the fitness department: an untapped asset
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The Fitness Department:An Untapped Asset
Presented By:Graham MelstrandVice-President, Business Development
American Councilon Exercise®
A stalled economy
An increasingly competitive marketplace
Skeptical consumers
Current Challenges Facing the Fitness Industry
Beginning in 2009 fitness facilities have faced:
Flat membership sales
Declining revenue from fitness department profit centers
Challenges realizing deferred revenue
Challenging Times…
Membership attrition rates in excess of 3%/month (36% annually)
Staff turnover rates 50%+ annually Increasing scrutiny around industry labor
practices
Challenges That Won’t Go Away
Weak Member Retention:
$40,000-$100,000+
Replace One Average Personal Trainer:
$11, 734.00
How Much Does it Cost
Membership Retention Calculator
Members X _____ Annual attrition rate = _____ Lost members X $____ average monthly dues
$_____Lost REVENUE
Can you keep them one month longer?
Personal Trainer example at $40K annual wages: Separation Costs:
– Exit Interview + Admin Costs: 2 hrs. @ $30/hr. $ 60– Separation Pay: 1 week $769– Unemployment tax increase: $ 15
Replacement Costs:– Pre-employment Admin Costs: 3 hrs. @ $30/hr. $
90– Marketing/Advertising: $350– Interviewing 4 candidates/1 hr. @ $50/hr. $200– Staff meeting costs 3 staff/1 hr. @ $50/hr. $150– Background check $100
Calculating Staff Turnover Costs
Manager or staff-led training: – Employee compensation 5 days @ $25/hr. $1000– Manager’s Time 30 hrs. @ $50/hr. $1500
Lost Productivity (billable training hours)– 25 hrs./week x 12 weeks/2 @ $50/hr. $7500
Total estimated cost to onboard a single trainer*
$11,734
*Adapted from Chally Group Worldwide Employee Turnover Cost Calculator
Calculating Staff Turnover Costs Continued
DO YOUR FITNESS PROFESSIONALS:
Have “off-the-clock” responsibilities
Work more than 5 consecutive hours without a break?
Ever work more than 8 hours in a day?
Compensation: FLPA compliance
29 CFR 778.501 - The ``split-day'' plan.
Section Number: 778.501 Section Name: The ``split-day'' plan. (a) Another device designed to evade the overtime requirements of the Act was a plan known as the ``Poxon'' or ``split-
day'' plan. Under this plan the normal or regular workday is artificially divided into two portions one of which is arbitrarily labeled the ``straight time'' portion of the day and the other the ``overtime'' portion. Under such a plan, an employee who would ordinarily command an hourly rate of pay well in excess of the minimum for his work is assigned a low hourly rate (often the minimum) for the first hour (or the first 2 or 4 hours) of each day. This rate is designated as the regular rate: ``time and one- half'' based on such rate is paid for each additional hour worked during the workday. Thus, for example, an employee is arbitrarily assigned an hourly rate of $5 per hour under a contract which provides for the payment of so-called ``overtime'' for all hours in excess of 4 per day. Thus, for the normal or regular 8-hour day the employee would receive $20 for the first 4 hours and $30 for the remaining 4 hours; and a total of $50 for 8 hours. (This is exactly what he would receive at the straight time rate of $6.25 per hour.) On the sixth 8-hour day the employee likewise receives $50 and the employer claims to owe no additional overtime pay under the statute since he has already compensated the employee at ``overtime'' rates for 20 hours of the workweek. (b) Such a division of the normal 8-hour workday into 4 straight time hours and 4 overtime hours is purely fictitious. The employee is not paid at the rate of $5 an hour and the alleged overtime rate of $7.50 per hour is not paid for overtime work. It is not geared either to hours ``in excess of the employee's normal working hours or regular working hours'' (section 7(e)(5) or for work ``outside of the hours established in good faith * * * as the basic, normal, or regular workday'' (section 7(e) (7)) and it cannot therefore qualify as an overtime rate. The regular rate of pay of the employee in this situation is $6.25 per hour and he is owed additional overtime compensation, based on this rate, for all hours in excess of the applicable maximum hours standard. This rule was settled by the Supreme Court in the case of Walling v. Helmerich & Payne, 323 U.S. 37, and its validity has been reemphasized by the definition of the term ``regular rate'' in section 7(e) of the Act as amended. [46 FR 7318, Jan. 23, 1981; 46 FR 33516, June 30, 1981]
Training Time vs. Floor Time and “Split Shifts”
As an Industry, how did we get here?
