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Five years ago BoardRoom contributor Rick Coyne visited Congressional Country Club in Bethesda, Maryland over a two-day period to examine the club's transition from the General Manager concept to the Chief Operating Officer form of governance.
During that time Rick met and interviewed Dennis Spurgeon, the immediate past president at the time and Timothy Sullivan, the current president along with Mike Leemhuis, the relatively-new COO of Congressional.
He also spoke with Jim Singerling, chief executive officer of the Club Managers Association of America to gain a better understanding of the COO process and the importance of good stewardship within each club's community. The resulting story was so well received that CMAA ordered a copy to be sent to all of its members.
Recently Rick Coyne revisited Congressional to see how well the system has worked and to meet again with those whom he had interviewed for the earlier story. In addition, Rick spoke with Congressional's current president, John O'Neill. It's our hope that you will enjoy this update as much as you enjoyed the first story.
Many of today's club volunteer leadership realizes that aside from being the center of our recreational or social universe, clubs are also live and functioning businesses, not unlike those that they operate each and every day.
We first chose Congressional as an example of the COO transition, because it ranks among the finest clubs anywhere in the world. It has history, tradition and is literally, a national institution. Congressional's original life members included five former U.S. Presidents including Hoover, Wilson, Taft, Harding and Coolidge.
In addition, the 825 founding members included J. Ogden Armour, Mrs. Rockefeller McCormick, William C. Carnegie, T.A. Mellon, John D. Rockefeller, Alfred I. du Pont, Mrs. E.H. Harriman, Walter P. Chrysler, Harvey S. Firestone and William Randolph Hearst, to name a few.
Stated in the 1921 prospectus for life members: "The official or member of Congress, brain cleared by the bracing air, and exhilarated by the play in which he is engaged, finds a new and more adequate conception of the problems of government, and develops more surely the solutions essential for America's well beingÉThere is a camaraderie of play, and it is this which makes this Club the resort of those who seek distraction from the heavy cares of duty."
Renowned for its golf course, Congressional has been home to many major golf tournaments including the Kemper Open, two U.S. Opens, PGA Championship, U.S. Senior Open, Women's Amateur Championship and the National Intercollegiate Golf Championship. And, Congressional will host the 2009 U.S. Amateur and the 2011 U.S. Open.
During World War II, the club was occupied by the O.S.S. (Office of Strategic Services) and became a training center. Holes 11 and 16 were scarred from missile testing, the 13th and 15th fairways were used as target ranges and quonset huts lined the perimeter of the club's property. In 1946 the club was returned to the members and Congressional once again, with an evolution from political playground to a family club with wholesome entertainment.
Patriotism, esprit de corps, traditions, and perseverance epitomize the club's succession throughout the past 84 years. In that time, the club has had only four general managers, including the current General Manager and COO, Mike Leemhuis.
The second reason for choosing Congressional was very much tied to the club's rich history and tradition. We wanted all clubs to look at the process and say to themselves, "If Congressional did it, it must be a prudent process to consider."
Likewise, it's no longer viable to assume that volunteer leadership can provide the time, nor expertise to manage a club in today's complex world of club management. Quite simply, there's never been a more appropriate time to reconsider the role of management and the business of operating our private clubs.
In developing the original history and chronology of the transition, four people were enlisted for their support and input including Jim Singerling, CEO of Club Managers Association of America; Dennis Spurgeon, the president at Congressional who initiated the COO concept, and also U.S. Open General Chairman for the 1997 U.S. Open; Timothy Sullivan, the then current president, and Mike Leemhuis, Congressional's General Manager and COO since February 1999. For this story, we've also interviewed the current president, John O'Neill.
The first step is in understanding the nature of the Chief Operation Officer versus General Manager or Manager concept. Jim Singerling is the leading authority on the subject, and to him we posed the following questions.
BoardRoom - Jim, spending most of my life in private clubs I can't help but notice that the typical governance system in clubs seems to be a bit antiquated, perhaps even out of touch. Why is the COO concept better and what does the association prescribe for clubs considering the transition?
