OB Case Study Background

BUSINESS BACKGROUND
Western Reserve Racquet & Fitness Club (WRRFC) is one of the premier indoor tennis facilities in Northeast Ohio. WRRFC was first opened in 1970 as a small, family run indoor recreation facility. It remained a small 6 indoor court tennis facility until 1992 when an electrical fire burnt it almost entirely to the ground. It was re-opened in 1993 and featured many new improvements and the club has remained relatively unchanged from then today. It now boasts 10 indoor courts, 5 outdoor clay courts a state of the art fitness facility, luxurious locker rooms featuring steam rooms and saunas, a full bar and a massage spa. WRRFC is located in Streetsboro, OH situated directly in-between the affluent neighborhoods of Hudson & Aurora and a short 10 minute drive from the large neighborhood Solon. This strategic location allows WRRFC to attract many of the upper middle class families with disposable income to become members and take lessons. Out of all its amenities, however, WRRFC is best known for its tennis program. Historically WRRFC has one of the strongest adult tennis programs in Northeast Ohio and one of the largest junior programs in the area as well. These tennis programs are bolstered by having some of the most well known tennis staff in the area. The tennis program at WRRFC is divided into 2 main types of programming: clinics and lessons. Clinics are scheduled and advertised through the club. These offer the highest margins of profit for the business itself as the tennis pros teaching the clinic are paid on a set hourly rate regardless of how many students are in the clinic. Lessons on the other hand are scheduled and advertised by the individual pro. These are much more lucrative for the tennis pro because they receive a percent commission on the total cost of the lesson.

PEOPLE OF INTEREST John Stofey is a United States Professional Tennis Association (USPTA) certified tennis professional. John first joined the WRRFC tennis staff in 2005 when he left the club that his mother owned, Washington Court, in Medina. John was a very skilled junior player playing in some of the nations top events. He did not play high school tennis and opted not to play college to pursue a career playing tennis professionally. John is a very well known pro in the area. As such when he was brought on at WRRFC he was able to negotiate a very good compensation package. He not only made a very high percentage commission on his lessons, he was also put on a salary as well as given a $500 a quarter allowance for apparel. Because of John’s following, he teaches mostly lessons from his large pool of clients. Sebastian Glinzler was the director of tennis for WRRFC from 2010 until 2013. Sebastian was hired at WRRFC after the previous director of tennis was let go. Sebastian is new to the Northeast Ohio area, coming here from South Africa, by way of El Paso, TX. His main objective when being hired was to make the tennis program more profitable. Sebastian is an experienced teaching professional however prior to WRRFC he has never been a director of tennis before. Matt Treblas is the current director of tennis at WRRFC. He was hired after Sebastian was let go. Matt is the son of one of the two owners and general managers of WRRFC. He has been on the tennis staff since 2006 and is also a certified personal trainer.
2010 – 2013 In spring of 2010 Sebastian Glinzler is brought on as director of tennis at WRRFC. He is replacing the former director of tennis because of declining profits in the junior program. In his first staff meeting Sebastian announces that there will restructuring within the tennis staff. Much of the tennis staff, in particular John, is very wary of Sebastian, as he has very limited experience managing a tennis staff.
The first policy that is implemented is a rule that limits when particular lessons are scheduled. The policy states that a pro may not schedule a lesson with a student during the time of a clinic that the student would be eligible to participate in. For example, a pro couldn’t do a private lesson with a high performance high schooler during the high performance clinic. The second policy that was put in place was setting a limit on the number of students could be in a lesson. Prior to this policy if the pro could get 8 clients on the court for the hour, he would get a large bonus because of the volume of students. However the new policy stated that the limit for a lesson was 4 to 1; this turned any lesson of 5 or more into a clinic, which took a significant amount away from the pro but into the business’s pocket. These policies were put in place to funnel students into the programming, the more lucrative of the two types of programming for the club.
These initial policies were met with a lot of negativity from the tennis staff. John, in particular, was very vocal about his displeasure with the new policies. The majority of John’s book of business was lessons, so these policies took a significant amount of money out of his pockets. Tensions between John and Sebastian escalate. In an effort to appease John, Sebastian raises John’s prices $5 per hour. This put his lessons higher than the rest of the pros, but still less that Sebastian’s. However, Sebastian left John’s commission percentage the same. John viewed this price hike in his rates as a disincentive for students to take lessons from him, as the tennis industry is rather price elastic. This only further increased the tensions between John and Sebastian.
John disengaged from many of his off court responsibilities as an act of protest to these policies. He also started getting a little lax with his timetables, showing up a few minutes late for lessons and keeping them late which in turn through other pros off their schedule.
2013 – PRESENT In fall of 2013 amid growing tensions between the pro staff and Sebastian as well as a decrease in tennis revenue, Sebastian was let go. In order to try to recoup these loses and reunify the tennis staff Matt Treblas, the son of the owner and general manager, and well-liked tennis pro was chosen to take Sebastian’s spot. Matt’s first steps as director of tennis were to remove the restricted lesson time and lesson cap policies. By removing these policies much of the tension between the tennis staff and management was alleviated. However the second task he has was to try to increase the tennis program profits. Matt chose to realign the composition plan to a strictly hourly basis, meaning that the only salaried employees on the tennis staff were those doing work off the court. As such John’s salary and quarterly clothing allowance was removed. John was hit particularly hard by this policy shift as his salary and allowance accounted as roughly a $12,000 annual loss from his paycheck. While tensions are alleviated with most of the tennis staff, John still remains bitter about a large chunk of his paycheck being taken from him. As such he withdraws from work, showing up late to, or even no-showing lessons. He also has completely abandoned all of this off court duties. As such John starts teaching fewer and fewer lessons. In 2010 he was billing out roughly 30 hours a week in lessons, presently John is billing out less than 15 hours a week. Management is frustrated with him as his no-showing of lessons as well as late arrivals have caused a number of scheduling conflicts with the other pros and the clinics.
The Problem
According to the financial statements for 2013 tennis revenue is down 7% from 2012. However revenue from lessons are down almost 20% from 2012. Much of the revenue lost in lessons is from John teaching less and less. How can WRRFC reengage John and make him into a strong, valuable member of the team again?