Challenge the status quo, or more of the same?
What can we learn from our history and best practices in other service intensive industries?
How can we develop a new fitness department structure and model for success?
Questions to Answer Today
Examine the structure of our fitness departments. Conduct a facility self-assessment Develop our staff Compensate our staff ….LEGALLY. Better position programs and services. Keep our members Make better use of time and money
Our To-Do List
FITNESS DEPARTMENTSBUILD FOR SUCCESS
Roles and responsibilities of staff over time
Organization charts, the playbook illustrated
Pros, cons and questions
Typical Department Structure
Distinct roles and responsibilities
Significant source of revenue for the club
More sophisticated programming
Large gaps exist in member service
Requires balance between production and development
Today’s Fitness Department
The Fitness Department Today: Current Club Organizational Chart
Fitness Manager/Director
Group Fitness Instructor
Group Fitness Instructor
Group Fitness Instructor
Fee forParticipation
Fee forParticipation
Group Fitness Mgr/Supervisor
Personal Trainer
Personal Trainer
NewPersonal Trainer
Personal Training Mgr/Supervisor
New Member Orientation
Responsibilities– In larger facilities oversees personal training & group fitness
managers– Set programmatic direction for facility– Hiring, firing of fitness staff– Training and scheduling of staff – Limited personal training (supplements salary)– P&L responsibilities for fitness department
Qualifications– Degree in Exercise Science or related field (advanced
degree a bonus)– Credible credential(s)– Proven track record for revenue production– Above average customer service skills
Compensation– Salary + Bonus + Training Income
The Fitness Department Today: Fitness Director
Responsibilities– Orientations – Lead opportunity– Provide one-on-one or small group training services for a fee– Deliver programming and group exercise – Limited housekeeping– Limited customer service
Qualifications– Certification: Weekend to credible organizations– Education: Varies
Compensation– Training rates and tiers vary by facility but are primarily
revenue share with fitness professional
The Fitness Department Today: Personal Trainer
Responsibilities– Manage class schedule and balance between
free and fee-for classes– Audition/Hire group instructors– Teach key classes on schedule– Some P&L responsibilities for small group or
premium classes Qualifications
– Broad Range: Highly regarded instructor to degree in Dance / Physical Education
Compensation– Part-time to full-time salary + hourly to teach
The Fitness Department Today:Group Fitness Manager / Supervisor
Responsibilities– Show up on time– Teach– Leave
Qualifications– Broad range: Proficient participant to degree
in Dance / Physical Education Compensation
– Hourly
The Fitness Department Today: Group Fitness Instructors
Pros– #1 source of non-dues revenue– Payroll expense tied to productivity
Cons– Limited penetration rates – Member service virtually non-existent– Narrow margins for club– Staff have limited stake in club’s success
Questions– How do we deliver a high quality member experience to
all members?– How do we ensure that new members are properly on-
boarded?– How do we ensure that the staff work as a team and put
the club and member’s priorities first?
The Fitness Department Today: Pros and Cons
Was the Evolution Organic or Intentional?
TAKING A CLOSER LOOK
Physical activity participation rates
Why members leave
Establishing baselines
Starting from scratch
What Do We Know AboutMembers and Non-members?
13-15% of adults are members of fitness/wellness facilities in the United States.