Jim Singerling - If the governance system of a club is 'out of touch', it has no single source to blame. It may be acceptance of the attitude 'it is easier to put it off than to deal with embracing the change.'
The club is one of the most successful 'small businesses' in every community. To allow any million dollar business to function without a chief operating officer is simply irresponsible.
Whatever model a club may choose to ensure successful operation of the business of the club, the board must assign responsibility to someone to run the operation day-to-day. CMAA has a number of models that reflect strong business plans for all operating departments.
The key is whether the governance structure of the club actually 'commits' to the concept. Good business cannot happen overnight, and it certainly cannot happen without the total commitment of the governing entities of the club.
BR - You have long been an advocate of the club being a sustainable economic engine for communities all over the country. What does a club actually contribute to its local economy and community and how can clubs become more involved within their communities?
JS - If you look at the distribution of the total revenue of the club, it all goes back into the community.
Here you have the more economically successful members of the community (club members) placing their disposable income into this small business and distributing it through payroll and accounts payable to the small business purveyors (florists, laundry, plumbers, painters, insurance brokers, food vendors, etc.) who usually never participate in using the club. It's like having Robin Hood in your own back yard!
Last year clubs returned over $10 billion to their communities. Almost $4 billion of that was in payroll only. And the club, once established, continues this revenue distribution for decade after decade. The club is the best economic neighbor a community could possibly embrace. Congressional's membership, as a perfect example, has recently approved a $24.75 million major renovation and addition to the club, almost all of which will benefit the local economy.
If one can get by the jealously of wishing they had the financial success of some of the members of the club, and look at the club for what it really has become, the club becomes the finest of neighbors for everyone who lives in the community.
The alternative would be to not have the club and the revenue stream in the community. Would that affect the club members negatively? Of course not, they would simply spend their disposable income somewhere else. A club is truly a good neighborÉno question about it.
- Looking back to the inception of the COO concept, it was during Dennis Spurgeon's tenure on the board that the process was initiated. He was the sitting president when Mike Leemhuis was hired.
BR - In 2000 we asked you what precipitated your initiating the COO concept at Congressional. Your response was that Congressional was a $15 million dollar business, which needed centralized management and after examining the roles of the president and the COO leadership, the board realized that it did not have the time nor expertise to operate the club as the business that it was. In retrospect, how has the COO concept of operation changed or affected the operations of Congressional over the past five years?
Dennis Spurgeon - I re-read The Boardroom COO article published in January 2001, and considered the answers I gave to your questions at that time. If you were to ask the same questions today, I wouldn't change a single answer (except that Congressional is now a $21 million business). It has been a very satisfying experience for me to watch from a distance these last six years and see that the COO concept at Congressional has become thoroughly institutionalized, as we intended and hoped that it would be. The board sets policy and the committees provide advice, but there is no question about who runs the business that is Congressional Country Club. Congressional now has centralized authority with the COO and a fully unified management structure. The COO has full authority and responsibility for the club's budget.
BR - Another aspect of the transition was that you had concerns about a new executive coming in and totally managing the club in spite of the powerful committees that were already in place. How did you and your board clear the "land mines" for Mike as he took the helm, and how has the process worked over the past six years?
DS - In any club there are bound to be some controversial issues and sacred cows that could be collectively referred to as "land mines" that a new COO should avoid stepping on early in his tenure. The new COO needs time to build his credibility with the membership and the staff, and the board needs to take every opportunity to present the new COO in a positive light. We attempted to have the board or the president take responsibility for announcing controversial actions, and have the COO announce and take credit for popular actions for the first several months of the COO's tenure. Committee chairs, who fully understood and supported the COO concept of club operations, were appointed. I have not heard any loud explosions emanating from Congressional, so the process must have worked.
