Leadership
Workout wonder
How Geoff Dyer lifted Lifestyle Family Fitness to a new level by learning to let go
By Brian Horn
Smart Business Tampa Bay | February 2008
When Australia native Geoff Dyer returned to the United States
after a trip home in 1983, he found out some surprising news
regarding his company. His partner in Lifestyle Family Fitness
Inc., the business the duo started in July 1982, had voted him out
of the venture.
The company had seen some success after 12 months of operation, and Dyer says his partner thought he could run things on his
own, even though he had no previous experience in the fitness
business.
“Any business that is well run looks like it runs on autopilot,”
he says. “But, as you well know, there’s always a good manager.
A business will run in their absence.”
After 18 months, sales started to decline. In 1985, after some
negotiating with his former cohort, Dyer bought out his partner
and took back control of the company.
The company slowly grew to eight locations by 1998, then Dyer
received an offer to sell the company the following year.
Unsure of what to do, he went to his friend, Stuart Lasher, for
advice.
Lasher said he would be interested in investing in the company if
Dyer changed the way he managed it, especially if he reorganized
the leadership structure.
It was the start of a beneficial partnership.
Dyer wanted someone like Lasher on board because he had
experience growing other businesses.
“I’ve always been a believer you surround yourself with the
best talent you can,” Dyer says.
He also recognized the blind spots that being a founder of the
business can create.
“I think you run the business on a shoestring, and you don’t really have the wisdom or experience to go out there and make significant hiring decisions,” he says. “When I took on investment
capital, which was in 2000, one of the first recommendations to
me, well the first caveat, was hire a CFO. And going from a bookkeeper to a CFO was a quantum leap in the way we ran the business from the financial side.”
It was the first of many changes Dyer made to take Lifestyle
Family Fitness to new levels of success.
Forming a team
Going off advice from Lasher, who became chairman of the company after investing in it, Dyer began assessing his current executive management team.
“The recommendation was to envision where our company
would be in three to five years,” he says. “If we were going to be a
50-club company, who is it that was running the company back in
2000 that could run the company in 2005? We concluded that we
really didn’t have a lot of depth and experience in multiclub management. We were a small company with small-time managers.”
Because Dyer knew the team he had in place would not take him
to the level, he began to look for what he referred to as “A” players who had experience managing multiple locations.
But in order to attract those types of people, Dyer knew he
would have to spend money to draw the best talent.
“The people at the top are going to require a significantly greater
investment than the people that don’t have as much talent,” he
says. “You’ve got to be willing to spend money to make money.”
To back up his point, Dyer invested about $1 million into his
executive team, which was quite a stretch considering the company’s revenue in 2000 was only $12 million.
“That was significant,” he says. “Significant for me because I wasn’t
accustomed to spending more than $75,000 for a bookkeeper.”
Because the pickings were slim within the fitness industry, Dyer
looked outside the fitness world to find those leaders who had
experience managing multiple locations. Whether it was managing
multiple restaurants or retail stores, Dyer wanted an executive
team that would not be overwhelmed by the growth.
Dyer used headhunters as well as referrals to assemble that first
management team of five or six people.
During the interview process, Dyer looked for leaders he had
chemistry with and who enjoyed being around each other.
“I think there is a mentality that comes with top-notch people,”
he says. “They think quickly, they are decisive and strategic, they
have a personality that people like to be around, and I think they
bring experience in whatever role they might end up taking with
the company.”
Dyer says that as a company grows, it is vital to have a solid team
around you.
“As you build a bigger company, you’ve got to have an executive
team that people want to follow,” he says. “That becomes critical
because that is the culture of the future. One person — one
founder or entrepreneur plays a significant role in a small company. When your company becomes big, that founder or entrepreneur becomes a very small part of the operation. So, you want to
create a leadership team that thinks like the owner and [that] people want to work for like the owner.”
He adds it’s critically important that the executive team has an
equity position in the company, which the company accomplishes
through the issuing of options.
“So we have an option pool in our company, and by issuing
options, they have stake in the company and they manage it like it
is their own,” he says. “That’s ultimately what you want is to have
a multitude of people with ownership mentality.”
Culture and retention
At the same time that the new executive team was assembled,
there was also reorganization at the level below the executive
team. The dual changes led to some struggles in the company
because people needed to learn new roles.
Dyer says a big challenge came between 2000 and 2002, when the
company split a general manager’s job into two separate roles.
That led to a lot of fighting between the two parties at that club.
But Dyer made it clear that the company would stick with the plan
it developed, and he had faith it would work.
“I think people like to believe if they resist it that you’ll eventually go back and do things the way they were before,” he says. “But,
we were clear we were going to stay the course and it was going
to work, and eventually, they understood and agreed.”
Reaching that agreement can lead to employee retention, which
Dyer says is important because retention of employees results in
retention of customers.
“It’s critical, particularly when you’ve got a service business that
revolves around people like ours,” he says. “So, you naturally want
to retain your employees so that you retain your members.
Members identify with the people. So ... if we have high turnover
in our employees, we are at risk of losing our membership, as
well.”
Dyer says the company would continually receive data from the
International Health, Racquet and Sportsclub Association on how
to be the most effective at retaining members.
“In the fitness industry, member attrition or loss of members is
something the industry has been fighting for years and years, and
one of the key strategies to retaining members is to retain your
employees first,” Dyer says.
“If we can get our employees to build relationships with our
members, they will look forward to coming to work just as much
as our members will look forward to coming to work out.”
Dyer says it’s simple face-to-face communication that keeps the
relationship between the employee and the customer strong.
“The easiest way is to just call every member by name,” he says.
“We go out of our way to try to get everyone to know the members
by name and then build the relationships from there. We are
always identifying ways for the employees to get to know the
members, but the easiest way is to get out there on the exercise
floors with the members and pick up the weights and go through
the locker rooms and doing locker-room checks.
“Doing the things if you had a party at your house is the example
we use. If you were a good host at a party at your own home, what
would you do? The bottom line is you would make sure everyone
was talking to one another and feeling good about the party
that they’re attending.”
A significant amount of capital is also invested in training
because Dyer wants to promote from within the organization.
“We have a decentralized approach to training where we put
the training out there in the field,” Dyer says. “But we continually invest in our people to provide management-leadership
training programs so we can continually have a full pipeline of
people ready for the next growth opportunity.”
It’s also important to send the message to all your existing
leaders that there is going to be an opportunity for them to step
up and take on more responsibility in the future of the company.
“If we continually pull people in from the outside, it can be
extremely demoralizing to our existing pool of people, and we
don’t want to do that,” he says. “So, whenever possible, we
want to try to promote from within. Plus, it keeps the culture
alive. You bring someone in at the top that worked for a different company, they’ve got preconceived ideas, and they’re typically not going to be the way we do things, and you become a
different company.”
The next chapter
Looking back, Dyer says the company still would have been
successful if he hadn’t essentially started from scratch and
made the changes he did. He can see having maybe 20 clubs
strictly within Florida, instead of the 51 in four states that are
now open or in the process of opening. However, if he didn’t
face the struggles in the early 2000s, the company wouldn’t be
nearly as big as it is today.
“We’d probably have much stronger competition than we currently have,” he says. “I think we were quick to fill out the market.” he says.
Lifestyle’s success has been rapid. It posted revenue of $35
million in 2004, $54 million in 2005 and $80 million in 2006, and
it now has 2,400 employees.
But now it’s time for Dyer to take the next step with a completely different set of challenges.
Dyer relinquished the CEO title after 25 years, becoming vice
chairman of the board in October of 2007, to President Todd
Bright, and now, he must go through the process of letting go
while continuing to play a role in the company, which he would
like to take public.
“I’m 57 years of age, and I don’t want to be working at this
pace when I’m 62 or 65, and it was an opportunity for me to
spend some time with my boys before they go to college,” he
says. “They’re both in their midteens, and I just want to put my
family first at this point in my life. But I still go to the office
every day, I’m still involved in all the strategy and all the real
estate trips and everything else, I just don’t have to deal with
the day-to-day at the moment.” <<
HOW TO REACH: Lifestyle Family Fitness Inc., (727) 456-3100 or www.lff.com