Membership rates vary from 6.3-21.8% by state.
While over 96% of adults acknowledge the benefits of exercise, 80% have not acted on that knowledge.
Adults 65+ are 5x more likely to never engage in physical activity.
Women are more likely than men never to engage in physical activity.
56% of children do not have regular physical education.
52% or parents feel that physical education should teach “healthy lifestyle” education.
Physical Activity and the U.S. Population
Facilities are overcrowded
Dissatisfied with staff
Dissatisfied with program offerings
Management is unresponsive
Cleanliness of facilities
Outdated equipment/facilities
SOURCE: IHRSA and Consumer Reports
Why Do People Avoid or Leave Fitness Facilities?
Utilizing Facility Inventory and Self-Assessment Tools
Establishing Baselines
Who are we? Who are the members we serve? What are the programs that we offer? Are they the right ones? Does the staffing model support our members
and programs at a high level? Are the baselines sufficient to support our
business plan?– Areas of strength– Areas of opportunity
Facility Survey Exercisewww.acefitness.org/CIsurvey
Size Type Market Segment
Facility Identity
Target audience Gender distribution Age range
Member Demographics
Facility features Fitness areas
Physical Plant Attributes
Formal member on-boarding process– Inventory new member
goals and expectations!!
Nutrition / weight management programs
Complementary wellness
Program Offerings
Personal / group training
FOR WHO?
Fitness Program Offerings
Fitness Program Offerings: Group
Are your staff employees or contractors?
Do you have an education manager / fitness director dedicated to:
– Personal training department
– Group exercise department
Do you have formal job descriptions for the following positions?
– Fitness director
– Group fitness manager or supervisor
– Personal trainer
– Group fitness instructor
Do you have mechanisms to ensure that staff hold current CPR / AED cards and appropriate certifications?
Staffing
Are your fitness professionals required to maintain professional liability insurance?– Personal training staff
– Group fitness staff
Do your fitness staff have floor responsibilities in addition to training / teaching?
Are your fitness staff responsible for a minimum number of sessions / classes per week?
Does your facility offer a formal career advancement path? Do you offer tiered compensation to your trainers /
instructors? Do you provide educational assistance? What do you wish your staff were better at?
Staffing (cont.)
Less than 50% of facilities surveyed have formal job descriptions for their fitness department positions.
Less than 25% of facilities surveyed have a formal process to onboard new staff.
Nearly all facilities unknowingly violate current federal labor laws with “floor hours” and “split-shifts”
Interesting Fitness Industry Facts
Degree in exercise science?
NCCA-accredited fitness certifications?
Do you require specialty training?
What are the Pre-requisite Qualifications for Your Staff?
Are we who we thought we were?
Are we serving our members interests or our own?
What can we do to better meet the needs of members?
What does that delivery model look like?
Starting from Scratch
Structure and scalability
Professional roles and responsibilities
Balancing resources: production vs. development
Considerations for Building a Model Fitness Department
Department structure– Roles and responsibilities – Job descriptions– Accountability
Staffing Professional development Programming and Pricing Compensation Putting it all together
Creating a Facility Action Plan
What Should the Future Fitness Department Look Like?
Fitness Manager/Director
Group Fitness Instructor
Group Fitness Instructor
Group Fitness Instructor
Programs
Free
Group Fitness Mgr/Supervisor
Personal Trainer
Personal Trainer
Personal Trainer
Personal Training Mgr/Supervisor
Fee forParticipation
Fitness Service Specialist
Fitness Service Specialist
Qualified
Competent
Seeking professional recognition / respect
Desire for compensation commensurate with experience and education
An image problem
Staffing: What Qualities Do Today’s Fitness Professionals Have?
Minimum competence:
– Has earned a CREDIBLE credential
– Fulfills ongoing continuing education requirements.