BR -Another of the issues we discussed in 2000 was insuring continuity of the COO process. You indicated at that time that the most important factors were to continually reinforce and support the position. What, if anything has changed and would you still offer the same advice?
DS - Yes, I would offer the same advice. One point that I might emphasize is the importance of the relationship between the president and COO during the early period of the COO's tenure. When we set out to hire a COO, I took the liberty of appointing myself as chairman of the search committee, and we did not employ a search firm. In the early months of the COO's tenure it's imperative that the president fully support the COO, even in those instances where the COO's judgment may be less than perfect. To do so the president needs to have complete confidence and trust in the COO. That confidence comes much easier if the president and the president's likely successors were fully involved and have a sense of ownership in the selection process. Once an excellent COO is on board, one consideration for selection of subsequent presidents by the board should be their compatibility with the COO, and their belief in the strong COO concept.
BR - Dennis, what other comments would you make to clubs not currently considering the move to the COO form of governance?
DS - When I read the many fine comments that were made about Congressional Country Club in the January 2001 article, I had a sense of pride that I was privileged to belong to such a club. In spite of Congressional's storied history and current status, we need to be mindful that things have not always been so positive at our club. Congressional has not always been a profitable business, our golf courses have not always been in such pristine condition, our dining facilities have not always been so popular with the membership, our golf pro shop was not always recognized as one of the top merchandise operations in the country, our golf tournaments did not always turn a profit, and our annual meetings have not always enjoyed a calm, civilized environment. Memories can be short and we can too soon forget the effort it has taken to get us to our current state of excellence. Continuity of purpose and adherence to the club's mission require continual reinforcement. "Those who do not learn from history are doomed to repeat it."
- It's obvious listening to Dennis' comments that a board has the responsibility to ensure that if it wants to have this kind of structure that it should have a president compatible with the management style. The hardest part is to get the flywheel turning and getting the program up to speed. Once engaged, however, the process appears to get easier. The concept is to get the process moving as an acceptable and necessary practice for the club's continued success and then to continually reinforce and support the role.
Timothy Sullivan was the then sitting president, and we wanted to determine how the program has effected operation, the functionality of the boards and the ability of the club to function as a business.
BR - During your term you initiated a strategic planning process and I believe were the first president after Mike was hired to take the COO position. What has happened with the strategic plan and how has it influenced the COO's operating position?
Timothy Sullivan - I've been out of the mainstream since my term ended, but the club does a nice job of keeping past presidents informed and somewhat involved through breakfasts with the current president (twice a year) and through participation in the club's strategic planning committee for five years after a president's term ends. Through that participation, it seems to me that the strategic plan is still a key component in the club's management and planning process. Perhaps the best current example is the work the club leadership has been doing, hand in hand with management, as it plans for the major renovation that's about to begin. Working together, they have engaged top-flight professionals, communicated extensively with the membership, budgeted rigorously, and listened carefully as the project has been refined. Mike Leemhuis and his staff have been involved every step of the way, and their input has been invaluable. The mutual respect between management and the board is obvious, and their working relationship will inure to the benefit of the entire membership.
BR -You indicated that in the COO concept, it was important to you and to the board that Mike not get "bogged down" in the politics of the club. How did you accomplish this and is the process still working?
TS - One of the worst things that can happen at a private club is for the COO to get caught up in club politics. He or she has to be above it - outside of it - for the system to work, and the president and the board have to make sure to circulate that message. When Mike started at the club, my predecessor Dennis Spurgeon made it clear to the board and to the committee chairs who were not board members that we were moving to a strong general manager system and that micro-management by members would not be tolerated. I sent the same message during my term, especially through my monthly letters to the membership, and each president since then has worked hard to make sure that everyone understands how things work. There was some grumbling at first, but really very little as I look back on it, and that grumbling died out once the members saw what Mike was capable of doing. In each case in which a member questioned what we were doing, I made a point of explaining the situation to them personally and I asked them to give us some time to effect the transition. To their credit, they cooperated, and it has worked out well for all of us.
