How Does Your Leadership Team Stack Up?
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Dr. Art Curtis
Why do some club companies continuously prosper while others underperform? This is a question that I have frequently looked at during my years in the club industry. I have been fortunate to have had the opportunity to be involved in many due diligence processes and the ultimate acquisition of dozens of clubs. The diligence processes gave me the opportunity to take a deep dive into the performance of a wide variety of clubs and business models, from the highest of the high end to the high-value/low-price (HV/LP) gyms that have been growing so rapidly for the past decade.
These businesses were on the market for a variety of reasons. Some were very strong performers and were looking to gain access to additional capital for growth or to provide an exit for the current ownership. Others were underperformers and were on the market in hopes of finding a solution to their underperformance. Acquisitions of the strong performers were frequently made when there were good potential growth opportunities and/or if they would further strengthen the acquirer's business by adding new markets, best practices and talent. Acquisitions were also sometimes made from among the poorer performers if the business was not terminal and the acquirer saw real opportunities to turn around the business performance and create value with the application of the right strategy, strong leadership and proper resources.
So, what are the characteristics that separated the performers from the underperformers? Certainly, there are very specific reasons for each situation where a club underperformed, i.e., poor customer service, deferred maintenance, lack of effective marketing, outdated programs and services, weak frontline staff, unable to effectively recognize and respond to new competition, to name a few. But, looking back, these were simply symptoms and not the root cause of the poor performance. In my view, the root cause of the poor performance and what differentiated the top performers from the poor performers could be traced back to the capability of the respective Leadership Teams.
Different organizations may define their Leadership Teams in different ways. For purposes of this discussion, I am referring to the relatively small group of individuals that occupy the very top spots on the club company's organizational chart. These could include the C-level or VP positions in a larger multiunit club company and/or the heads of the various key functional areas of a single club. They are the relatively small group of top decision makers of the organization who are responsible for developing and executing the strategic direction of the company. They are responsible for the policies and procedures necessary to direct the managers, supervisors and staff to accomplish the work necessary to achieve the objectives of the business. Further, they are responsible for keeping the organization focused and allocating resources within the organization.
Where there was a capable Leadership Team in place that worked well together, they were much more likely to be able to identify an appropriate strategic direction, assemble the necessary talent and resources and provide the focus needed to execute their plan. Those with weak leadership at the top, no matter how much talent existed elsewhere in the organization, tended to flounder, especially as the competitive environment continuously evolved around them. So, what were some of the characteristics of strong Leadership Teams? Here are a few of my observations:
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