Necessary to be effective AND successful:
– Effective communication skills
– Skilled at meeting and exceeding expectations for customer service
– Clearly identifiable area of SPECIALIZATION
– Programs and services deliver RESULTS
What Qualities Do Consumers Look for in a Fitness Professional?
STAFFING TO WINEVERY STAFF-PERSON ISA FITNESS PROFESSIONAL
Fitness director
Group fitness director
Personal trainer
Group fitness instructor
Fitness service specialist
Options:– Registered dietician
– Physical therapist
– Massage therapist
Roles and Responsibilities
Qualifications– BA/BS, Exercise Science or related field, Master’s Preferred– Current NCCA-Accredited certification– Current CPR/AED card, (Instructor a plus)– Experience (management + teaching a plus)– Proven track record for production
Responsibilities– Hiring/Firing– P&L oversight for department production– Escalations– Staff Development– Program Management
Accountable for– Overall development and execution of Fitness Department business plan
focused on: Programs, Revenue Production and Member Retention
Fitness Director
Qualifications– Bachelors Degree in Exercise Science, or related healthcare profession– Current NCCA-accredited certification– Proven track record and proficiency in multiple group modalities– Current CPR / AED card (instructor a plus)– Experience (management + teaching a plus)
Responsibilities– Auditions/hiring/firing– Oversight for department production and participation– Escalations– Staff development– Program management/scheduling
Accountable for– Maintaining a high level of participation, member service costs, identifying
trends and opportunities in new programming, assisting personal training staff with crossover programs
Group Fitness Director
Qualifications– Degree in Exercise Science or related field preferred– Current NCCA-accredited certification– Current CPR / AED Card– Consumer friendly
Responsibilities– Lead prospective member tours– Providing a quality member experience for ALL members– Assessment and program design for training clients and small group programs
as assigned– Management of assigned programs– Maintaining a personal/professional development plan as established with
Fitness Director Accountable for
– Programs as assigned– Production – training sessions– Member retention as part of the fitness department team
*IHRSA surveys indicate members prefer trainer-led tours vs. salesperson-led
Personal Trainer
Qualifications– Current NCCA-accredited certification– Current CPR / AED card– Training in any format that they intend to teach
Responsibilities– Effectively LEAD group classes as scheduled– Support club programs and services – Actively engaging all members they come in contact with
Accountable for– Assisting club in efforts to containing member visit service costs– Member retention as part of the fitness department team
Group Exercise Instructor
Qualifications– Complete member service training and facility orientation– Excellent customer service and communication skills
Responsibilities– Actively engage members on the fitness floor, facilitate introductions
between members– Anticipate member needs– Basic housekeeping– Direct traffic to programs that may interest members
Accountable for– Supporting group and personal training staff and facility programs– Member retention as part of the fitness department team
Fitness Service Specialist
Required Elements
– Evaluate staff
– Inventory existing programs, products and services
– Review current policies and procedures
– Identify areas of opportunity
– Develop a PLAN!
Establishing a Plan for Success
Benchmarking staff creates roadmaps for professional development and impact customer service, member retention and ultimately revenue production!
Staffing Surveys- Benchmarking Employees
Degree in Exercise Science or related field?
Highest level of education completed
Current Certifications: – NCCA-accredited? – Other?
Other Professional Credentials?
Current CPR / AED Card? Current professional liability
insurance Other specialized training?
– Group– Coaching license– Other
Fitness Staff Survey Items
Sports Performance Older Adult Weight Management Youth Post Rehab/Special Populations Mind/Body Management Fitness Education Or…Generalist
– Group– Personal Training
Does Each Staff Person Have an Area of Specialization?
Where do they want to be in 1, 3, 5 years?
What do they want to learn to make them more successful?
What is their preferred learning style?
How do they learn best?
Aspirations
Whose responsibility is it?
