Less than two months ago, I wrote in this space about club finances and how much information membership has access to. Recently, I received a call from someone out of state concerned about his club’s finances and alerting me to the situation at another prominent club, Oak Hill Country Club in Rochester, NY highlighted in this article. While as yet there’s been no proof of wrongdoing, this case, at such a prominent and respected club like Oak Hill demonstrates that even the most respected clubs are not immune from financial irregularities that can be rooted at even the highest levels of club leadership, as well as from staff, management, members or the outside. I’ve been called in several such situations and observed suspicious activities (at the very least) in others.
The productive way to approach what I believe is potentially far more widespread than widely perceived is to discuss preventative measures to avoid unpleasant situations.
As I mentioned in my September article not only do many club boards operate behind closed doors and in some cases decisions come unilaterally from a select few individuals, but many members simply don’t pay attention. As long as things are running smoothly and there’s enough funds to pay the bills they just want to pay their dues and not be bothered as they enjoy the club’s recreational facilities. Transparency needs to be demanded, by all club members who should have a voice.
Board meeting minutes should be detailed and readily available, if not published. Term limits for club leaders need to be adhered to and the purchasing of goods and services needs to be done in an open manner that maximizes the club’s best interests at all times. This all sounds sensible, but isn’t always the case.
Here are some of my thoughts on the best way to ensure that club finances are handled properly and unpleasant situations avoided:
- Transparency/Communication – Transparency is noticeably absent at some clubs. Since members are owners of the club, finances and board decisions need to be available to members. Whether it be the approval of capital projects, decisions on new rules/policies or any other club business, it is the obligation of the board and club leaders to inform the membership. It’s not uncommon for board meeting minutes to be unavailable to the membership and it often raises the question of what’s being hidden and why. Publishing those minutes on the members only section of the club’s website resolves this issue.
- Term Limits – Even when term limits exist, some board members and club leaders stay on beyond the specified terms as outlined in the club’s bylaws. This practice alone leads to too few people having too much influence and often decisions that are made (sometimes unilaterally) on personal preferences that can conflict with the club’s best interests. This can include anything from “cronyism” for the club’s purchase of goods and services and preferential treatment of board members to cliques and inequitable treatment of some members. It also often leads to hiring and firing practices of key staff and management favoring certain club leaders. Term limits should be established so that nobody is either an officer or board member (cumulatively) for too long. 6 years seems to be a number often specified.
- Selection of Club Leaders – With term limits (as stated above) resolving the “same old crowd” issue, the process of choosing club leaders should be based on skill set and the ability to commit the required time. Anyone who aggressively seeks to be on the board could have an alternative agenda that may be personal rather than institutional. The best board members are those who are asked (if not begged) to serve due to their reputation for high integrity and specific skills, that may include finance, communication, project management (if applicable), legal, insurance, etc. Integrity, at the highest level is critical. Private club politics, like governmental politics, can be a cesspool of corruption. How does the broader membership know that all club leaders are paying appropriate dues, being charged like the rest of the membership and not receiving inappropriate benefits? Identifying potential club leaders whose reputations are beyond reproach is essential. Those folks need to be recruited. Otherwise, I’ve always wondered why on earth would anyone want to make their club a (thankless) job?
- Cost Efficiency – It’s not uncommon for clubs to spend too much in a variety of areas. For instance, golf course maintenance is often an area of pride and it’s easy to overspend simply to establish “bragging rights” about the condition of the golf course, even if just based on the budget and even if those expenditures are being diverted for alternative purposes. Ensuring that improvements and enhancements to the club are both designed and implemented in the best way possible for the club and done by the best professionals is critical. Being cost efficient doesn’t necessarily mean the least expensive, but also best value and avoiding excess cost from potentially unethical practices from all sides of a project. Having the watchful eye of an independent consultant monitoring these activities can more than pay for itself in many instances.
- Speaking Truth to Power – The often highly paid professionals clubs hire for management positions, as well as staff should be strongly encouraged to speak truth to power. It’s not always easy. It’s not at all uncommon, if not typical for key club management professionals (GM’s, CFO’s, Golf Professionals, Superintendents) to practice self-preservation by telling club leaders what they think they want to hear. Who can blame them?
Private clubs can be very politicized. Most members don’t want to be involved. Leadership at any club is usually responsible for creating the club culture, which itself can benefit from review and analysis. The definition of a great club is one with happy, satisfied members. Such satisfaction can come from many different sources ranging from outstanding facilities to perceived high value to the atmosphere created at the club from the mix of membership to the establishment and (hopefully equitable) enforcement of rules and club policies. The distrust that inevitably develops from situations like Oak Hill – and others can usually be avoided through some of the sound practices mentioned above. No club wants to deal with a lawsuit or the damaging publicity that comes with it.