Governance Standards in Australian Golf Clubs
In June 2024, Golf Business Advisory Services, in conjunction with Board Surveys and Golf Australia, released a report titled “Golf Club Governance in Australia.” The opinions of golf club GMs/CEOs (CEOs) and Club Captains/Club Presidents (Chairs) formed the basis of the research for this report.
Governance standards in Australian golf clubs has emerged as a topic of growing interest. As the finances and resources of golf clubs face more challenges than ever, Club’s are reviewing all areas of their operations to elevate their performance. Governance is one such area where clubs in general have underperformed.
It’s a unique situation where the golf club Members are both the owners of the business and its primary customers. Then the Board is also comprised of Members as well. This environment presents a much higher likelihood of conflicts of interest and golf club Boards becoming overly involved in the operations of the Club.
It’s for this reason that the results of the survey showed a divergence in opinion from Chairs to CEOs when considering the effectiveness of golf club Boards, with CEOs rating the effectiveness much lower than Chairs.
Key findings from the research included:
1. Be clearer about the purpose and role of the Board and Directors.
2. Get Board renewal, composition and diversity right.
3. Focus on leadership, dynamics and process.
4. Do strategy, performance, risk and stakeholder management well.
Let’s review some of the changes to governance when looking at Lonsdale Links in recent times through the lens of these key findings.
1. Be clearer about the purpose and role of the Board and Directors
The biggest complaint noted in the report from both Chairs and CEOs was that the Board gets too involved in daily Club operations meaning the line between governance and operations is blurred.
Lonsdale Links voted through changes to its governance structure in April 2024 in order to better define the role of the Board and that of the CEO and Executive Team. The following changes were made:
· Change in terminology from Executive Committee to Board
· Change in terminology from General Manager to CEO
· Reduction in size of Board from 8 to 4 (President, Vice-President, Treasurer and General Position)
· Full delegation of operations to CEO and Executive Team
· The Board to focus on strategy, risk and governance
2. Get Board renewal, composition and diversity right
Many Clubs have outdated constitutions which feature 1-year terms and an annual renewal of a Board of Directors. The short time frame of service and potential for high turnover can rob the Club of stability at the Board table and the risk of “Corporate Memory” walking out the door. Golf Club Boards are also often the domain of retirees as they have more time to volunteer to do the work. Combine this with a Board that is overly focused on operations, with too many meetings, which are too long, and the time contribution required rules many younger professionals out from directorship. This can rob the Board of diversity of thought as not all demographics are represented.
Lonsdale Links has sought to address these items as follows:
· The changes noted in the previous point in moving to a 4-person Board focused on strategy, risk and governance.
· In 2022, changes were made to the gender balance of the Board and Subcommittees such that not less than 40% of any one gender should be represented.
· Director roles on the Board are now for 3 year terms with a staggered rotation. A 9-year maximum term length has also been introduced.
· A Succession Planning Subcommittee has also been established which is tasked with identifying potential candidates for the Board and Subcommittees to fill positions with respect to the skills that have been identified. The Succession Planning Subcommittee also manages the expression of interest process for those interested in serving to ensure they have a clear understanding of what is required for them to fulfil such a role.
· The Board and Subcommittees are formally inducted each year after the AGM.
· Rules of Association, Club By-Laws, Board Policy Manual, Subcommittee Charters and Member Policies have all been reviewed and updated to reflect these changes.
3. Focus on leadership, dynamics and process
The Chair’s leadership of the Board is the largest factor for whether the Board is effective or not. This includes acknowledging the good performance of Directors, but equally addressing Director behaviour that is not at the required standards.
The relationship between the Chair and the CEO is vital. Dysfunction in this relationship will be to the detriment of both the Board and the Club’s performance.
The role played by the Succession Planning Committee at Lonsdale Links has helped to ensure that skilled people are taking up Director or Subcommittee roles. The Board also assesses their performance at least annually to address performance issues.
4. Do strategy, performance, risk and stakeholder management well
Golf Club Boards should be spending most of the available time on the agenda discussing and planning these points.
Does the Board have a well understood long term strategy that it regularly reviews?
The Board is responsible for appointing and reviewing the performance of the CEO. Have they set clear expectations to the CEO, and supported and empowered them with the staff and resources to manage the operations as defined in the strategy?
Is the effect of risk on strategy and decision making appropriately considered with the aid of metrics and frameworks?
How well does the Board communicate with its stakeholders?
The Board and CEO have introduced the following items in the past few years with focus on the above questions:
· The Board has developed successive 3 year Strategic Plans with annual Member Feedback surveys conducted to assess performance. The CEO maintains a Scorecard that charts the activities that underpin the success in different areas of the Strategy. This Scorecard is reviewed by the Board on a regular basis with feedback provided to the CEO to help inform the Executive team of progress.
· The Board has developed a clear Position Description for the CEO and an annual Job Guide with KPI’s linked to the Club’s Strategy. The Chair meets with the CEO multiple times per year to provide feedback on their performance. This is an opportunity for the CEO to also provide feedback to the Chair regarding resourcing or Board performance. The Board also committed to funding for the CEO to complete the Company Directors Course to improve governance knowledge at the Club.
· The Board has integrated risk management into the Finance / Audit / Risk Subcommittee to help it in its oversight duties. The Club’s Risk Register and corresponding Risk Management Plans are discussed at the Subcommittee level before being reviewed by the Board.
· The Executive Team have a dedicated Marketing/Communications Manager that executes a defined Communications Plan. The Plan focuses on delivering one major communication per week in the areas of, i) Course, ii) Golf Operations, iii) Hospitality & iv) Board/Executive/Membership. In 2024, the Members rated the Communications coming from the Club at 8.96 out of 10. Visibility of the Board and Executive Team for those impromptu conversations with Members is also prioritised.
In summary, the term “Governance in Golf Clubs” is a very detailed topic with many activities to consider in order to improve the governance capability of your Club. There is general agreement from leaders within the golf industry that improved governance capability will generally lead to improved outcomes for the Club and its Members too. It is often a dry topic, but one that is so important for the sustained success of your Club.