Private club finance committees: composition and responsibilities.Editor's Note Editor's Note (foaled in 1993 in Kentucky) is an American thoroughbred Stallion racehorse. He was sired by 1992 U.S. Champion 2 YO Colt Forty Niner, who in turn was a son of Champion sire Mr. Prospector and out of the mare, Beware Of The Cat. Trained by D. : This article is based on the results of a survey conducted by the authors. The authors wish to thank the Club Foundation of CMAA CMAA Club Managers Association of America CMAA Construction Management Association of America CMAA Crane Manufacturers Association of America CMAA Country Music Association of Australia CMAA Customs Mutual Assistance Agreement for making their research possible. Private Club Finance Committees: Composition and Responsibilities Private club decision-makers require financial information to make sound business decisions. The Club Managers Association of America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. (CMAA) has developed a uniform system of financial reporting for clubs to help its members simplify and standardize stan·dard·ize v. 1. To cause to conform to a standard. 2. To evaluate by comparing with a standard. the 'what' and 'how' of collecting, summarizing, and reporting financial data. This system, revised in 2003, helps in the process of effectively communicating financial information. Since the early 1990s, CMAA has emphasized em·pha·size tr.v. em·pha·sized, em·pha·siz·ing, em·pha·siz·es To give emphasis to; stress. [From emphasis.] Adj. 1. the concept of the general manager (GM) and the chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. (COO (Cell Of Origin) See mobile positioning. ). In this context, a club's governing board Noun 1. governing board - a board that manages the affairs of an institution board - a committee having supervisory powers; "the board has seven members" of directors functions as chief executive officer (CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. ). CMAA suggests that the responsibilities of the board acting in the capacity of CEO are the same as that in other businesses: to continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. examine and update as necessary the organization's mission and to establish broad policies which establish parameters for procedures developed and implemented by the GM, who serves as the organization's COO. Most clubs utilize a governing gov·ern v. gov·erned, gov·ern·ing, gov·erns v.tr. 1. To make and administer the public policy and affairs of; exercise sovereign authority in. 2. structure which relies upon committees to address specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. concerns such as finance, social activities, membership, athletic athletic (athlet´ik), adj pertaining to a bodily constitution characterized by a strong, muscular, robust appearance. athletic injuries, n. activities, and constitution/bylaws. These committees, in turn, deliberate Willful; purposeful; determined after thoughtful evaluation of all relevant factors; dispassionate. To act with a particular intent, which is derived from a careful consideration of factors that influence the choice to be made. on specifics applicable to their major concerns and often make recommendations to the governing board. Continuing with our CEO/COO business model, the COO (general manager) requires current and accurate financial information. General managers working with departments heads, for example, establish operating budgets Noun 1. operating budget - a budget for current expenses as distinct from financial transactions or permanent improvements budget items, operating cost, operating expense, overhead - the expense of maintaining property (e.g. and monitor actual performance against the standards suggested by the operating budget. In an article which appeared in Club Management (November/December 1997), co-author co·au·thor or co-au·thor n. A collaborating or joint author. tr.v. co·au·thored, co·au·thor·ing, co·au·thors To be a collaborating or joint author of: "He and a colleague . . . Schmidgall reported that 56 percent of club executives considered the financial benchmarks expressed in the operating budget to be its major benefit. Also, like their counterparts in other businesses, GMs must have access to a wide range of other financial data relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc quantity, quality, productivity, and other measures of business inputs and outputs. Research Questions Most private clubs utilize a finance committee to address finance-related issues of concern to the board. How do these committees operate (number of members/length of their term, number of meetings each year), and what exactly are the primary responsibilities of this committee? Our study represents, to the authors' knowledge, the first formal analysis of the composition and role of private club finance committees. Research Methodology A survey draft was developed and provided to attendees at a CMAA-sponsored financial management workshop, and a Business Management Institute (BMI BMI body mass index. BMI abbr. body mass index Body mass index (BMI) A measurement that has replaced weight as the preferred determinant of obesity. III) program organized to train club managers about the COO concept. This input was utilized to develop the final survey. A mailing list An automated e-mail system on the Internet, which is maintained by subject matter. There are thousands of such lists that reach millions of individuals and businesses. New users generally subscribe by sending an e-mail with the word "subscribe" in it and subsequently receive all new of currently active CMAA members was used to develop from the Association a random sample of 1,000 members. Useable responses were obtained from 369 members (representing a 36.9% response rate). Results and Discussion: The Respondents In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy. Figure 1 summarizes the positions of survey