Creating a member / facility focused plan
Creating a career path and advancement opportunities
Staying on track
Professional Development and Staff Training
Management– Return on investment– Develop interpersonal, business and sales
skills.– Staff skills must mirror member interests
Fitness Staff– Focused on science and programming – Expect science and programming
knowledge will drive clients to them– Avoid courseware in interpersonal,
business and sales
Balancing the Needs and Interests of Management and Staff
Establishing baselines
Personal professional development plans
Investing in continuing education
Staff training
Mentorship
Key elements
– Knowledge, skills and abilities
– Training and development
Goal: Member retention and revenue production
Creating a Member / Facility Focused Plan
To deliver the level of service and programs the following questions need to be answered:– What is acceptable in our model for?
• Education• Credentialing• CPR / AED training• Interpersonal skills and sales training• Experience
– Which staff meet that standard and which need additional training?
– How will that training be delivered and by whom?– How will we track the progress?– How much time will we allow a staff person to meet
our baseline?
Baselines
Generalist or specialist?
Program driven career paths
– Professional facing
– Consumer facing
Accountability: Staying on track
Measurement and compensation
Creating a Career Path and Advancement Opportunities
Advanced
Intermediate
Foundational
OLDER ADULT
SPORTS
PERFORMANCE
WEIGHT
MANAGEMENT
YOUTH
M IND
&
BODY
MANAGEMENT
SPEC
POP &
POST
REHAB
FI TNE SS
EDUCATIONFoundational
Continuing Education
Career Starting Point
PotentialCareer Paths
Programming / Exercise Science
Business / Marketing/Interpersonal Skills
Certification
Academic or Vocational Training and Education
Foundational Educational Resources
Department management
Key front line positions
Program specific positions / responsibilities
Identify the Roles That Need To Be Filled
Program Specific Positions / Responsibilities
Weight Management
Intro to…
New Member Programs
Member Orientation
Assessment
Program Design
Personal Consultation
Program Specific Positions / Responsibilities (cont.)
Older Adult
WeightManagement
Training Services
Sports Performance
Mind / Body
Youth
Post Rehab / Special Pops
Training is key to Performance AND Retention…. Reduce turnover costs Our judgment and expectations are skewed by
outliers– Top Performers– Under-performers
Our members EXPECT and DESERVE a high quality experience
Compelling Reasons to Train Your Staff
Time and Money Budget for Staff Training and Development
– Establish an accrual account Who is eligible for training? New Staff
– Onboarding Existing Staff
– Accrue weekly and award at the employees anniversary
Use dollars that would be otherwise spent on turnover related expenses
That’s Great….How Do We PAY for Staff Training?
What About Revenue?!
• Sell SOLUTION based programs NOT Sessions• Keep them short- 6 weeks or less• Pricing is based on the TOTAL cost of the program
Why?• Reduces barriers to entry by limiting exposure/risk
– Time– Financial– Recognize revenue
Example: 6-week Weight Loss Program
• 6 Week Weight Loss Program $699 Includes:– Initial private consultation with a personal trainer who
specializes in weight management– Food log and analysis– Healthy grocery shopping field trip – Personalized physical activity plan– Meet with your trainer up to twice per week for one hour for
coaching, feedback and instruction
– Register now to secure your space – Programs begin the first week of each month– Small group programs also available
Offer Small Group Programsto Onboard New Members!
• Offer member onboarding programs that go out on the floor at specific time:– Introduction to the club and program– Fast Start– Getting started for women
• Open to ALL members• Small group format
• Objectives:– REDUCE 6 month attrition rate– Provide LEADERSHIP to new members that leads to success
Entrepreneur on my payroll?
Revenue share (splits), why it works on paper and not in real life
Tiers for trainers, making it work for the club and the trainer
Is the current compensation model the best for the business, staff and consumer?
Staff Compensation
Trainers average between 45-60% of gross revenue from a training session + tax and benefits
Trainers are primarily compensated based on production: sessions completed
Full-time trainers average 25 billable hours / week (50 weeks)
Full-time benefits paid to a significant percentage of fitness professionals in the U.S.
