History, says ClubCorp president and CEO John Beckert, is both a blessing and a curse.
In its nearly half-century of history, ClubCorp has established its brand name as an industry leader. Its properties are household names and landmarks, including Pinehurst Country Club, Firestone Country Club and The Homestead resort.
But that history also can be a curse. For companies with 50 years of history, there’s five decades of “But we’ve always done it this way” excuses and broad blinders that block clear vision of problems.
When Beckert came on board in 2002, membership at its clubs was dropping, and revenue was slipping. It was clear that something needed to be done, but what, exactly, was up for debate.
“Everyone understood that things weren’t going well,” Beckert says. “The trends weren’t good. The condition of the clubs no one was pleased with. … We spent all of our time deciding what we were going to do to react to the problem.”
ClubCorp is a 49-year-old company that both owns and manages different types of clubs, including business, golf and country clubs, as well as resorts. When Beckert joined the company, it owned or operated 210 properties. Today, ClubCorp owns or operates 166 properties.
While the number of clubs ClubCorp owns or operates has decreased, its revenue has steadily increased, from $991 million in 2002 to slightly more than $1 billion in 2005. The clubs have a combined 180,000 members and 18,000 employees.
Like many businesses, ClubCorp struggled after the terrorist attacks of Sept. 11. The economic recession after the attacks forced many Americans to re-evaluate not only their budgets but also their travel plans, and therein Beckert saw opportunity.
If clubs were welcoming and safe, they’d be an extension of home for members, but with amenities such as golf and pools that many had come to enjoy on vacations. That was a tall order for the company at that time, as some clubs needed updating and others had suffered from deferred maintenance.
Beckert’s mission was to sort through the clubs, deciding which to sell and which to keep. And since the company was cutting the number of clubs, it also needed to reduce employment levels at its home office.
Beckert was also tasked with renovating the clubs that were left to create a warm, welcoming environment that would bring members back year after year.
Evaluating the company
With a hefty to-do list, Beckert started by assessing some of the company’s clubs first-hand.
Seeing the clubs gave him a feel for what renovations needed to be done and an opportunity to meet with a club’s managers. If he were going to change the company, he’d need the managers’ buy-in, and it would be easier to get their support if he got to know them and their needs.
“I would sit down with the company’s top managers, and with a notepad, and introduce myself and give a little background on the company and then just listen,” Beckert says. “Through that process of listening, I was able to quickly get a handle on where the priorities and the needs were. The first week, I was here for five days, and two of those five days I spent touring clubs in Dallas. It was very different from what had been the norm and had been the culture.”
Managers were unflinching in their advice for Beckert and their critiques of the company. One manager said he could either answer every e-mail from the corporate office quickly, or he could be out visiting with members and making sales calls — but he couldn’t do both.
Beckert knew the right answer was visiting with customers and making sales calls, both of which would help grow the company.
“There were certainly a couple of recurring themes, that they needed better communication, they needed more capital to improve their clubs,” Beckert says. “It was interesting. They kept saying, ‘There has been this big push from the home office to grow the company [through acquiring clubs], but we think the biggest growth opportunity is to reinvest in what we have and make it better and let me grow my membership,’ which ultimately became the primary plan for the next three or four years.”
Beckert agreed with the managers. He wanted to see ClubCorp reinvest in its own clubs by addressing maintenance issues on buildings and golf courses. Clubs and courses had to be well-maintained and welcoming to bring members back year after year.
Members paying dues were the most important revenue stream, and ClubCorp had to protect it. Deferred maintenance was no longer an option.
“What had changed dramatically was that the competition had changed,” Beckert says.
There was simply more of it.
“If we were not reinvesting and maintaining our properties, golf courses and dining rooms, we weren’t going to be competitive,” he says. “We would not be successful.”
Beckert still visits a club at least once a week and encourages his staff in Dallas to do likewise. Rather than ordering in lunch to eat at their desks, Beckert encourages senior managers to eat at one of ClubCorp’s Dallas clubs, which takes roughly 20 more minutes out of the day than eating at their desks. doing so keeps the company’s finger on the pulse of the clubs.
