Among often used terms today, transparency comes to mind in many situations. Citizens constantly seek transparency from elected officials and in our business dealings we hope associates treat us fairly and are forthcoming. One common issue in my travels to the many private clubs we work with is the (real or perceived) lack of transparency in club governance and operations, whether member-owned or investor-owned. This singular element can be the difference between happy members and financial success or an exodus of members and limited use of the club which often causes a downfall. I’ve seen clubs fail, largely because of a lack of transparency and the resulting decline in confidence of the membership.
What is transparency? The dictionary definition is: the quality or state of being transparent. something transparent, especially a picture, design, or the like on glass or some translucent substance, made visible by light shining through from behind. What it means for clubs is that the membership is provided access to decisions being made and that leadership/ownership is accountable to the members. At many member-owned clubs, club leadership and governing boards are often given broad powers to make decisions on behalf of the membership. Like governments, the board can modify dues, establish pricing for club services and assess the membership as it sees fit. While there are sometimes spending limits without membership approval, the board can obligate the membership to significant costs, make “politically” motivated admissions and disciplinary decisions and implement or reverse policies in a manner inconsistent with the wishes of the broader membership. With investor-owned clubs, ownership has broad power but needing to make a profit, is sensitive to member input. Many investor-owned clubs have member advisory boards that act as a communication conduit between ownership and members with the goal of creating a culture of “ownership” among the members despite them not owning the club.
Clubs come in a variety of “shapes and sizes”. Some are member-owned with board governance. Some are member-owned with “benevolent dictator” governance. Some clubs are owned by a limited group of the membership and some are owned by for-profit investors or management firms. No matter the ownership structure, there can be complex operational and capital expenditure decisions that should (but aren’t always) made with the knowledge and more importantly, the support of the membership.
At board run member-owned clubs, leadership often operates in a vacuum of secrecy. There is limited interaction with the membership at large and it’s not uncommon to see individuals in positions of leadership for extended periods, sometimes even exceeding term limits imposed by club by-laws. Sometimes, those individuals demand (and receive) preferential treatment from staff. It’s not uncommon for clubs to retain services and purchase products from board member-owned businesses, even in situations where it may not be most advantageous to the club.
Club policies, rules and financial details aren’t always presented clearly and in some cases questions arise about a variety of topics, including but not limited to operational and capital expenditures, perks for board members, membership levels, maintenance costs and dues/assessments. Minutes of the board meetings are rarely published and if posted, are often abridged limiting description of the issues at hand. Rank & file members often feel as if they have no voice, not only in decision making but also in who’s making the decisions, as election of board members is often a tightly controlled process by those in power.
At investor-owned clubs, though membership has no legal right to participate in decisions, some multi-club operators tell me that they try to encourage member involvement in the interest of creating a club culture where members feel like they have a voice. Their financial future depends on happy members and if they can create the right culture, the club will be profitable. Investor-owned clubs typically avoid member assessments while boards often “push through” assessments for pet projects that may not be popular with the broader membership. At some clubs, like Myers Park CC in Charlotte, NC the board can approve a spending plan and be sued for lack of transparency.
Members are the lifeblood of any club. At most clubs members are successful folks used to being informed and consulted. Once ignored, a club – any club – can fall into decline that can sometimes be irreversible. Transparency is an essential element for a happy membership which in turn results in a successful club.
As I’ve said many times before, no club – even the seemingly most successful – is bulletproof. Once members feel ignored and feel as if they have no voice because there’s no transparency they become disenfranchised. A few years ago, I wrote about a club I belonged to that exists no longer, largely because of a lack of transparency and poor decision-making. Recently, I became involved as a consultant and appraiser for two different clubs where disputes have arisen in advance of potential transfer of ownership partly from a lack of transparency. One such situation is in litigation. Transparency can avoid that.