The training staff currently support approximately 5% of members in the average club
What are they doing to for the other 95%?
Trainer Compensation: A Closer Look
Example based on $100 training session and 50% split with trainer
Trainer Compensation: $50.00 Social Security Tax (6.2%): $ 6.20 Medicare Tax (1.45%) $ 1.45 Discount for Multiple Sessions $20.00 Marketing / Sales Load (8%) $ 8.00 Total Cost of Session $85.65
Net to club $14.35?!
Revenue Share: Does it Make Sense?
Trainer Compensation: $___.__ Social Security Tax (6.2%) $___.__ Medicare Tax (1.45%) $___.__ Discount for Multiple Sessions $___.__ Marketing/Sales Load (8%) $___.__ Total Cost of Session $___.__
Net to Club $___.__
Revenue Share In My Club: Does it Make Sense?
Tiered Compensation: Career Advancement or Margin Erosion?
Trainer Compensation Discounts for Bulk
$60
$55
$50
1
2
3
$80
$90
$1001 Item
20 Items
Alternative Plan for Tiered Compensation
Club Margin Rate Tier 1 =
Rate Tier 2 =
Rate Tier 3 =
$100
Alternate compensation plans
Look outside the industry for best practices
Testing a sample alternative compensation model
Getting Outside the Box: Win-wins for Business and Employees
Salary
– The new work week 37% more!
Bonus
– Individual Production: Sessions completed (monthly)
– Team: Retention (quarterly and annual)
Who would do that?!
Can we do that in the fitness industry?
What’s in it for the facility?
– Service, retention
– Employment law
An Honest Day’s Work
Total Training Revenue in 2010 / Total Sessions = Avg Revenue/Session
Total Compensation in 2010 / Training Sessions= Avg Training Rate
(Total Training Sessions / Trainers) / 50 weeks = Avg Work Week
Top Trainer Compensation in 2010 / Training Sessions= Top Training Rate
Top Trainer Sessions / 50 weeks = Benchmark
This will help set the range for compensation and production
Can it Work in My Club?
Total Training Revenue in 2010: $__________ / Total Sessions in 2010: ___________ = Avg Revenue / Session $__________ Total Compensation in 2010: $__________ / Training Sessions __________ = Avg Training Rate $__________
(Total Training Sessions _____/ ____Trainers) / 50 weeks = Avg work week _______hrs
Club Worksheet
A tier one example based on average income of $50,000 in 2010
Average Salary = 80% of average trainer income $40,000
Total Bonus Potential = 20% of average trainer income $10,000– Productivity (measured in sessions) $ 8,000
• $666.67/month to qualify (25/week x 50 weeks)• $10 session beyond 25/week
– Member Retention/Service Goal $ 2,000• 4 Quarterly x $ 250• Annual x $1000
Putting Pen to Paper- Testing the Model
Tier One– Meets prerequisites for employment– Establishes personal/professional development plan
Tier Two– Maintains credentials and conditions for employment– Completed annual personal/professional development plan
• CEC / training• Advanced degree in the field
– Consistently meets and exceeds production goals Tier Three
– Above + established area of specialization– Manages club programs in their area of expertise– Contributes to the professional development department staff
Your Best Trainers: Tiers that Make Sense
1. Conduct a thorough self-assessment of facility and staff
2. Establish your priorities
3. Share your vision
4. Implement change during slack times
5. Start new THEN dismantle the old
Making Change… Where Do We Start?
ACE provides a complimentary Facility Assessment Tool which can be found at: www.acefitness.org/clubs
Facilities that complete the survey receive a detailed report that includes strengths, opportunities and comparative information based on industry best practices
A complimentary facility listing on the ACE Fitness and Health Club Finder is included for all facilities that complete the survey
Contact me: graham.melstrand@acefitness.org
Tools and Resources
Questions
Contact me:858-576-6554
graham.melstrand@acefitness.org
Booth # 1033
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