Competitive strategy and skills: working out the fit in the fitness industry

HUMAN RESOURCE MANAGEMENT JOURNAL, VOL 15 NO 2, 2005 15

Competitive strategy and skills: working outthe fit in the fitness industry

Caroline Lloyd, University of WarwickHuman Resource Management Journal, Vol 15, no 2, 2005, pages 15-34

It is widely accepted that creating quality products and services requires a well-trained and skilled workforce. This article seeks to contribute to unpicking therelationship between business strategy and skills in the service sector by presentingresearch findings from the UK fitness industry. This sector has grown quickly andincludes companies that compete on the basis of high-quality services, alongside thosecompeting largely on cost. If the route to a high-skills economy is to shift more firmstowards the higher-quality end of the market, we would expect to find employers inthese companies making use of a workforce with higher levels of skill. The researchfrom the fitness industry questions this simple relationship, finding that there is noclear link between competitive strategy and skills. As market position is notnecessarily the impetus for improving the skills of the workforce, the article thenbriefly explores what other factors may also be required.Contact: Caroline Lloyd, ESRC Research Centre on Skills, Knowledge andOrganisational Performance (SKOPE), University of Warwick, Coventry CV47AL. Email: [email protected]

High-quality, high-value-added goods and services require a high-skilledworkforce, according to the dominant assumption that underpins policy andacademic discussion of the role of skills in economic performance. Whether it is

the traditional emphasis on the inadequacies of the UK education and training systemmaking it difficult for firms to compete in high-quality markets (eg Steedman andWagner, 1987) or the more recent view that it is the failure of firms to produce in thesemarkets that ensures a lack of demand for skilled workers (eg Keep and Mayhew,1998), all sides of the academic debate seemingly accept the link between skills andbusiness strategy. However, what evidence is there to support this accepted wisdom,and what are the implications of findings that might suggest this relationship is farfrom straightforward?

The limited research that has focused directly on the links between business strategyand skills has been undertaken in a variety of manufacturing settings, while the servicesector remains largely unexplored. The assumption that a skilled workforce is requiredto produce quality goods and services is reflected in the UK government’s policies oncompetitiveness and economic growth in the so-called ‘knowledge economy’:

The future of the country’s prosperity lies in the knowledge economy. This is as true of the manufacturing sector as it is of the service sector. We must strive to innovate, to produce high quality, value-added products and services. And to do this, we have to ensure the right skills tosupport growth… Hewitt, 2003

There is a detailed manufacturing strategy, where the ‘goal is to narrow theproductivity gap, assisting companies to move up the value-added chain to more

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Competitive strategy and skills: working out the fit in the fitness industry

knowledge-intensive, high-skilled manufacturing’ (DTI 2002: 3). Yet, despite theinsistence that services are important, too, there is no comparable service-sectorstrategy. Seemingly, the gap in policy replicates a general lack of analysis and evidencein this area.

This article seeks to contribute to unpicking the relationship between businessstrategy and skills in the service sector by presenting research findings from the UKfitness industry. Typical of the leisure industry, it is characterised by a relatively low-paid and poorly qualified workforce. Keep and Mayhew (1999a) stress that the long-standing skill problems of a large segment of the leisure sector are an outcome of theemphasis on cost-based competition. They suggest that improving skill utilisationwould require the upgrading of product market strategies, ‘better people managementsystems and practices and approaches to work organisation that allowed for significantlevels of job enrichment’ (1999a: 30). The interesting aspect of the fitness industry is thatthere are already a number of companies producing ‘high-quality’ services catering formore sophisticated market niches, as well as companies competing on cost. Are thosethat compete at the higher-quality end making use of a workforce with higher levels ofskill, thereby confirming the relationship between product market strategy and skill?

One of the initial problems in this area is that terms such as ‘value-added’, ‘quality’and ‘upmarket’ are rather ambiguous, and often used interchangeably (see, for example,Del Bono and Mayhew, 2001, on definitions of quality). In this article, quality is used todenote market position: whether firms are upmarket (ie high priced), middle market(medium priced) or bottom end (low priced). This industry or price definition of‘quality’ does not necessarily reflect the quality of service provided by employees, butis most easily understood as the price companies can charge for the ‘whole package’they are offering. There is not space here to discuss the wide-ranging literature on themeasurement and make-up of quality in the service sector (see Nickson et al, 2002, fordetails), but some implications of the industry’s own definition of quality arediscussed later.

