Putting a Value on the Human Capital of Golf Courses

What is the true value of a golf course superintendent and the course’s maintenance crew? If your course shut down during the COVID-19 pandemic, with the superintendent and maintenance staff locked out, or your maintenance ran on only a skeleton crew, then the assessment of “true value” quickly became painfully obvious to anyone who later set foot onto your neglected turf.

Operating capital is what gives a business the liquidity to operate day today. Physical capital encompasses not only operating capital but the real estate, equipment, inventory, furnishings, and other assets of the business.

Human capitol, however, is a category with an evolving place on the balance sheet. And as first attitudes and then metrics shift, golf course superintendents may be uniquely well-positioned to reap tangible rewards from these changes.

COVID-19 Escalated an Emerging Trend

For decades, human capital has been categorized as business expenditure. Recruiting, hiring, training, benefits, salaries, and other outflows related to the management of employees looked like and felt like a cost to the company. However, as our culture shifts from manufacturing-based to a knowledge and service-based economy, accounting practices haven’t kept pace.

Attorney Mike Melbinger is a partner in the Chicago offices of Winston and Strawn. He specializes in matters of executive compensation. While golf course superintendents may not feel very “executive,” they are in fact, the key employees most critical in determining when and at what level a golf course is revenue producing.

Melbinger explained, “…Unique among the stock market crashes and economic crises of the past 90 years, (and no, I haven’t been practicing law during all of them) the current pandemic has brought to the fore human capital issues rather than financial or economic ones.”
He cites a recent webcast from the global financial advisory, Willis Towers Watson, identifying two of the most important reasons the coronavirus pandemic initially sent the stock market into a downward spiral:

1. The current economic downturn is human capital-driven, not financial or market forces driven.
2. Reduced capacity of workers to do their jobs is reflected in the rapid stock market decline.

Even before COVID-19 painted a clear picture of what the world (and the stock market) would look like if workers all stayed home, perceptions were shifting. In March 2019, the Securities and Exchange Commission’s Investor-as-Owner Subcommittee on Human Capital Disclosure issued the following recommendation:

“Today’s companies are increasingly dependent on their workforces as a source of value creation. Indeed, for many of the most dynamic companies, human capital is their primary source of value. As the US transitions from being an economy based almost entirely on industrial production to one that is becoming increasingly based on technology and services, it becomes more and more relevant for our corporate disclosure system to evolve to include disclosure regarding intangible assets, such as intellectual property and human capital. Human capital is increasingly conceptualized as an investable asset.”Recognizing this substantial shift in defining how value is created, the SEC Subcommittee recommended “modernizing corporate reporting and disclosure,” a message that currently is being echoed by countless other legal, financial and economic experts.

Why Actions by the Securities and Exchange Commission Matter for Your Golf Course

Because you are not employed in the financial industry or may not be a major shareholder in a company, you may be wondering how initiatives of the SEC have any impact on your livelihood. In fact, ivory tower decisions are being made right now that could have a substantial effect on your future as a turf manager or course superintendent.

Workers at publicly held companies, such as many of the golf courses owned by major resort developers or large golf management firms, ultimately are accountable to the organization’s stockholders. As standards are implemented to capture the real value of a company in a knowledge-based economy, the gap between the organization’s market value (stock) and its book value narrows. Human capital (that’s you) starts to be measured as an asset rather than as a cost.

If the SEC continues in its current direction, revised conditions will go into effect regarding how publicly owned companies calculate the value of human capital in reporting to their shareholders. Companies will establish new criteria for representing key employees as assets rather than as a cost.

Superintendents who work at a municipal course are accountable to the voters and taxpayers, while the accountability of those who work for a privately held company is to the company’s owners and investors. Nevertheless, even without actual shareholders, superintendents at municipal and at private golf courses will benefit from the transitioning way human capital is measured by publicly held companies.

As talented golf maintenance and turf professionals are valuated as assets on the balance sheet rather than as costs, private courses and municipal facilities will have no choice but to, in their own way, follow the lead of their publicly-traded competitors. Make no mistake about it, your public, private or resort course has more competitors than ever before.

Golf now competes for the time, money and attention of consumers in an environment jam-packed with alternative options for leisure, recreation, competitive sports fun and social engagement. I n a vertical that once thrived by simply retaining members, golf course management today must pull out all the stops to attract and retain membership, frequent golfers or vacationers whose time and interest for playing the resort course is being upstaged by countless “shiny object” recreational activities.

The Power of Human Capital Migration

It won’t be easy for employers to determine accurately the value of a golf course superintendent’s accumulated knowledge, technical expertise and on-the-job experience. No doubt, most superintendents would suggest that their value is far greater than their paychecks reflect.
If superintendents are correct in their assessment of their own value, and they are willing to make a geographic move, they may be able to leverage the new emphasis on valuing human capital. They may also be able to find golf course owners or managers who see them as being as valuable as they see themselves or, at least, perceive them to be more valuable than their current employers do.

When superintendents with greater talents and experience leave their existing places of employment for “greener fairways” where the paycheck and the benefits are better, they are creating a talent migration. As a result of this migration, good golf courses will become even better because they attract more skilled or knowledgeable workers. Less successful golf courses will decline because they won’t be able to compete for the top employees.

What Can You Do Now to Help Define Your Human Capital Value?

Putting a monetary value on human capital won’t be a simple task for regulators, companies or even at the micro-level of your own golf facility. As a superintendent, turf manager, director of golf, or other course decisionmakers, you can, however, start laying the groundwork for better benchmarking and the assessing of contributions made by you and your crew.

Consider keeping a running spreadsheet of cost-savings generated by your actions and the actions of your maintenance workers. Measure mentions in the media by tracking what that much coverage would have cost in advertising dollars had your facility been paying for it. Track the cost of your formal education at today’s value and keep records of the investment you and the facility make in on-going training for you and others on your staff. Be sure to include all the “above and beyond” contributions, such as working on your days off, working in inclement weather, supporting community interest in the facility at off-property events, and other efforts you and your workers make that contribute to the course’s recognition and success.

Although it is imprecise and somewhat subjective, attempting to establish the return on investment (ROI) of your workplace contributions provides, at best, a powerful springboard to human capital valuation and, at the least, extremely helpful talking points for negotiating your next raise. To paraphrase a wise insight, “If you think it’s expensive to hire a good golf course superintendent, try hiring a bad one.”

Linda Parker has been writing professionally since the 1980s. With clients in finance, sports, technology, change enablement, resorts and nonprofit global initiatives, Linda helps organizations communicate their stories in meaningful ways to the people they most want to reach. She has authored, ghostwritten or contributed to more than a dozen nonfiction books. Linda is a member of the Authors Guild and the Golf Writers Association of America. You can connect with her at linda@glindacreative.com