When Australia native Geoff Dyer returned to the United Statesafter a trip home in 1983, he found out some surprising newsregarding his company. His partner in Lifestyle Family FitnessInc., the business the duo started in July 1982, had voted him outof the venture.
The company had seen some success after 12 months of operation, and Dyer says his partner thought he could run things on hisown, even though he had no previous experience in the fitnessbusiness.
“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 somenegotiating with his former cohort, Dyer bought out his partnerand took back control of the company.
The company slowly grew to eight locations by 1998, then Dyerreceived an offer to sell the company the following year.
Unsure of what to do, he went to his friend, Stuart Lasher, foradvice.
Lasher said he would be interested in investing in the company ifDyer changed the way he managed it, especially if he reorganizedthe leadership structure.
It was the start of a beneficial partnership.
Dyer wanted someone like Lasher on board because he hadexperience growing other businesses.
“I’ve always been a believer you surround yourself with thebest talent you can,” Dyer says.
He also recognized the blind spots that being a founder of thebusiness 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 investmentcapital, which was in 2000, one of the first recommendations tome, 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 LifestyleFamily 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 companywould be in three to five years,” he says. “If we were going to be a50-club company, who is it that was running the company back in2000 that could run the company in 2005? We concluded that wereally 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 himto 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 hewould have to spend money to draw the best talent.
“The people at the top are going to require a significantly greaterinvestment than the people that don’t have as much talent,” hesays. “You’ve got to be willing to spend money to make money.”
To back up his point, Dyer invested about $1 million into hisexecutive 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’taccustomed to spending more than $75,000 for a bookkeeper.”
Because the pickings were slim within the fitness industry, Dyerlooked outside the fitness world to find those leaders who hadexperience managing multiple locations. Whether it was managingmultiple restaurants or retail stores, Dyer wanted an executiveteam that would not be overwhelmed by the growth.
Dyer used headhunters as well as referrals to assemble that firstmanagement team of five or six people.
During the interview process, Dyer looked for leaders he hadchemistry 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, theyhave a personality that people like to be around, and I think theybring experience in whatever role they might end up taking withthe company.”
Dyer says that as a company grows, it is vital to have a solid teamaround you.
“As you build a bigger company, you’ve got to have an executiveteam that people want to follow,” he says. “That becomes criticalbecause that is the culture of the future. One person onefounder 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 tocreate 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 anequity position in the company, which the company accomplishesthrough the issuing of options.
“So we have an option pool in our company, and by issuingoptions, they have stake in the company and they manage it like itis their own,” he says. “That’s ultimately what you want is to havea 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 executiveteam. The dual changes led to some struggles in the companybecause people needed to learn new roles.
Dyer says a big challenge came between 2000 and 2002, when thecompany 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 planit 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 goingto work, and eventually, they understood and agreed.”
Reaching that agreement can lead to employee retention, whichDyer says is important because retention of employees results inretention of customers.
“It’s critical, particularly when you’ve got a service business thatrevolves around people like ours,” he says. “So, you naturally wantto retain your employees so that you retain your members.Members identify with the people. So ... if we have high turnoverin our employees, we are at risk of losing our membership, aswell.”
Dyer says the company would continually receive data from theInternational Health, Racquet and Sportsclub Association on howto be the most effective at retaining members.
“In the fitness industry, member attrition or loss of members issomething the industry has been fighting for years and years, andone of the key strategies to retaining members is to retain youremployees first,” Dyer says.
“If we can get our employees to build relationships with ourmembers, they will look forward to coming to work just as muchas our members will look forward to coming to work out.”
Dyer says it’s simple face-to-face communication that keeps therelationship 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 membersby name and then build the relationships from there. We arealways identifying ways for the employees to get to know themembers, but the easiest way is to get out there on the exercisefloors with the members and pick up the weights and go throughthe locker rooms and doing locker-room checks.
“Doing the things if you had a party at your house is the examplewe use. If you were a good host at a party at your own home, whatwould you do? The bottom line is you would make sure everyonewas talking to one another and feeling good about the partythat they’re attending.”
A significant amount of capital is also invested in trainingbecause Dyer wants to promote from within the organization.
“We have a decentralized approach to training where we putthe training out there in the field,” Dyer says. “But we continually invest in our people to provide management-leadershiptraining programs so we can continually have a full pipeline ofpeople ready for the next growth opportunity.”
It’s also important to send the message to all your existingleaders that there is going to be an opportunity for them to stepup and take on more responsibility in the future of the company.
“If we continually pull people in from the outside, it can beextremely demoralizing to our existing pool of people, and wedon’t want to do that,” he says. “So, whenever possible, wewant to try to promote from within. Plus, it keeps the culturealive. 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 adifferent company.”
The next chapter
Looking back, Dyer says the company still would have beensuccessful if he hadn’t essentially started from scratch andmade the changes he did. He can see having maybe 20 clubsstrictly within Florida, instead of the 51 in four states that arenow open or in the process of opening. However, if he didn’tface the struggles in the early 2000s, the company wouldn’t benearly 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 $35million in 2004, $54 million in 2005 and $80 million in 2006, andit 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 vicechairman of the board in October of 2007, to President ToddBright, and now, he must go through the process of letting gowhile continuing to play a role in the company, which he wouldlike to take public.
“I’m 57 years of age, and I don’t want to be working at thispace when I’m 62 or 65, and it was an opportunity for me tospend some time with my boys before they go to college,” hesays. “They’re both in their midteens, and I just want to put myfamily first at this point in my life. But I still go to the officeevery day, I’m still involved in all the strategy and all the realestate trips and everything else, I just don’t have to deal withthe day-to-day at the moment.” <<
HOW TO REACH: Lifestyle Family Fitness Inc., (727) 456-3100 or www.lff.com