The first section of this article examines the existing literature on the links betweenbusiness strategy and skills and, in particular, highlights research undertaken withinthe service sector. What becomes clear is that there is a considerable gap in research inrelation to whether high quality is associated with higher level skills. The main part ofthe article examines this issue through qualitative research undertaken within the UKfitness industry. The business strategies of some of the largest companies in the sectorare identified; and the skills of their core workforce, fitness instructors, are evaluated.Analysis of the findings suggests that the relationship between market position andskill is far from straightforward. As the evidence indicates that quality is not necessarilythe impetus for improving the skills of the workforce, the article then briefly exploreswhat other factors might be required.

SKILLS AND PRODUCT MARKET STRATEGY

It is widely accepted that a high-quality product market strategy is likely to beassociated with more sophisticated forms of HRM and a higher level of workforceskills. In pursuing a strategy of high-value-added goods and services, ‘treatingemployees as resourceful humans makes good business sense’ (Legge, 1995: 67). Adriving force of HRM, particularly the soft version, is that only by investing in theworkforce can high-quality goods and services be provided. The model ‘assumes thedesirability of policies to recruit, develop and retain staff with high levels of ability, skilland adaptability’ (Guest, 1987: 515). Similarly, other management techniques have also

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emphasised the importance of employee skills. The rhetoric of total qualitymanagement (TQM) is that to produce a quality product employees need to be bettertrained (see Rees, 1998: 33, for a discussion). The high-performance work organisation(HPWO) literature also stresses workforce skills, for example in enabling workers toundertake more flexible job roles and to take on greater responsibilities (eg Appelbaumet al, 2000).

What is surprising, given the emphasis on employee skills as central to the way inwhich these types of management practices are claimed to work, is that there is verylittle direct investigation of the relationship between business strategy and skill. Wherereference is made, it tends to be indirectly: for example, by testing whether HRM orHPWO policies are more applicable to particular business approaches. Most authorsrefer back to Schuler and Jackson’s (1987) three models – derived from Porter (1980) –where different competitive strategies are linked to a range of HR practices. In relationto the skill characteristics of each approach, a cost reduction strategy is said to requireminimal levels of training, whereas a quality enhancement strategy should beassociated with extensive and continuous training and development of employees.The third category of innovation involves the selection of highly skilled individualsand the development of a broad range of skills. Although there is a clear role for skillsand training in this approach, there does not appear to have been any systematicattempt to test whether particular skill patterns are actually linked to each specificcompetitive strategy.

More significant advances have been made by those working directly on the issuesof skills and vocational education and training (VET) systems. The writings of Sorge,Streeck and Regini have been particularly influential in identifying product strategyand exploring the implications for skill. The general conclusion is that morediversified products for quality markets require higher levels of skills than those inmore mass- produced and/or lower-quality markets (Sorge and Streeck, 1988: 19;Streeck, 1989; Regini, 1995, 1997). A limited number of other comparative studies haveconfirmed that higher-quality or more sophisticated products require a workforcewith higher levels of skill (eg Steedman and Wagner, 1989; Mason et al, 1996: 175;Mason, 1999: 193).

This type of research has typically focused on manufacturing industries, while theservice sector has either been ignored or presumed to operate under similar conditions.Studies on the links between skill and business strategy in services are sparse, althoughthere is a burgeoning literature, particularly US-based, that deals with HR practicesmore generally (see Korczynski, 2002). A variety of authors have developed a numberof typologies that link business strategies to HR strategy. The relatively simpleclassifications that have been derived from manufacturing industries are, for mostauthors, considered to be too limited to encompass the wide range of businessesoperating in the service sector. The most popular approach is the two-by-two matrix,giving four alternative classifications of types of services that can then be linked to‘appropriate’ HR practices, including skill requirements. Heskett et al (1990) base theirtypology on the extent of service customisation and the degree of customer contact,while Schmenner (1995) replaces this latter element with the degree of labour intensity,and Lashley (1998) favours a high-autonomy/low-autonomy dichotomy. In all thesecases, customisation plus, for example, labour intensity is the common element thatappears to link into higher level skills.

