubt get in the way of your accomplishments. You already have the ability, so make your plan and stick to it.

This post was written by Erin Palmer on behalf of Villanova University’s online programs. Choose from a variety of topics such as IT Service Management, Project Management, Six Sigma, and more!

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the club industry and its challenges. From time to time, we will feature guest bloggers — those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking club managers throughout the country and around the world.

Club Resources International – Management Resources for Clubs!

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Guest Blog: You Don’t Know . . . What You Don’t Know!

Monday, May 9th, 2011

blake_ashdownNote:  This week’s guest blog is by Blake Ashdown.  Blake is CEO of Club Insights by SureVista.  You can learn more about their services by clicking on the link at the end of the blog.

As a professor at the business school at Michigan State University, I was frequently asked by my students, “What do I have to do to be successful in business?”  It’s a simple question, but one without a definitive answer.  Over the years, I have started and run many successful businesses and each one taught me something different.

But after reflecting on this question, I realized that there was one success principle that stood out; one that, if I hadn’t followed, would not have led me to the successes I eventually achieved –  here it is, “Successful people have an insatiable appetite to pursue what they do not know, and then apply it to their business and life.”

There are two key concepts in this principle:

  1. You must have an appetite to pursue what you do not know.
  2. After you discover or learn something you did not know you must apply it to your business and life.  If you never apply it, it is of no value.

This principle seems simple, and yet very few successfully execute it.  Here is why:

You don’t know what you don’t know!  You probably think you know, but you don’t!  How do you know what you don’t know?  If this seems confusing, let me try to bring some clarity.  Have you ever thought or said something like this, “If only I had known two years ago what I know today, I never would have…

  • hired that person.”
  • bought that car.”
  • used that vendor.”
  • taken that job.”
  • gone out with that person!”

At the time, you made a decision based on the information you had available to you.  You thought you knew what you were doing and you thought you were making a wise decision.  But later, you discovered that there were some things you didn’t know and, had you known them, you would have made a different decision.

This is called the Law of Unintended Consequences.  You made a decision, thinking it was the right decision, only later to learn that it was not the right choice.  As a result, you suffered an unintended consequence.  In fact, most problems you encounter as a Club Leader are the result of the Law of Unintended Consequences.

Now, sometimes unintended consequences are unavoidable.  But too often, they could have been avoided if you would have had the desire to learn things you did not know.

You see, studies show that most people would rather talk about what they know, rather than pursue what they don’t know.  Do you know anyone like that?  Someone who is always talking about what they know, or telling you why something cannot be done.  They make excuses as to why something cannot be done, when it may be they don’t know anything about it.

In fact, through his research at the University of Georgia, Paul Schempp has found that most people think they know much more than they really do.  In his book 5 Steps to Expert, Schempp identified 5 steps to becoming an expert in your field.  The 5 steps are:

  1. Beginner
  2. Capable
  3. Competent
  4. Proficient
  5. Expert

Experts are the highest skilled professional in their field with exceptional amounts of both experience and education.  Shempp’s research found something interesting.  He asked the participants, “How much of what you need to know to be successful in your profession, do you know?”

  • The average response from Beginners and Capables…90%.
  • The average response from true Experts…60%.

Here’s the point, most of us know much less than we think, and the more you know, the more you realize you don’t know.

You don’t know what you don’t know.  Your board members don’t know what they don’t know.  The only way you, as a Club Leader, can achieve success is to realize you don’t know what you don’t know and actively seek out what you do not know.

You cannot eliminate the law of unintended consequences, but you can minimize it.  This is why research is so important.  Data is just information.  Information when it is understood in its context becomes knowledge.  Knowledge that becomes actionable is wisdom.  When you have wisdom, you make wise choices, and wise choices lead to success.

Blake Ashdown, CEO Club Insights by SureVista.  See Blake’s insightful video blogs here.

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the club industry and its challenges. From time to time, we will feature guest bloggers — those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking club managers throughout the country and around the world.

Club Resources International – Management Resources for Clubs!

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Guest Blog: Crabgrass Control

Monday, May 2nd, 2011

Note:  This week’s guest blog is from Global Turf Network – an initiative to provide scientifically-based educational information and expertise to the turfgrass industry globally in native languages.  You can learn more about their services by clicking on the link at the end of the blog.

Crabgrass (Digitaria spp) is a major problem in both cool-season and warm-season turfgrasses.   As a general rule, crabgrass tends to be more of a problem in temperate climates and less of a problem in tropical regions.  In temperate regions the most important and likely the first weed control practice of the year is the proper timing of a pre-emergent herbicide application for crabgrass.

The ideal situation is to apply a pre-emergent herbicide just prior to crabgrass germination.  At this point in time your herbicide will prevent germination and last longer through the growing season.  Besides the traditional calendar date for application, soil temperatures and flowering ornamentals can be used to predict crabgrass germination.  Below are some of those keys. It should be noted factors like turf cover, and soil moisture for example can influence crabgrass germination and emergence.