respondents. Position titles suggest that virtually all the respondents would have a clear understanding about the survey questions and would know and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. have access to information required for appropriate responses. As expected, the vast majority (79%) were general managers followed by 11 percent identifying themselves as clubhouse managers. Prevelance of Club Finance Committees The authors were surprised to learn that only approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 80 percent (293 of the 366 respondents) of the clubs had a finance committee. Figure 3 provides information about them: The length of service for members of the finance committees ranged from one to 10 years. The most common term of committee membership is three years (38%), followed by two-year terms (25% of respondents). The number of finance committee meetings annually range from one to 24. Over half (54%) of the finance committees meet between 7-12 times a year, and 33 percent of the committees meet monthly. The number of finance committee members range from three to 20. Forty percent of the clubs have five or six members on the finance committee; seven or eight members serve on the finance committees at an additional 25 percent of the clubs. In virtually all cases (96%) the board treasurer TREASURER. An officer entrusted with the treasures or money either of a private individual, a corporation, a company, or a state. 2. It is his duty to use ordinary diligence in the performance of his office, and to account with those whose money he has. serves on the finance committee, while in seven out of every eight clubs the GM also serves on the committee. The club's size (number of members) did not affect whether a finance committee existed, the number of committee members, the number of times the committee meets annually, or other issues addressed in the survey. Responsibilities of Finance Committees Figure 4 reveals the responsibilities of club finance committees. It indicates, for 11 financial concerns, the number and percentage of club finance committees which (a) reviews the information; (b) recommends to the board; and (c) approves information before submitting it to the board. One should note that finance committees do not typically have final approval authority--in clubs where financial committees have approval authority, the committee must approve the financial information before it is passed on to the board for its consideration. An average 40 percent of the finance committees review these financial concerns, 34 percent of the committees make recommendations about the concerns, and only 12 percent approve the financial concerns. Finance committees appear to be relatively more active in financial matters of direct concern to members. Consider, for example, the reviewing and recommending roles applicable to membership dues and initiation initiation, the transition and attendant ceremonies, such as ordeals and rites, involved in passing from one state or status to another, often from childhood to adulthood. It was among the most important social institutions of early humans. fee increases, capital assessments, and external financing In the theory of capital structure, External financing is the phrase used to describe funds that firms obtain from outside of the firm. It is contrasted to internal financing which consists mainly of profits retained by the firm for investment. . A large majority of finance committees address these financial concerns. Note also that relatively few clubs require approval action by the finance committee before the board's consideration. These matters are a priority concern and, perhaps, most boards want early input into their consideration. Property acquisition issues are also of concern (review and recommend responsibilities) to finance committees in a large number of clubs as is equipment acquisition, which, while not addressed by the survey, is probably outlined in a capital budget. These are 'big ticket' costs which are not part of more routine operating issues, and finance committee input is in line with the COO model of club management noted above. With the exception of approval responsibility for the annual operating budget (discussed above), club finance committees do not generally have much approval responsibility. Rather, after deliberation deliberation n. the act of considering, discussing, and, hopefully, reaching a conclusion, such as a jury's discussions, voting and decision-making. DELIBERATION, contracts, crimes. by the finance committees, matters are moved on for full board consideration. Conclusion This article has reviewed the role and responsibilities of private club finance committees as they study financial information applicable to their clubs. Not surprisingly, the annual operating budget is addressed by finance committees more than any other concern. Issues of priority importance to members including membership dues, initiation fees, capital assessments, and external financing tend to receive the most attention. Results of food and beverage F&B is a common abbreviation in the United States and Commonwealth countries, including Hong Kong. F&B is typically the widely accepted abbreviation for "Food and Beverage," which is the sector/industry that specializes in the conceptualization, the making of, and delivery of foods. operations--a significant concern of many board members--are also addressed by finance committees in many clubs. This study considered the work of club finance committees. Similar studies of other committees found in private clubs would help to round out a picture of the information committee members receive and use, and about the input the committee provides to the board. As this information is collected, the club industry will have a clearer idea to what extent committees and boards of directors help general managers to function within their role of the club's chief operating officer.
