United States

Beyond equity Reflecting on stakeholder perspective of private clubs


While only a small percentage of private clubs have investors, or owners, in a traditional sense, the concept of equity members is quite common. Simply put, these members are shareholders. And shareholders expect a return on their investments.

The difference between these shareholders and those invested in commercial businesses is that their return is not financial. By in large, members of private clubs expect their return to be in the form of enjoyment and the fulfillment of the expectations they held when they decided to join; they invested in a lifestyle.

Just as businesses need to be profitable to show a return to shareholders, so too must private clubs ensure they stay true to their missions and provide the experiences members require to feel they have invested wisely.

Meanwhile, those with financial equity invested in a club or business are not the only ones with a stake in its success.

As a review of the stakeholder perspective of business, consider the scenario of a club that is cited for polluting a local source of water through the runoff of artificial fertilizers the club uses on its greens. Many stakeholders are impacted by the actions of the club and the outcome of polluted water. The local townspeople are upset because they take their children to fish in that water and their pets have been known to drink from its edge when they take them for walks. A metaphorical cloud settles above the water and spreads over the town as it sparks concerns about drinking water that leads to much distrust and ill will aimed at the club even though there is no connection between water sources.

While the local government and related agencies are suddenly faced with additional pressures they would rather avoid, one might argue that the local media are able to benefit from the news development—everyone tunes into the disaster and newspaper sales increase as the club makes front page. Another stakeholder that might gain from the troubles of the club is any provider of a water treatment that might reverse the damage caused by the pollutant.

The list of parties who are impacted by this occurrence—who thus have a stake in the private club—does not end there. Employees, for example, are a group of people who have a definite stake in the club. The pressures they face from the bad press can be emotional and even financial if the fallout ultimately leads to financial troubles for the organization as members disassociate themselves.

All of the aforementioned stakeholders are only a sampling of the people and organizations with an immediate stake in the club. In addition to these and others in the immediate vicinity, consider the outcome should local government begin to champion new environmental standards and penalties related to such actions. These efforts could easily spread through the county and federal levels over time. While one might suggest there would be a positive outcome for the health and wellbeing of society as a whole should this occur, still many others would hone in on the challenges created for other clubs as well as any number of companies whose officers might need to alter their operations as a result.

Just as the location of stakeholders can be extrapolated to see that organizations on the other side of the country or even world can be impacted by the actions of a single club, so too might the concept of time be considered. For example, one family might choose to continue to fishing in the polluted water. After two decades, a local child is now grown and is happily married. The couple is excited to be starting a new family of their own but their first child is born with health issues related to an undiagnosed condition in his parent. A medical specialist labels it the result of frequent exposure to pollutants consumed through diet. With this development, lawyers, the court system and all of those with ties to that system (e.g., judges, bailiffs, and document processors) quickly come into the picture.

From this view of stakeholders, it is relatively easy to conclude that nearly all of society is ultimately tied together. This thought process feeds into the idea of sustainable business practices and corporate social responsibility—considerations that are as important for executives of private clubs as executives of commercial businesses.

Having reflected on stakeholders in conjunction with this disaster scenario, club executives might also find it beneficial and more uplifting to undertake a similar exercise in a manner that assists in presenting the great value their organizations contribute to society.

Private clubs have been portrayed as places of leisure for the extremely affluent. The descriptions offered in some reports portray the callous rich who care little about anyone else and whose wealth offers them a means to ignore the rules and pressures of everyone else while they continue to grow wealthier at the expense of others. While it may be true that the typical member of a private club is more affluent than the average person, appreciating the stakeholder perspective reveals that these descriptions are far from accurate.

Considering first those stakeholders in the immediate vicinity again, private club executives can take great pride in the value they bring to their members and in the jobs they create and bring to their regions. They create memorable experiences that shape the lives of families by offering traditions and places of comfort that can stay with families for generations.

They offer career training and paths to success for many. The impact these jobs have on local economies is significant as local stores hold a stake in the ability of club employees to purchases their groceries, clothing and other necessities. These employees need places to live and their presence adds to local real estate markets. This might mean additional work for real estate agents in the area.

On that topic, consider those whose work is tied to clubs even if they are not directly employed by them. For example, real estate agents often make successful careers by selling to those who wish to live within a community where a club exists. These private clubs often increase the value of property through their well kept grounds and serene environments.

On a similar note, private clubs stimulate interest in golf, fitness, boating, tennis and other activities. That interest often extends beyond those who are active in clubs by way of conversations and relationships. These interests can lead to the employment for trainers, coaches and summer camp staff. Similarly, equipment used to engage in each of these activities is designed, manufactured, distributed, marketed and sold by other parties. Each of those parties employs a staff. Those employees receive pay that is spent in their local economies and can even reach worldwide.

For more quantifiable examples that complement this thought process, consider the personal stories and descriptions of about the economic impact of golf outlined on the We Are Golf website.

Now more than ever, private clubs are engaging in sustainable practices. They are using more native vegetation in their landscaping. They are experimenting with composting or using byproducts from their food and beverage in treatment of soil. They are improving efficiencies in their usage of electricity. These activities are serving as examples and furthering a culture that benefits stakeholders now and well into the future. Furthermore, the pride members can take in these efforts adds to the return they feel as shareholders.

These exercises illustrate that, while private clubs have shareholders of one form or another, a stakeholder perspective is as relevant for this organizational model as for any other. By appreciating that private clubs are a component of a much larger system, executives of these organizations are much better positioned to outline the value they are able to create well beyond their gates while staying focused on the mission their members embrace.