Boxall (2003) takes a slightly different approach, identifying three types of services,and associating them with the knowledge content and typical work design ofemployment. Mass-service, cost-based markets utilise low-skill workers; while highly

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differentiated, quality and expertise-based markets require high-skilled workers. Theinteresting category is type 2, which consists of a ‘mix of mass markets and highervalue-added segments’ operating with ‘a mix of cost and quality-based competition’,and associated with variable skills levels (2003: 13). Although not developed in anydetail, this does leave an element of indeterminacy of outcome, providing some role formanagerial choice (among other factors). The problem with all these types oftypologies, however, is that they are better at identifying the extremes – eg fast food inone box and lawyers in another (Heskett et al, 1990) – than in capturing the complexityand variety of those service operations that fall in-between. Nevertheless, all seem toagree that in higher-quality markets we would expect to find employees utilisinghigher-level skills.

The empirical research is, to some extent, even more limited than the developmentof conceptual models. What tends to be tested is the relationship between differentcompetitive strategies and HR practices – see Hoque (1999) on hotels in the UK – wheretraining or multi-skilling is treated as one variable among many. Exceptions include thestudy by Batt (2000) on HPWO in US call centres, where an attempt is made to assessdifferences in levels of skill. This research found that workplaces servicing high-value-added markets required employees to have significantly higher levels of skills thanthose in low-value-added markets, thus seeking to confirm the assumption of skillequals high added value (if not quality). Regini et al’s international comparative studyof banking, although not specifically designed to investigate the link, finds a similarrelationship between the customisation of products and workforce skills. A universaltrend is for banks to have ‘standard products sold by poorly trained employees… forlower-end customers’, alongside ‘the development of close personal relationships andintegrated service offered by highly skilled consultants as a way to attract corporateand higher-end customers’ (1999: 328). Research by Hunter (2000), which focused onjob quality (including access to skill development) of nursing assistants, found it wasbetter in those nursing homes that pursued approaches of customer differentiation (seealso Eaton 2000).

These studies seem to indicate a confirmation of the findings from themanufacturing sector that customisation, alongside higher quality, is associated withhigher levels of workforce skills. In an extensive review of the literature on the UKhospitality industry, Nickson et al (2002: 19-23) conclude that, at the opposite end ofthe spectrum, standardised services are predominantly provided through competingon low cost and low specification in association with a low-skilled workforce.However, they do not make a similar generalisation about whether competing onquality equates with a high-skilled workforce. Although this is not commented upon,it does leave unanswered a central question about how ‘generalisable’ the existingempirical studies are. Does providing an upmarket service necessarily have to beundertaken by a skilled workforce? A cursory glance at some of London’s top hotels,where prices can be £2,000 per night, might lead to a questioning of this view.Cleaning staff often earn the minimum wage: for some, training consists of: ‘She foundme a mop and bucket, bin bags and rags for cleaning, and left. That was my training’(Abrams, 2002). Clearly these are not frontline staff but they are still part of thebroader service delivery within the hotel and, at the very least, should make usexplore this issue more closely.

Others have also implied that the link may be less straightforward than is oftenassumed, although the examples are (perhaps) surprisingly drawn from themanufacturing sector. Boxall and Purcell (2003: 58-59) point out that cost-basedstrategies (in manufacturing) can be pursued both with high-skill and low-skill



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workers, depending on the technology used, leading Boxall (2003: 15) to argue that‘the match, or fit, between competitive strategy and HR strategy is greater in servicesthan it is in manufacturing’. Despite their long-standing claims relating to the need formore firms to move upmarket to raise the demand for skills, Keep and Mayhew havespeculated that ‘there is the possibility that soon it may be feasible to produce highspec by Fordist production [ie low skill] methods’ (1999b: 8). They suggest that ‘thereality may be far more complex and nuanced’ than the typical bipolar model of highskills, high added value versus low skills, low added value (1999b: 9). Thompson et alargue more forcefully that ‘there is no necessary congruence between markets,technologies and particular forms of work design’ (1995: 721, emphasis added). Theysuggest a more nuanced relationship between skills and markets, ‘mediated byinstitutional frameworks, corporate strategic choices and attempts by managers andother actors in the employment relationship to socially construct and attach meaningsto the processes involved’ (1995: 740).

