Friday, November 4, 2016

Golf Course Business - Key Performance Indicators

By Michael D. Vogt, CGCS, CGIA

Love em, hate em or never heard of em, KPIs are everywhere. Sometimes we hear about KPIs in big businesses like manufacturing or service industries. Indeed, many of us have KPI targets in our jobs, others have to report on KPIs, but what really is a KPI?

Spyglass Hill #11

In simple terms a KPI is a way of measuring how well we as individuals or how well entire companies or business units are performing. KPI is short for Key Performance Indicator. A KPI should help us understand how well our golf courses is performing compared to their strategic goals and objectives.

I often use an airliner analogy to illustrate: Just think of an airplane trip from Chicago to Paris. Here, the aim of the journey is to take passengers to the City of Lights - say, in 9 hours. Once the ‘wheels are up’, the captain and co-pilot need navigation data to understand where they are on the globe relative to their planned route. In this case useful KPIs might include the radar and GPS location data, average speed, fuel levels, weather information, etc. Together, these metrics (or KPIs) allow the flight crew in to understand whether they are on track or veering off route. This enables them to make decisions about where to guide the airliner for the most expedite route.

For golf courses or country clubs, it is exactly the same. If a company's goal is to make more money through increased golf rounds or added memberships, it might want to measure KPIs such as rounds/membership growth, profit margins and operating costs. If a company wants to attract new customers by creating a great brand, it might measure brand equity and brand awareness. And if a company wants to ensure their employees are engaged it might want to measure staff performance/advocacy as a KPI. And if, like most companies, all of the above matter, then it needs a set of KPIs.

The trouble is that there are thousands of KPIs to choose from and companies often struggle to select the right ones for their golf business. The wrong KPIs bring the danger of pointing people into the wrong direction and even encouraging them to deliver the wrong things. Always remember, the reason why KPIs are so powerful is that 'YOU GET WHAT YOU MEASURE'. If a company measures and rewards the achievement of KPIs that are not in line with their goals, then it basically asked the crew to sail into the wrong direction!

Effective KPIs are closely tied to strategic objectives (be it for the entire company, golf course maintenance, golf shop management or even an individual on your team). When I help companies select the right KPIs we first develop a performance management framework that articulates the strategic priorities. We usually create a single-page diagram of the key objectives and how they support each other to deliver the ultimate goal (e.g. deliver value to players at your course).

Spyglass Hill #1

Once the performance framework represents the company objectives it is time to develop KPIs. But before anyone jumps straight to the measures I make sure companies first identify the questions they need to answer. Take the wildly successful company Google, their executive team has identified a set of about 35 questions. They now make sure that the KPIs they use are helping them answer their most critical business questions. This way companies not only tie their KPIs to their strategy but also ensure they are meaningful and informative (i.e. helping you to answer critical business questions).

How do you measure and adjust course to achieve the ultimate success of your golf course operation?