Legendary Golf Management Warning:  Proceed with Caution. The following information on performance driven compensation is hazardous to anyone who does not want to be held accountable!

Are you Performance Driven?

     I am amazed at the number of clubs and resorts I speak with who fall far short of creating expectations and accountabilities in their businesses for their key management personnel.  Business is about producing a “bottom line” in accordance with the experience your members and guests want and are willing to pay for.  And yet when I ask about specific goals and staff compensation, I find that in almost all cases, the staff is operating under what I term an “entitlement system” for compensation.

An “Entitlement System” for Compensation

     So, what is an “entitlement system”?  Well it's basically a system that pays for doing little more than coming to work and getting through the day  It has nothing to do with the actual quantitative or qualitative performance a key staff person is able to produce, or not.  Key club personnel such as the general manager and department managers get paid a salary irrespective of the business outcomes.  Whether the performance is outstanding or horrific, the pay is the same.

An Alternative:  Performance Driven Compensation

     The alternative is a “pay for performance” compensation plan! And once a sound “pay for performance” compensation plan is put in place, an amazing transformation occurs!  The transformation is sudden and impactful!  It creates a buzz in the club.  It gets everyone's attention.  And it is not without pain.  It initially scares the heck out of the staff.
 
     Suddenly, pay is dependent upon producing results, not just showing up for work.  Suddenly, spending money does matter.  Suddenly, that lead for an outing, a new member, or a private event takes on new importance.  Suddenly the staff is now the owner's partner in the success or failure of a club or resort instead of just a passive bystander. 

     Suddenly the key staff has a stake in the business outcomes and begins thinking and acting like an owner, like someone whose personal financial situation is dependent upon the results of the business, because it is!

So, what does Performance Driven Compensation look like?

     Performance driven compensation looks like exactly what it sounds like!  It involves placing a significant portion of every general manager's, sales person's and department manager's compensation on the quantitative and/or qualitative results of the business.

     For sales positions such as membership directors, private event directors, and outing salespersons, 60% to 70% of the total compensation potential should be based on sales results relative to a predetermined sales plan.  What amazes me most is that at so many clubs/resorts, sales personnel are paid salary only.  They have no sales goals and no commission component. Salary only for a sales position, huh?

     For positions such as General Manager, Food and Beverage Manager, Chef, Director of Golf, Head Golf Professional, Golf Course Superintendent, Tennis Director, Facility Maintenance Director, Golf Course Superintendent, and Club Accountants, 25% to 30% of their total compensation potential should be based on performance.  A portion of the performance based compensation should be based on specific departmental numbers, a portion on qualitative plans for improvements in specific departments, and a portion on the financial results for the overall club or resort.

What are other KEY COMPONENTS of a performance driven compensation plan?

• A financial plan that has is basis in the realities of the business and is not some “pie in the sky”, unattainable goal.
• A quarterly payout.
• A sales plan for every revenue department.
• Formal quarterly reviews.
• Minimum hurdles usually beginning at achievement of 95% of plan to get any bonus (does not apply to sales people).
• Overachievement pay available when financial results are exceeded.
• Performance review modifiers for payout.

An Example, albeit an ill fated one!

     And the plans have to make sense.  For example, I spoke with the General Manager of a course operated by a management company who believed his club had “performance driven compensation plans”.  In chatting further with the General Manager, he explained that plans were in place for most departments and were being developed for others.  He offered an example as a key department manager having $10,000 of bonus potential based on the revenues of his department for the year.  Ok so far. 

     Then it went awry.  The club is having an off year and the total revenue budget is $1 million.  The General Manager said that they would be lucky to get to $800,000.  I naturally assumed that missing the annual goal by 20% and by more than $200,000 would result in “no bonus”.  But no!  I was told that he would receive 80% of his bonus if the club only achieved 80% of its goal. 

     WHAT?  The club is missing plan by 20% and by $200,000 in revenues and a bonus of $8,000 on a total potential of $10,000 will be paid.  When I pointed this out to the General Manager, he suddenly was a lot less proud of this performance based plan.  The reality is that it's not performance based at all, just another iteration of entitlement pay!

     And I can cite countless more silly examples!

Three Types of Employees

     There are three types of employees.  Those who MAKE things happen, those who WATCH things happen, and those who WONDER what happened?    And if you implement a “performance driven compensation plan “ it will quickly become apparent who buys in and is ready for a challenge and ready to have their performance measured and who does not. 

     The Performance MAKERS will display immediate interest, begin pulling reports, become excited about having a specific goal that will be measured, and begin looking for better ways to do business.
 
     The uninvolved WATCHERS will complain about how it's not fair, spend lots of time trying to explain why it's not fair, and quickly disengage.
 
     And the clueless WONDERERS, well, they will just fade away.
 
     A performance driven compensation system will quickly eliminate the WATCHERS and WONDERERS and you will within a short period of time have a solid club/resort team of Performance MAKERS!

So, what will it be at your Club or Resort?

     So, what does compensation look like at your club, course, or resort?  As an Owner, Board Member, or General Manager are you supporting your staff through their weekly pay just for showing up, much like an allowance for a dependent?  Or, is your compensation designed to drive performance, engage all of your key personnel, and have them as a partner in your success?

Ready to become Legendary?

Call me to discuss your own unique situation at 727-424-2434.

For Legendary Golf Management,
Bob Devitz
President and CEO
Legendary Golf Management
www.legendarygolfmanagement.com
727-424-2434

PS: Want to discuss the steps you should be taking to become Legendary? Call me at 727-424-2434 for a complimentary 30 minute consultation, a $300 value. Available only to the first 6 clubs who want to take control of their own destiny! Call me NOW!

PPS: For information on how to close all of your leads, click here to download our Free Manual on How to Close More Membership Sales, $199 value.