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July 2010

Question

“Throughout most of 2009, we weren’t replacing employees who left our club. Now that business seems to be (on the surface) picking up, we’re feeling the demand for more staff. However, we’re very weary of hiring again just to lay people off in a few months. How do we know when it’s the right time to start hiring again?”

Answer

In essence you want to work your staff as close as possible to the limits of their capabilities before risking re-hires. If that means overtime for an interim period, well, that may be a plan to consider.

Overtime is not as expensive as you might think. While 30 hours of paid overtime is the equivalent of 45 hours of regular pay, there are no health insurance costs or other pay based benefits (vacation time, sick time, disability, unemployment taxes) on top of the 45 hours of pay. This means that often 30 hours of overtime equals 40 hours of labor cost. The additional value in overtime is that it can be managed easily and no one loses their job when it comes to an end.

Another option is to hire some part-time staff with the plan to have some of these jobs eventually transition to full-time as the business gets much stronger.

The right time to add staff is when business (and net income) has come back for an extended period, say at least two consecutive months, to the point where club management believes it can permanently support the reinstated labor costs.

June 2010

Question

We recently had a fire sprinkler go off in our gymnasium subsequently flooding and requiring us to do a full floor replacement. We are a membership based community center and as a result have had many questions about refunds for memberships, etc. The rest of our facility including fitness center, running track, and 3 pools will remain open for members. My question to others who have found themselves in similar situations is: 1. What was your response to your membership? Did you provide any refunds, membership extensions, etc? Did you do a blanket policy for all members or handle on a case-by-case basis? Any thoughts would be helpful.

Thanks, Justin

Answer

I’ve run into situations like this before. I can’t remember any instances where we gave refunds to customers. The difficult issue here is how do you determine who to give the refunds to and how much. Can you prove which members were most affected by the loss of the facility? If you decide to pay them other members may say their use opportunities have been diminished and they want to be reimbursed as well. If you have a sure way of determining who to reimburse then you may find that to be your best solution but again, in my experience managing and consulting, I haven’t seen anything as cut and dry as that. If you decide that some compensation must be given it is much better as a free service (i.e. personal training) which have a cost but not the full credited value, and it also provides an opportunity to engage members in another club activity which they may enjoy and want to utilize.

Another route you can pursue is to see if your business insurance will cover you for loss of revenue due to the flooding. Some do, and in that case you could do a variety of different things with the compensation from insurance. You could use that money to pay back certain or all customers or to provide membership extensions, but again this is risky as it is a very touchy subject and could create a precedent which could come back to haunt you in the future.

Lastly, check to see if your membership agreement has any clauses stating that the club may not be fully available for use at all times. Usually these clauses are included to provide you protection against loss of use due to maintenance or equipment replacement. If your current membership agreement does not have these clauses, I would recommend adding it.  Good Luck!