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