If this relationship between skill and business strategy is more complex than themodels suggest, then it raises important policy issues. The government’s claimedobjective is to shift the UK towards a knowledge economy with skilled workers, byencouraging firms to produce high-quality goods and services (DTI/DfES, 2001). Ifhigh quality is not directly associated with high skills, then the question of what elsemight be required to raise skill levels becomes of equal importance. From the existingresearch, it is clear that there is simply not enough evidence to begin to make morethan some general assertions about what might be needed – see Lloyd and Payne(2002) for an attempt at a theoretical level. This article, therefore, presents some initialresearch findings on the relationship between skill and competitive strategy in theservice sector.

Defining product market strategy and skill levels is, nevertheless, far from simple,perhaps partly explaining why there is so little research in this area. The use of asectoral approach, however, facilitates the identification of the market segment atwhich the service is aimed, and can focus on the relative skills of the same broadlydefined group of employees. The fitness industry is a subset of the leisure sector andhas its own distinctive characteristics that might provide the opportunity for a varietyof approaches to skill formation. The market for the fitness industry is wide-ranging,from the most exclusive gyms of the rich and famous to the local leisure centre withprovision for swimming lessons for schoolchildren. It also utilises a workforce that canoperate at varying levels of skills: for example, a well-trained and experiencedinstructor able to undertake risk assessments for those with serious medicalconditions; and an instructor who may have undertaken a course over one weekend.These types of features, therefore, offer the possibilities of employers utilising differentcombinations of quality and skill levels.

The research that forms the basis of this article was conducted in the first half of2002. It involved interviews with senior representatives from SPRITO (the nationaltraining organisation), the Fitness Industry Association (the main employers’organisation), Fitness Professionals (a professional body for fitness workers), and theInstitute of Leisure and Amenity Management and the Institute of Sport andRecreation Management (two professional bodies involved in education and trainingprovision). This was supplemented with a range of documentary evidence and reportsprovided by the various organisations. From this material, along with trade andcompany websites, the 15 companies with the largest number of fitness clubs in theUK were contacted. These were chosen on the basis that they all operated more than30 sites and included different types of provider – that is, dedicated gyms, gyms

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within hotels and companies, and local authority leisure centres. Nine of the companiesagreed to participate. As three of the four local authority contractors, and the onecorporate provider, refused, it was decided to include the next biggest providers ofcorporate gyms and local authority centres. In total, the 11 organisations covered morethan 600 clubs in the UK together employing more than 20,000 people.

In each organisation, semi-structured interviews were held with either the senior HRmanager, training manager or operations director, depending on who was identified bythe company as having the key responsibility in relation to recruitment and trainingpolicies. In four companies, interviews were held with both HR and operationsmanagers. The interviews focused on questions relating to product market strategy, thedefinition of quality in the industry, and the recruitment and training of fitnessinstructors and lower-level managers. Detailed notes from the meetings were writtenup, and any gaps were filled in by subsequent phone calls and emails. Interviews werealso supplemented with documentary evidence, company reports and relevantindustry and press reports. The next section provides a brief summary of the keyfeatures of the sector.

FITNESS INSTRUCTORS

It is estimated that there are 3.4 million members of private health and fitness clubs inthe UK, representing around 7 per cent of the adult population (Mintel, 2001). Add tothis 343 million admissions to the 3,640 local authority leisure centres and swimmingpools (Mintel 2002), and it is apparent that the fitness industry has a significantpresence in the consumption activities of the British public and is a major part of theeconomy. The private sector has a turnover of more than £1.7 billion, and employed48,000 people in 2000 in more than 2,600 fitness clubs (Mintel, 2002).