  • Soil Temperature (pre-emergent herbicide applications should be made prior to these occurrences (~ 3 C below the threshold))
  1. Minimum soil temperatures of ~13 – 15 C) at the 2.5 cm depth at daybreak for 4-5 days are required for germination.
  2. Mean soil temperature of ~16 – 19 C at the 2.5 cm soil depth are required for germination.
  3. Soil temperatures greater than 23 C are required for significant crabgrass emergence
  • Phenotypic Keys for crabgrass germination (pre-emergent herbicide applications should be made 14-days prior to these events:
  1. Forsythia bloom withering (more applicable in northern temperate regions)
  2. Daffodil (Narcissus spp.) bloom withering
  3. Dogwood (Cornus spp.) bloom withering (more applicable in warmer regions)

Dr. Karl Danneberger, Turfgrass Science Professor, and Ed Nangle, PhD Candidate.  They can be reached through the Global Turf Network website – www.globalturfnetwork.com.

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the club industry and its challenges. From time to time, we will feature guest bloggers — those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking club managers throughout the country and around the world.

Club Resources International – Management Resources for Clubs!

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Guest Blog: Enron & Madoff are Stealing from Your Club!

Monday, September 13th, 2010

Before you close the bank accounts and padlock the doors, we propose that these financial scandals have led to unprecedented scrutiny of your club’s financial wellness.  In a “normal” economy, an equity investment in club membership for most members and prospects is a large commitment and important financial decision.  Particularly the case if your member is a resident in the adjacent or “bundled” community.  In the current economy, amid corporate collapses and failing golf and country clubs, any unexpected increases in dues, fees and operating or capital assessments are devastating to the club’s creditability and growth potential.  Your proactive response as club leaders and management must be a commitment to superior governance practices.

GOVERNANCE MATTERS

The Enron scandal, revealed in October 2001, led to the largest bankruptcy reorganization in American history at that time.  WorldCom, Lehman Brothers and three others have since filed even larger bankruptcies.  Enron is undoubtedly the largest audit failure and led to the dismantling of the once highly credible Arthur Anderson CPA firm.  In July 2002, the federal government responded with what is commonly known as the Sarbanes-Oxley Act requiring the Securities and Exchange Commission (SEC) to regulate corporate governance for investor protection.

While Sarbanes-Oxley has not mandated reforms for non-profit organizations such as private clubs, it has raised the bar for the financial governance practices of all organizations.  In June 2007, the IRS released a new Form 990 that requires significant disclosures on governance and boards of directors.  The Form 990 disclosures do not require but strongly encourage nonprofit boards to adopt a variety of board policies regarding governance practices.  These suggestions go beyond Sarbanes-Oxley requirements for nonprofits to adopt whistleblower and document retention policies.  The IRS has indicated they will use the Form 990 as an enforcement tool, particularly regarding executive compensation.  Sarbanes-Oxley has had a considerable impact by modernizing terms such as whistleblower, fiduciary responsibility, accountability, transparency and independence.  Despite this, the Madoff scandal broke in December 2008 and is widely considered the financial crime of the century.  Madoff serves as a grand wake-up call to the SEC and IRS that watchdog controls are not yet and may not ever be completely effective.

Good governance policy is not only best practice but a required foundation of a club’s creditability.  Club leaders and management must focus on defining their risk tolerance and achieve a balance between strategy, operations, and controls.

YOUR CHALLENGES

  • Financial and other reporting in a complex regulatory environment
  • Fiduciary responsibilities and risk management
  • Internal control design and testing
  • Protecting business information and computer systems against security threats
  • Business critical event identification and establishing responses
  • Growth in membership and ancillary income in a competitive environment
  • Effective and efficient use of resources

Effective club governance goes beyond establishing an audit committee and obtaining an independent financial statement audit.  To address member concerns about financial risk, as club leaders and club managers you must demonstrate an on-going commitment to risk assessment, internal control development and testing, long-range planning and adherence to a comprehensive code of conduct for board members and staff.

By the way, do consider periodically changing your bank account and door locks as a good governance measure.

Mark Alviano, Americlub Financial

Mark Alviano is a leading financial advisor to America’s private clubs.  His expertise helps club leaders overcome financial challenges on the path to prosperity.  He is the Managing Partner of Americlub Financial, a boutique club advisory firm with national headquarters in Raleigh, NC.  Based on an expertise in finance, accounting, HR, technology and regulatory compliance, Americlub’s products, services, and solutions create opportunities for cash flow improvement and sustainable financial growth.  Find out more about Mark at www.americlubfinancial.com/mark-alviano.

Thanks and have a great day!

Ed Rehkopf

This weekly blog comments on and discusses the club industry and its challenges. From time to time, we will feature guest bloggers — those managers and industry experts who have something of interest to say to all of us. We also welcome feedback and comment upon the blog, hoping that it will become a useful sounding board for what’s on the minds of hardworking club managers throughout the country and around the world.

Club Resources International – Management Resources for Clubs!

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