BR - What were some of the more difficult days when the COO concept was implemented and what advice would you give to other boards contemplating the transition?
TS - As we all know, some people just don't like change, and the world of private clubs is no different. In our case, I think we made the change with a minimum of difficulties because, (1) we communicated to our members exactly what we were doing and why and, (2) we had the right guy in Mike Leemhuis. I just can't say enough about the need to communicate with the membership. In today's world, with e-mail and other avenues, there is no excuse for failing to get your message across. In addition, a good club manager can make such a transition much more successful by practicing management by walking around. Mike Leemhuis does that as well as anyone, and the members love it. Between those two techniques, you can solve most of the issues lurking out there.
- Five years after the first story and six years after the transition, we felt it extremely important to gain a "current" perspective on the COO concept as it relates to the present operation and strategic planning of Congressional Country Club. We interviewed John O'Neill, who has recently been involved in the approval of a $24.75 million dollar capital renovation project, concerning his perception of the governance system and its ongoing affect on the club.
BR - You have inherited a system of governance that began five years ago. As the current president, how would you describe the system to other boards and what advice would you offer them in setting up and maintaining the system?
John O'Neill - In my mind, the COO system is fairly easily described. That is, the primary duties and responsibilities of a president and board are to set and develop club policy, whereas the primary duties and responsibilities of the COO are to manage the club's operations. It's hard for me to imagine that any club, particularly a large club, would not benefit from this system. However, to make it work and work well, everyone must embrace the concept.
Once everyone is on board with the concept, the next step is to find the right COO for your particular club. He or she must be well trained and have expertise in managing all of the different facets of a modern club. This is where I believe the CCM designation and training can be of immense help to a president or board. A general manager or COO with this designation should have that necessary expertise. Maintaining the system means sticking with the concept! The president, the board, the committees, and the club's members must let the COO manage the club. If a club is currently operating under a different system, this can be hard at first. In general, boards are comprised of successful people, often with pertinent backgrounds, who by human nature want to extend their expertise to the club. In some situations such as planning or developing capital projects this can be very helpful, but when it comes to day-to-day operations, the COO must have control. The board of course is always there to give support and establish club policy when needed, but the COO must be allowed to manage, if the system is to succeed.
Finally, it is important to have a clear club mission statement that will guide management and staff. We refer to our mission statement and supporting statement of objectives and responsibilities as our 'North Star.'
BR -After six or so years of the system being in place, how much emphasis is placed on the COO's input on the club's financial health and how involved is the COO in developing the financial strategies for the club?
JO - Michael Leemhuis, our COO, is involved in the financial health of the club from top to bottom, which is imperative in a $21 million dollar operation. In fact, much of his own personal evaluation each year is based on his ability to create the budget, manage the budget, and bring the club in on budget. Since Michael came to the club he has significantly improved our budget process, and he is the driving force behind it. Each year it is freshly created from top to bottom in each department, and barring natural disasters or unpredictable events, Michael would blame himself for a less than optimal financial year at the club. At this point in the COO concept at our club, the board expects him to present a finely tuned accurate operational budget every year that continues the sound financial principles by which the club abides. In addition to the operational budget, he also prepares the capital budget with the same focus on each department of the club. Although it falls under the purview of the board to approve or allocate larger capital expenditures, Michael manages all of the daily departmental and general club capital expenditures.
BR - What advice would you offer a new president taking the reigns of a club that is considering the COO position? What advice would you offer clubs that have not considered the position?
JO - I believe the answers to these questions are essentially the same and have a central theme: In today's club environment, a CMAA, professionally trained general manager/COO should manage your club, and the board, under guidance from the president, should set policy, develop policy, perform long range strategic planning, and handle membership issues. This concept has worked very well at Congressional, and I suspect that it would work well at most clubs.