“Every time you think things are going really well, you are sitting in the office too much,” Beckert says. “You see some really good things, you see some employees doing phenomenal things, but you also see carpet that is more worn than you thought it was.”
Home office help
To give club managers the support they needed to grow the clubs, Beckert changed much about the way the home office operated. No one from the home office may send out a mass e-mail to all clubs without approval from Beckert or another top-level manager, which keeps the amount of e-mail down.
Beckert also started communicating directly with club management in regular e-mail updates, roughly every month, and with a quarterly conference call, informing them of financial performance and ongoing projects. Beckert even changed the name of the corporate office to “home office” to make it seem friendlier and more helpful.
And to help him keep tabs on interactions between home office and club employees, club managers receive an evaluation form every quarter and are asked for their feedback on interactions they’ve had with home office employees. About 85 percent of surveys are completed and returned, and if a negative comment is received, home office managers call the club to discuss it.
“My vision for this is that someday the lines of communication become so open and so frequent that you don’t need to do this,” Beckert says. “I don’t think we are any different than any reasonably large organization that it’s easy for people in the field feel like that the home office is more of an obstacle than a level of support.”
Slimming down
To raise capital for those all-important improvements, ClubCorp sold some clubs, and among Beckert’s biggest tasks was deciding which to sell and which to keep.
Most public golf courses, with few exceptions, were sold, as that simply didn’t fit the strategy. ClubCorp kept only those that were exceptionally profitable or in good regions for the company.
Then Beckert began evaluating the remaining clubs, examining each club’s bottom line, and its potential, before making a decision.
“We weren’t overly focused on whether it was producing positive cash flow today or not,” Beckert says. “Was it in a position to maintain or get better, and if it wasn’t, why wasn’t it? If it wasn’t trending to do better, if we spent capital, such as reinvesting in the golf course or rebuilding the club house, could that happen?
“A lot of it had to do with the local market we were in or our geographic presence.”
Getting employees to go along with his plans wasn’t always easy, Beckert says, especially with the job cuts, which were painful for the company. Beckert says constant communication is the key to helping employees accept drastic changes. About one-third of the staff in the home office was let go, which made the company more profitable.
Getting buy-in from employees is preferable, but sometimes, employees cannot be convinced.
“Ultimately, if they didn’t buy in, they left,” Beckert says. “That’s not my M.O., and it’s not something I’m proud of or overly focused on, but I spent a lot of time listening and a lot of time communicating. I simply said, ‘Thanks for the input. Here’s what we’re going to do. If you don’t like it or don’t understand it, come back and talk to me about it.’
“I did a lot of talking. Then, it was, ‘If you don’t like it, leave. If you can’t buy in to it, you ought to move on.’ If you do a good job of that, then I think most people will self-select out and choose to leave.”
Beckert’s advice for anyone going through difficult changes is to pull the trigger quickly. Make decisions and execute so you can realize the benefits sooner.
“In retrospect, some of the tougher decisions, especially around some of the people or organizations and some of our divisions, had we done it sooner, we would have gotten the benefit of the change sooner and a more stabilizing impact on the partners,” Beckert says.
The next step in the organization’s growth will come with a partnership. ClubCorp’s board of directors announced in May it had engaged Goldman Sachs to advise it on a strategy going forward, which could include a sale.
Beckert would like to see ClubCorp realize a great benefit from the sale: a new owner willing to take more risks, which could include more properties and more capital investments. That, in turn, would offer members of ClubCorp clubs more options when they travel, as they can buy an upgraded membership that allows them to visit other clubs.
Beckert sees that as possibly being a key growth mechanism for the company.
“We may well find a new owner and a new partner who is interested in taking more risks,” Beckert says. “When one has all of one’s wealth in one investment, it would be prudent not to be taking a lot of risks. If we have a new owner that has many kinds of investments in many companies in many segments of industry, they will be much more inclined to take risks.
“A new owner could bring with them expanded offerings that would make the clubs even more attractive.”
How to reach: ClubCorp, www.clubcorp.com