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Transcription – Jan Spaticcia Show 157

Chantal:               Jan, thank you so much for joining me on the show.

Jan:                        My absolute pleasure, Chantal.

Chantal:               Now before we get stuck into the main questions for today, I thought because we are talking about culture, it would be a good idea if we started by setting the scene and you could tell anyone a little bit about the Energy Group.

Jan:                        Absolutely. Chantal, we started the business in 2003. It was a real accidental beginning. We became the first fitness franchise group in the UK. I’m very aware that in New Zealand, Australia, and American franchising has been prolific for many years. But in 2003 it just hadn’t been tried in the UK marketplace. The business began from very humble beginnings, literally from my dining room. It was an investment rather than a business for me.

Thirteen years later, I’m still here as Chairman, Chief Executive. The business is now almost a hundred clubs strong. 26 million network turnover, around 124 thousand members, 2 million visits per year and growing strongly. We’ll be opening some 30 clubs this year and we’re now spread across five territories.

Chantal:               Let’s dive straight into it Jan. How do you actually determine what culture you want within your business?

Jan:                        I think first of all, it’s important to say that a culture has to be authentic. For it to be authentic, I don’t think it can be engineered. I think it needs to be developed naturally. But you have to start with a really clear vision. I mentioned to you last week that I’m a great follower of Jim Collins and the “Built to last” and “Good to Great” and I really enjoyed sort of how Sony began.

Sony began in a bombed out factory in downtown Tokyo post war, when the country had really lost its identity. And even before Sony made a decision on what industry it was going to be in, it had a vision of what it was going to do. And what it was going to do is it was gonna make “Made in Japan” stand for quality and not shoddy. That was even before they decided what business to get into. And it’ll be well know that soup and agriculture were the first thoughts that they had. [crosstalk 00:02:16] had a vision of what they existed for, what their purpose was, even before they knew what industry they were gonna to be in.

I think when you begin to develop a culture within a business, it’s got to be something that comes from the heart and soul. It’s got to be something that’s authentic. In order to get to that, you have to ask deep questions. And you have to ask them of all of your stakeholders.

Energy just recently revisited our culture. And it took a year to do it. We called it the big conversation. We spoke to all of our stakeholders, our shareholders, our banks, our suppliers. We spoke to our members. We spoke to our ex-members. We spoke to the people that had never been members before, but were part of our communities. We spoke to our staff and we spoke to our franchisees. And it’s only through deep questioning of those truly involved in your business then you can really get an insight as to what your true purpose is. And thereby get to the real essence of your culture. And we’ve only had to do that twice in the 14 years we’ve been in existence. And each time it’s been a very, very revealing process.

Chantal:               When you went through that process, did you call it the big conversation?

Jan:                        The big conversation.

Chantal:               When you went through that process, can you, just for any of our listeners out there that might think, “Well, that’s an exercise that we need to go through for our business.” Would you be open to sharing with us maybe a couple of those questions that you asked the stakeholders in the business?

Jan:                        Absolutely. We really wanted to get back to our grassroots. We wanted to get back to our purpose. And as you stated purpose, since it began, is empowering people to transform their lives. We see this at three levels.

One, we look to empower our franchisees. These are maybe people who are in a job that they don’t enjoy or they’re in a career path that it’s not for them. And some of our franchisees are risking a significant amount of their wealth, their net worth, in order to take a risk and go for it alone. And we believe that we’re empowering our franchisees to transform their own lives and the lives of their families. We also look to create a career environment where it truly is possible for a fitness instructor to go to a club manager to them being a club owner. We’ve got several examples of where that’s occurred and it’s so exhilarating when it does. And then, most importantly, our members, who come to us with needs and when we fulfil those needs, when we truly empower them to take control of their lives in a way that they’ve never done before, then you really do know that you’re getting to the essence of what your business is about and your true purpose.