Figure 1
Who Responded to Our Survey?
Position Number Percent
General Manager 291 79
Clubhouse Manager * 42 11
Assistant General Manager 17 5
Other ** 17 5
Total 367 100
* A Clubhouse Manager is typically in charge of the club's dining room
and, in many cases, functions as the club's Assistant General Manager.
** Position titles included controller and Assistant Clubhouse Manager.
Figure 2
Demographics of Responding Clubs
Type of Club Number Percent
Country Club 257 70
Golf Club 34 9
City Club 28 7
Yacht Club 17 5
Other * 33 9
Total 369 100
* Other clubs include athletic, university, and military clubs.
Club's Organization
Traditional (Not-for-Profit) 321 87
For-Profit 45 12
Other 3 1
Total 369 100
Club's Annual Revenues (All Sources)
Below $1,000,000 18 5
$1,000,000-$3,000,000 107 29
$3,000,001-$4,000,000 74 20
$4,000,001-$5,000,000 47 13
$5,000,001-$6,000,000 39 11
$6,000,001-$7,000,000 25 7
$7,000,001-$10,000,000 29 8
Over $10,000,000 27 7
Total 366 100
Club's Age (years since founded)
Less than 10 years 16 4
11-20 years 32 9
21-30 years 25 7
31-40 years 27 7
41-50 years 22 6
51-75 years 50 13
76-100 years 135 37
Greater than 100 years 62 17
Total 369 100
Figure 3
Overview of Club Finance Committee
Length of (years) of Member Service on Finance Committee
Number Per-
cent
One year 52 19
Two years 69 25
Three years 106 38
>Three years 49 18
Total 276 100
Range = 1 year - 10 years
Number of Yearly Meetings
3 or fewer times 46 16
4-6 times 73 25
7-12 times 154 54
More than 12 times 14 5
Total 287 100
Range 1-24
Number of Committee Members
<4 members 45 15
5-6 members 116 40
7-8 members 72 25
9-10 members 35 12
>10 members 23 8
Total 291 100
Range 3-20
Figure 3
Overview of Club Finance Committee
Service on Finance Committee
Yes No Other *
General Manager 255 87% 18 6% 20 7%
Board Treasurer 281 96% 9 3% 3 1%
* A number of GMs serve as ex-officio members of the Finance Committee
and only present financial information or act only in an advisory
capacity.
Figure 4
Responsibilities of Club Finance Committee
Financial Concern Reviews * Recommends * Approval *
Annual Operating Budget 225 (77%) 1.95 (67%) 103 (%)
Salary/Wage Increases 126 (43%) 59 (20%) 9.5 (12%)
Membership Dues Increases 182 (62%) 225 (77%) 64 (22%)
Initiation Fee Increases 163 (56%) 190 (65%) 50 (17%)
Capital Assessments 166 (57%) 211 (73%) 56 (19%)
External Financing 180 (62%) 205 (70%) 62 (21%)
Employee Bonuses 102 (35%) 35 (12%) 30 (10%)
Other Bonus Programs 104 (36%) 38 (13%) 27 (9%)
Employee Contracts 77 (26%) 22 (8%) 20 (7%)
Property Acquisitions 136 (47%) 118 (41%) 31 (11%)
Equipment Acquisitions 157 (54%) 97 (33%) 36 (12%)
Average (No. of clubs) 147 (40%) 127 (34%) 44 (12%)
* Data represents number/percent of respondents answering each survey
question and varies on a by-question (financial concern) basis
|
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion