How Eric Affeldt led a cultural change at ClubCorp Featured

7:01pm EDT January 31, 2012
How Eric Affeldt led a cultural change at ClubCorp

When Eric Affeldt came in to run ClubCorp USA Inc., it was a 50-year-old company that had been operated by one family, and he recognized that change wasn’t going to be easy for the organization.

But change was necessary for the business, which owns and operates private clubs. With an aging population, many of the clubs’ members would soon not need a club or be physically unable to use one, so making them more appealing to younger people needed to happen.

“My biggest challenge is an ongoing challenge, and that’s how do you get people to look at the business differently every day,” he says. “Certainly markets change, consumer spending patterns change, consumer desires change, and you could continue to deliver the same product a consumer liked 20 years ago, but you may find yourself a dinosaur.”

He wanted to send a message that change was going to be a new part of the organization, so on his business card he printed his title as “catalyst and CEO.”

“(That) addresses the biggest challenge, and that is that many people are reluctant to change,” he says. “We’re all creatures of habit, and we all get in ruts, some are good, some are bad.”

Then he dug in. Here’s how he changed ClubCorp from a parochial organization to one that’s keeping with the times.

Paint a vision

To start the change process, Affeldt recognized that change must be intentional and that it started at the top with him, thus the title on his business card.

“It obviously indicates something is going to change,” he says.

Even though you know something is going to change, you have to have a specific idea in mind.

“No. 1, [great leaders] set direction, so they have a dream, they have a vision, and they have some place in their mind they can see going and get other people to go with them,” he says.

He wanted to focus on underserved markets and target more women and younger people to encourage them to become members of the clubs.

But he couldn’t just have an idea in his head of where the company was going to go and not let other people in on the secret — nobody would follow because they wouldn’t understand. So he set out across the country to talk to employees. In his first year in the company, he visited about 130 of 154 locations.

“It was face to face, answering questions, trying to convey a different sense of energy and focus, and frankly, curiosity, and just getting people comfortable that if I’m going to suggest that it’s OK to challenge the way things have been, it probably is OK,” he says.

For the most part, he received positive feedback from employees about the new direction, but he also encountered some resistance.

“There are clearly some that said, ‘This is not what I signed up for, and, frankly, who are you to tell us what to do?’” he says. “We’re the oldest company of our type in the industry. There were a few folks who thought we were too cool for school. … It’s always a challenge because it’s not unlike a new exercise program — it hurts for a little while to do some different things. You might know it’s beneficial, but it hurts for a while until your muscles get used to the new routine.”

He was also met with some opposition from club members. On one business trip, he was dining alone and an older member of the club approached him and asked why he was going to focus on bringing in younger people to the club — the older folks were the ones that paid his dues.

“I said, ‘Thanks, I appreciate your input, but the reality is with an aging demographic and people dropping out of clubs due to people not being able to play golf anymore, or they’ve retired and have no need for a business club anymore, it’s important to bring the next generation of consumers into the club. It doesn’t mean we don’t care about you, and we do want to have programs to serve you, but we need to keep new consumers coming in because the reality is, most people, myself included, won’t belong to a club because they either won’t have the interest nor the time or physical ability to do so,’” he says.

Affeldt says the man intellectually understood, but he really didn’t want to hear it, and that’s the common response most people took. He says the key is to continue to reinforce the plan and why it’s important and let them come around.

“Part of it is just stick-to-itiveness — here’s what we’re going to do, and we appreciate if this is new or different, but we are going to do it, and we are going to help you do it, and we’re going to tell you why we think it’s important,” he says.

Allocate resources

Once he had a vision in place and had communicated it to people, he had to provide the means to do so and give people a reason to care.

“No. 2, [great leaders] allocate resources,” he says. “That’s both people, getting the right people in place as well as capital dollars to grow the business.”

For the first part of that, he created an 11-member executive committee, and he said about seven of those members turned over in the first year, so having the right top people was critical. He and his colleagues pulled out their rolodexes and recruited sharp people they had previously worked with who would complement his team.

“It’s important to have people who have different skill sets than you do,” Affeldt says. “I use this analogy all the time that if you grab two batteries and put the pointy ends together in a flashlight, the flashlight is not going to work. It has to be a plus and a minus. You have to have people around you that have different skill sets that complement yours. At the same time, you have to have people around you who like to be challenged.”

When he was bringing those people in, it was important that they know the change the company was going through.

“Another critical word in my vocabulary is communication,” Affeldt says. “Very clearly articulating both to the people who stayed and the new people that our intent was not to milk this company, so to speak, but to transform it into ways that were more appealing to existing members and future members — making sure they were signed up for running faster, jumping higher and pushing the envelope.”

By communicating this goal upfront, he was hoping to get people who embraced change.

“There’s a quote I’ve used from Gen. Casey, who said getting people to embrace change is the toughest job of any leader,” he says. “The key word there is embrace — not tolerate or stand for it, but embrace it. It’s important to find people who have that same sort of passion for change and improvement, however improvement is defined.”

Aside from hiring the right people, Affeldt also allocated resources toward his employees in a way not many companies do — he created a 501(c)(3) for them. As the company celebrated its 50th anniversary, he decided to have a one-day fundraiser at his clubs to raise money for a multitude of charities, including a new one just for his team members. It was designed that when hardships hit his employees, they could receive free help, which they never had to pay back. Since starting it, he’s given away about $1.5 million to people who have lost their homes to flooding or fire, had their cars break down, or reached insurance limits and weren’t able to pay for medical expenses.

“By establishing that foundation, a lot of line-level employees said, ‘Wow, apart from actually paying me, these people are providing a safety net for me if something nasty happens to me,” he says.

Aside from the nontraditional resource allocation in the charity program, he also increased financial incentives for people to outperform their financial targets and invested about $250 million in capital back into the business.

“Our employees see we’re not just talking about improvements and then taking all the money to the bank and running away,” he says. “We’re actually reinvesting in them and their clubs.”

And when you put resources toward your employees to help them, it also creates the buy-in you need from them to do a great job and embrace the change. If you’re unsure of putting more money into your people, let data guide your decision.

He says, “For the skeptical, you can always tiptoe into the pool and try programs to see what kind of reaction you get with your employee partners, but there’s enough data that exists from a lot of organizations that shows what the power of incentives provides for growing companies in a variety of different industries.”

Ensure execution

He had to make sure that people were actually working on changing and that it just wasn’t a pretty plan sitting on a shelf.

“No. 3, and most importantly, [great leaders] ensure execution,” Affeldt says. “It’s not enough to have a great idea and to have other smart people working around you. You can’t just put your feet up on the desk at that point and say, ‘I hope it works.’ You’ve got to ensure that it works.”

The financial incentives he created certainly helped ensure that, but he doesn’t go off of his hunches to gauge whether execution is happening.

“We’re a relatively good size company – almost $700 million in revenue,” he says. “Clearly, the change is reflected in our financial performance as well as in some of the metrics we measure our business.”

He uses member numbers, the number of rounds of golf played, the number of meals served and other similar metrics to track ClubCorp’s progress.

“There are all kinds of analytics you can look at to say, ‘Something is happening here and hopefully something good,’” he says. “Then you say, ‘Why did that happen? Hopefully you can trace that back to, ‘Here’s the plan we had, here’s the people we allocated against it, and the performance is better.’”

As he looks around the organization today, the numbers are proving that ClubCorp. is growing and improving and changing each day, and he anticipates that continuing as he looks toward the future. But even more important, his people are now fully bought into the change.

“What they’ve told me is it’s a more egalitarian, collegial atmosphere, and the constant questions that I pose about, ‘What next, what next, what next,’ have sunk in,” Affeldt says. “People are now very comfortable with trying to come up with something that’s radical.”

How to reach: ClubCorp USA Inc., (972) 243-6191 or www.clubcorp.com

The Affeldt File

NAME: Eric Affeldt

TITLE: President and CEO

COMPANY: ClubCorp USA Inc.

Born: Los Angeles, and I grew up in Orange County, Calif.

Education: B.A. in political science and religion from Claremont McKenna College

What was your first job ever as a child, and what did you learn that still applies?

Pulling weeds and clearing out lots for a developer in our little community where I grew up — my first paid job, let me put it that way. I think I was 10.

I vividly remember I was working at a neighbor’s house over the weekend clearing a lot, and the nice neighbor lady wanted to pay me on Saturday night, and the job wasn’t finished yet. I said, ‘No, I can’t do that.’ My dad had taught me that when the job is finished, then you get paid. That was one of the first things I remembered from working.

And frankly, several of the jobs I had, there’s a lot to do with attitude. You go and do a job, trying to do as well as you can and hopefully enjoying it as opposed to saying, ‘Oh, I have to go pull weeds.’ Your attitude is extremely important.

What’s the best advice you’ve ever received?

I have to answer, because my faith is an important part of me, what Jesus said when asked, ‘What do I need to do to be saved?’  — love the Lord your God with all your heart, soul and mind and love your neighbor as yourself. That’s really good advice for everybody.

I don’t know if this was specifically said to me or came to me through parents, but the importance of being kind to other people is important and recognizing that everybody has their own stuff. It’s important to be kind as you go through your life, and people will respond to that.

What’s your favorite board game and why?

I like backgammon, frankly. It’s strategic, it’s fast, it’s quantitative to a degree, and there’s a cautious way to play, and there’s an aggressive way to play, and depending upon who you’re playing and the roll of the dice, you have to make decisions in real time as to how fast and how slow you want to play.

As a child, what did you want to be when you grew up?

A kid, I wanted to play professional baseball. A younger man, I wanted to go into the ministry or play professional baseball or go into politics.

So how’d you get where you are now?

Oh gosh, that’s a really long story. A lot of serendipity, meeting people, friends would call it God-winks — things that just happen and you say, ‘How did that happen?’ — meeting people who encouraged me to go into finance and then to take a risk and to start my own company, then being invited to join another company with a friend. And through all of that, raising my hand too many times and volunteering for new things and just giving things a try.