- Finally, as a part of understanding the transition to the COO concept, we spoke with the Congressional's General Manager and COO, Mike Leemhuis. Mike has an interesting background including the Sun City Resort in South Africa, work as general manager at TPC of Avenel and as the manager of several hotels around the world. Mike has been a participant in an Iron Man competition (just because he wanted to see what it was like) and demonstrates the quiet confidence of a man with the energy, enthusiasm and knowledge to operate this $21 million dollar operation. Mike currently serves on the national board of the CMAA.
BR - It's been over five years now since you assumed the position of COO What have been your greatest challenges and how have you overcome them?
Mike Leemhuis - Probably the greatest challenge at Congressional Country Club has been to understand the culture. It's the culture of a club that defines who and what it is. Part of culture is to understand and appreciate the history and traditions of the club. It's important to remember that during the interview process for a position at a club, it's a two-way process. The search committee is probing to try and see if you would be a good fit for the club. It's also as important for you to ask probing questions to see if the club's culture fits you and your career. I believe managers lose their jobs because either they or the club have not ensured that there is a good 'cultural' fit. I believe you have to understand and fit the culture of the club to be successful as the club's COO.
With Congressional's high profile position in our nation's capital, it's been a enjoyable challenge to immerse myself into it's incredible rich history and traditions. It's something that takes time, patience, research and a lot of listening to get you to that trusted position of 'club historian.'
BR - Mike, you have always placed a great deal of importance on the relevance of the staff. Describe the process that you employ to both give support to your staff and to gain support from them?
ML - When I'm asked this question, which happens a lot, I always have the same answer. First, hire the brightest and the best you can find. Surround yourself with people who have a great attitude and want your job. Second, clearly communicate what it is that you want done and how it should be done and then empower them to get the job done. Make sure your employees are well trained. Training isn't a 'one time' thing but an 'every day' thing. You don't stop training, just like in life you don't want to stop learning. Trust, respect and empower your staff and make sure you spend time with them. The COO sets the tone in the club from the time he sets foot in the door. Remember, your staff is always watching you and how you handle situations at the club. You have to lead by example. You are the standard!
BR - What kind of background prepared you to undertake this position?
ML - As I indicated in the last interview, I am not the traditional country club manager. More than 80 percent of the traditional managers seem to come from a food and beverage background. I'm not saying that this is right or wrong, however, it does speak to the old triad concept of three separate operators.
The ones that have succeeded, and there are a host of them, have taken upon themselves to move beyond their core competencies and become expert in the other disciplines including golf course maintenance and golf operations. One of the things that I stress in my Michigan State BMI III class in golf operations is do a golf rules certification. Make the commitment and you will have a better golf understanding than most other people in the club. So, the good ones have gone outside their area of comfort and gotten the education required to manage all areas of the club.
A lot of the really good ones go to the green superintendents conventions, the PGA conventions and other activities that are again, outside of their core strengths.
Even though I have a hospitality background, I was not a culinary expert 15 years ago. However, I set out to understand and educate myself and today I would put it up as one of my strengths. I read wine magazines and culinary magazines as well as the golf magazines and turf magazines. I went back for my Master's Degree just to broaden my perspective. When we deal with the professionals we have as members on a day-to-day basis and if we want to be considered in the same category, we need to go down the same road of educating ourselves. I'd recommend to anyone in the industry to right now go and register into an MBA program. Even if it takes you 10 years, it can assist not only your base of knowledge but your confidence as well.
BR - What advice would you give to a GM going to a club as the first COO?
ML - I would answer exactly as I did five years ago. Be visible. Members have a hard time extending trust and confidence when they never see you. Take time to know your committees and spend time at each committee meeting. Be sure that the board that hires you will support you in the process. Ensure that the board reiterates the COO system at annual meetings.
Attend all of the member functions. It's not only visibility to the members, it's visibility to the staff as well.
Lead by example. Even though you have the authority to hire, fire and mandate employee policies, you will find that if the staff trusts you and respects you, that your job as well as theirs, becomes easier.
Educate yourself. At every opportunity step up and find new things concerning our industry to learn. There are plenty of opportunities. Attend conferences other than for your own specific discipline.