I think any business over time loses its way. We certainly had lost our way in certain aspects of this. I think it’s very easy to come back to the norm and simply be doing what everybody else does. If you’re truly going to be authentic with your culture, then you’ve got to be living it and you’ve got to be living it everyday. And you’ve got to test it on a regular basis.

Some of the questions we had to ask is are we serving the people we truly set out to serve. We were attracting people from the same places as other fitness operators were. Those people that always go to gyms. But that only represents some 14% of the UK population. What’s happening with everybody else? We’re truly proud of the fact that we reach out and reach out to members that have never exercised before. And that truly is central to our core purpose. And we’d lost our way and we had to bring ourselves back to centre.

And so asking questions of our staff and of our members and of those people that have never used our clubs before, “What is it that would truly empower you,” really helps us get to the root of what our business is all about.

Chantal:               Thank you so much for sharing that, Jan. Now, you know, building a culture within a business or within a team that’s under one roof is one ting, but you talked about the fact that you’ve actually, I think, 100 franchisees out there and another 30 coming on in 2018, have I got those numbers correct?

Jan:                        Yeah.

Chantal:               So, how do you make sure that that culture actually becomes part of the DNA of the business when you’re having to reach so far?

Jan:                        The simple answer, Chantal, is that it is very difficult. I had an early career that consisted of building fitness groups and selling clubs and then [inaudible 00:06:48] clubs where, as the group got further away from me, so it became more dilute. And it is significantly more difficult as a business gets bigger. I think it’s Richard Branson that says, “The magic is to build a gigantic business that operates like a small business.” And that’s very difficult to do.

We’re very fortunate that we’re in the franchising business. For that reason, we work through some very talented and very passionate owners who operate businesses in their own communities. And I think that’s what makes it possible for us. I have to be completely candid and say that my own experience is when you build a large group that is controlled from the centre, it’s very difficult to have built a culture that’s authentic. But the advantage of doing it through a franchise network is each and every club is owned by somebody that is invested in that local community. And I believe that that makes it a true difference. Both in terms of the nature of the culture, and the authenticity of the culture, when the owner is actually there in the mix. And I think that gives us a great advantage.

It does have challenges, though. It does mean you have to deal with the fact that not ever body gets it. And I came back here to “Build to Last” and “Good to Great”, Jim Collins’s great pieces of work. It’s about tightness of fit. Hewlett-Packard were very well known for not having simply one centre. What they would do is they would build regional head office in a town and then they would effectively become part of the fabric of that town, so that the people that worked with them got to live the HP way. And that kind of, almost cult like culture, that tightness of fit, creates a unity that’s very, very powerful and is very difficult to break. And when you’ve got that, people that don’t fit almost get repelled like a virus. There’s a tightness of fit and there’s a culture that is what the business is about. Where if you fit, you fit and if you don’t fit, there will be another place that you fit that just isn’t here.

And Collins put it very well. Everybody thinks that working for a good to great company a great place to work. It’s not. Working for a good to great company is a great place to work for people that understand a good to great culture. For everybody else it’d be a lousy place to work.

So I would say to you that the answer to the question is you have to hire for attitude, train for skill. And when you find the right people that fit within the culture, that everybody subscribes to, actually becomes very natural.

Chantal:               Jan, how important is it to get members of the team … the greater team, together on a regular basis or on an annual basis whether that be for a conference or for meetings? What role does that play in extending the culture within the business?

Jan:                        I think it’s really important and we certainly, on a regular basis, bring our teams together, be it for a conference, for a retreat, for simply to measure against the objectives and see where we are, to have a kind of health check on where we are against the objectives. There all essential.

However, I don’t think they’re as important as actually living it day by day. I think it’s very easy to just turn the [inaudible 00:10:03] of culture into a programme. You know, it’s a programme that has very tagline. And you have the conference and you have the weigh day and ever body lives in false environment for those days and then they go back to the day job and nothing changes.

I feel what is actually more important is living it day by day. I mean, it’s gotta come from the top. It’s no good creating a culture, which expects one behaviour if the leadership behave in a completely different way. If the culture is that you’re systematic and you’re punctual and meetings start on time and minutes always go out on a regular basis and very punctually, but then the leaders don’t do it, then nobody’s going to follow that culture. Nobody’s gonna buy into that culture.

So, I do believe that events and team building and conferences, they’re all important, certainly. But actually it’s walking the talk, it’s being out there every day and living it. That’s what really makes the difference.

Chantal:               You mentioned before that you did the big conversation, so you went to the market to kind of do a bit of a check on whether or not you’re on track and if you needed to make any changes. How do you actually measure the success of culture? Is it in those kind of exercises like you did with the big conversation? What are the ways that you look at the business over all and say “Yup, were on track. We are being successful in disseminating the culture across the business”?

Jan:                        I think that there are hard measures and soft measures. Let’s deal with the hard measures, first of all. I think one of the greatest KPIs for measuring whether you’re on track with culture is your staff attention. You know, if you’re creating a culture, which is a place that people want to work, a place where people really, truly believe that they belong, then that will show up in your staff attention. If people are with you for long periods of time because they couldn’t imagine working anywhere else, then you’ve got something like real culture. And that actually translates very well into membership.

But you know what? You don’t actually have to have a great culture to sell memberships. You can sell memberships into a club with a lousy culture. But to keep members? Now that’s certainly very different.

Our original club was built in 1995. It’s still there today and you might notice there’s some mathematical problems there because Energy is only 14 years old and 1995 is 23 years ago. Our first club, which is still part of the group today, was built as an independent club in 1995. We still have members in that club that were there 23 years ago, who have been members without interruption all of that time. I wish I could say that about every one of our clubs, but not all of our clubs are that old. But I would like to think that we’ve got owners that have got their culture so well embedded that 20 years from now, they’ll have members that have been there all of that time.

So I think retention is the greatest measure of culture. But you also can measure a staff engagement by simply looking at the way that the team address culture within the group. And I’ll give you a good example. A little story. I was running a smaller group some years ago and it was only a small group of clubs. And I was recruiting people and then finding they were leaving quite quickly. And actually leaving without me having to force them to leave or without them even going through a process of telling me that they were going to leave. They just seemed to disappear. And I had no idea why this was happening. And then, I came upon a discovery and that was that I’d built a team that had been together for a long time. The team in this particular club was five years together. And they created a real culture amongst them, which said, “We know people that fit in here.” They’re hard working, they smile a lot, they’re good to be around, they’re polite to the members, and they do their bit and they have everybody else’s backs. And as soon as I recruited somebody in that didn’t fit with that culture, it turned out that it sorted itself out because the team made it very clear that it wasn’t going to work.

I didn’t know they were doing it. But it turned out there was a thing called “the walk to the [inaudible 00:14:21]” and the [inaudible 00:14:22] was a pub down the high street near the club that were talking about. And that basically meant that the team had taken it upon themselves. If somebody didn’t fit in and they weren’t going to be the right person for the team, I never had to deal with it. It dealt with itself. And I think it shows you that you can sometimes see whether your culture is working just by looking at the behaviour of your team and they way that they operate and how protective they are of the culture that they’ve created.

Chantal:               That’s a great gauge. Now, were gonna have people that are listening to this conversation, Jan, some of whom are brand new to establishing their business, some that may have been fitness business owner or a manager for long period of time now. So I’m hoping you might be able to leave us with, today, your three tips on how to actually get started with building a culture within a fitness business. So that’s whether they are brand new or whether, perhaps, they need to make some changes to the existing culture within their business.

Jan:                        Absolutely, happy to. First of all I’d say, ask deep and searching questions. And ask those questions of all of your stakeholders, even if you’re a small business. You’ve all got staff. You’ve all got members. You’ve all got ex-members. You’ve all got, and this is very important, those people that live in the communities that you serve who’ve never been to your club. They’re much harder to get to, but they’ll give you a much better insight into whether you’re getting it right and more importantly where you’re getting it wrong.