Understand the mission of the club as well as its goals and objectives long term.
Communicate openly and truthfully.
Deal with the operational issues, training and delivering what the members want. Remove yourself from political issues. This should be the domain of the board.
Remember that no matter how much time the job seems to take, spend quality time with your family. Take breaks during the day to go home and attend to your personal needs as well.
Most importantly, enjoy what you do.
COO CONCEPT MOST RELEVANT
As with the story of five years ago, this one too reveals a great deal of insight into how to begin the process and how to keep it alive and working. Each person interviewed played a significant role in the transition process. But what can we learn from them?
On my two-day stay at Congressional five years ago, I witnessed a remarkable operation made so by an insightful elected leadership and a management staff dedicated to a system and process of management by example.
The follow-up interviews in this story with five remarkable individuals simply intensified our belief that the COO concept is truly the most relevant means of governance for the private club, an opinion that we hope you share.
Here's our summary in the steps, not necessarily in order, required to build a strong general manager or COO concept at your club:
1. The will of the board to institute professional management and a willingness to accept the inevitability of change affecting their governing position, as well as the day-to-day experiences of the membership and employees. To some degree this means putting personal agendas behind the need for professional guidance.
2. A realistic mission statement to set expectations, and the financial means to provide for that mission statement. Don't set the expectations beyond the current operation's ability to sustain.
3. The framework of a strategic plan for capital enhancements and improvements over an extended period of time into the foreseeable future. The COO should have considerable input to the strategic plan.
4. Strong, effective and on-going communication to the membership and employees regarding the concept and how it affects their day-to-day interactions.
5. Steadfast resolution to adhere to the principals of the COO concept, whether with member conflict or employee situations. This may even include protection of the COO from public opinion over the first several years.
6. Clear separation of duties between the operational and capital issues of the club versus the political issues. Keep the COO away from politics of the club such as elections or other highly personal issues.
7. The means to ensure consistency and longevity of the concept.
8. A hired leader, with the background, experience and qualities, capable of stepping into the position.
Private clubs have operated the same way for a long time. Before the onslaught of wholesale competition, before our members began aging without adequate replacement and before the legislative issues seriously affected our clubs, it may have been adequate, maybe even appropriate for volunteer leadership to mandate operations.
However, times have changed and conditions demand that we change as well. Competition is rampant, younger people see the country club lifestyle differently, members expect, even demand, that their experiences at the club be exceptional in every way, as they should.
However, the lavishness that once was available through abundant cash flow is today challenged by the needs of our members to dine more frequently outside of their club as well as their requirements for more diversity in their social lifestyles resulting in the need to professionally manage our clubs as the businesses, which they are.
Well beyond the normal vision of the board or membership, the industry has foreseen these challenges and prepared a cadre of specialists to deal with them. From the club manager to the green superintendent and golf professional, and now even to the membership professional, the respective associations representing these disciplines, has provided educational formats and certification programs preparing the club's professionals for the challenges of managing the private club. Specifically, the Club Managers Association of America has led the way in developing specific education on the transition to the chief operating officer concept.
The circumstances of our industry indicate that the timing is right to make a change. The industry itself has prepared the personnel to accept and respond to the challenge. As this panel of experts agrees, perhaps the first step is acceptance. Likewise, this esteemed panel of experts has also realized that volunteers, no matter how qualified or educated, do not have the time nor the expertise to successfully operate a private club as efficiently as a professional staff.
Whatever your club decides, we wish you the best of luck! However, if you are moving forward with the COO concept, luck may not be necessary. As we have often quoted Theodore Roosevelt, "In any moment of decision, the best thing you can do is the right thing, the worst thing you can do is nothing."
The saga continues... BR
Rick Coyne is president, Club Mark Corporation and a regular contributor to The BoardRoom. He can be reached at 1-972-788-4848, ext. 4 or via e-mail: rcoyne@clubmark.com
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