I also say that in asking those questions, be open to the answers not being the ones you want. You can’t be defensive. You need to let people speak and speak the truth and let the truth be told. And coming back to Collins, face the brutal truths. If the brutal truths mean that you need to change, then change. So ask questions and ask them relentlessly.

Secondly, hire for attitude, train for skill. We can train anybody to do any job in the club. But you can’t train attitude. Attitude is something you either have and if you have the right one, they said make it contagious, that’s exactly what you’ve got to do. But as soon as you’ve got the wrong attitude, you’ll never train that. So hiring for attitude is absolutely key. In some of our clubs, you have people joining the clubs and going right the way through the ranks of the organisation that didn’t have a fitness qualification when they joined us. I much prefer to hire somebody with an absolutely amazing personality and attitude and then train them for skill.

And the third, and probably the most important, is live it. Live it and live it honestly. Authenticity is key. You can’t fake a culture. You can’t create a programme that says, “We’re gonna have this particular culture,” and then ask everybody to perform to that culture. It doesn’t work that way. A cultures either in the fabric of an organisation or it isn’t. And therefore, it has to come up from the ground. And once you’ve got a culture that people want to be part of, then it’ll work its own magic. So make it authentic and live it every day.

Chantal:               Jan, thank you so much. And off the back of those questions, I’ve actually got one little bonus question for you, because I think probably a lot of owners out there would be thinking this. You mentioned making sure that we ask the community that our facility is based in and that that can sometimes can be quite challenging. Are there any ways that you’ve found have been effective in reaching them. I mean, how, physically, how do you actually get to them to ask those questions? Are you doing a one on one survey? How have you gotten to them?

Jan:                        Okay. So, we’ve tried several methods. You can actually buy mailing lists, which is very easy in this digital age to get to the people who you need to get to if willing to spend the money that you need to to get to those people. So you can buy the appropriate list to either call or mail.

We’ve found two methods, however, to be very effective. The first is to put together small workshop groups where members introduce you to their friends that have never been members before. Little tip: don’t run the event in the club. It feels too much like you’re trying to sell them something. You need to make it very clear that you’re not trying to sell them a membership. What you’re trying to do is get an insight into why they’ve never, not only joined our club, but joined any club. And getting insights from those people that’ve wanted to be fit, have always wanted to be healthy, but have never made the move, it’s powerfully insightful.

And the second, and this is extremely effective but very simple, is backpacking at supermarkets. Sounds silly. But you’ve got supermarkets in all of your towns where it’s quite frequent that somebody doing a charity job will be doing backpacking, helping people pack their shopping. It’s much easier to catch somebody and get them to be honest with you when you’re simply having a conversation with them. So in a very, very effective trial of having some of our staff packing supermarket bags at the end of a checkout and just casually chatting to people about whether they’ve been member of a club before. And if not, why? But making it very clear in that conversation, “I’m not looking to sell you anything. All I want from you is some answers to questions,” and it’s in general conversation. That worked surprisingly effectively.

[crosstalk 00:20:04]

Chantal:               Sorry, Jan. Were they wearing a branded top when they were doing that?

Jan:                        They’re actually wearing a top that had the charity that the supermarket was … So it was volunteer work in the community. So it wasn’t seen as a membership promotion. It was simply seen as part of parcel of the conversation that having in the check

[crosstalk 00:20:27]

Chantal:               Yeah, and then you collected all of that.

Jan:                        That worked very well.

Chantal:               Interesting. Well, thank you so much for sharing all of that, Jan.

Look this has been such a fantastic conversation. I want to thank you for being so open and honest and sharing that with us, because I think you’ve given everyone some great ways that they can start to either have a look the existing culture within their business, make some changes. I particularly love your suggestion about having that big conversation and asking questions to all of the stakeholders within the business. So, thank you so, so much for joining us.

Jan:                        My pleasure, Chantal.

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