Just over half the clubs are independent, single-site operations, although these aredeclining with the rapid growth of the fitness chains since the 1990s. Companies suchas David Lloyd Leisure (owned by Whitbread), Cannons and Fitness First operate clubsacross the UK (and a number have expanded overseas) catering for a range of marketsegments. The other main players in the private sector are hotels, with their own in-house clubs with membership open to guests and non-guests; and companiesspecialising in workplace clubs. However, local authorities remain the largest providersof gym and leisure facilities, with the overwhelming majority managed in-house,although compulsory competitive tendering and – more recently – ‘best value’ haveresulted in significant numbers of leisure centres being run by private contractors andnot-for-profit trusts.

The expansion of the chains has been associated with a rapid rise in the workforce ofthe largest companies. Employment in the fitness sector in at least six companies nowexceeds 2000, with eight companies in the private sector owning more than 50 clubsand a further two companies running more than 50 local authority contracts. Thesecompanies have become large organisations, yet they have similar structural features tothe restaurant, hotel or small retail chains in that each workplace employs a limitednumber of people. A recent Mintel survey (2001) found that half of all clubs employfewer than 10 full-time staff, while only 15 per cent employ more than 30.

Fitness instructors are the main employee group within the sector and, arguably,have the most direct interaction with the customer in the provision of the ‘product’. Theestimated 26,000 instructors working in the UK are predominantly young and low paid– between £5 and £6 per hour is fairly common. Turnover of staff in some companies isas high as 70 per cent, and it is estimated that 18 months is the typical length of job



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tenure. However, partly as a result of the expansion of the large chains, there has beenthe potential for rapid career progression into management positions.

A fitness instructor may undertake a variety of roles, including ‘supervising users ofthe gym to ensure that they are exercising safely and effectively’, writing ‘individual,personalised programmes’, demonstrating the use of equipment and exercises, andacting as lifeguards. More experienced instructors may undertake one-to-one work orpersonal training, and work with high-risk customers such as older people or thoserequiring rehabilitation (SPRITO, 2001: 7). Fitness instructors are not required by law tohold any qualification, although a company that employed staff as lifeguards without afirst aid certificate or life saving qualification would open themselves up to negligenceclaims and have difficulties in gaining insurance.

Although the provision of advice and guidance to users of a gym is a central part ofthe job of fitness instructors, they also have to be able to ‘put the message across’ andbe friendly, helpful and encouraging. The question of whether these latter requirementsare skills, and how they might be measured, has been subject to considerable debate inthe literature, particularly with recent interest in the area of ‘social skills’ and emotionallabour (see, for example, Payne, 2000; Boston, 2004: 19). In this study, there was noevidence to indicate that firms had different corporate approaches in relation to ‘socialskills’ and how they were used. Unanimously, they were regarded by senior managersas personality traits that had to be recruited rather than as skills that could bedeveloped through training or within the company. Exploring this issue at workplacelevel would no doubt provide systematic evidence on the role social skills play in thejob of fitness instructors. This article, however, focuses on company-level policy and, assuch, it was the technical skill requirements and development that were seen to vary.These are additionally the skills that are measured and used to assign instructors toparticular skill levels on the national Register of Exercise Professionals, and alsodetermine whether they have the appropriate qualifications in order to deal withmembers who have more complex health problems. As a result, the research adopted adefinition of skill based around the technical requirements of the job, obtained throughprior qualifications and on- and off-the-job training.

As stated earlier, fitness instructors can be recruited with varying levels ofqualifications and skills, and may subsequently be trained by their employer todiffering degrees. Possession of vocational qualifications in fitness instruction andpersonal training is the most popular route into the industry. However, there are alsosignificant numbers who enter via higher education having followed a two- or three-year course in sports science or health club management. This latter group normallyenters the industry at the same level as those with vocational qualifications – that is, asfitness instructors – although in the local authority sector there are a limited numberof posts for duty managers, and a few graduate trainee jobs are available throughoutthe industry. This variation in the level of qualifications and training availableprovides the opportunity to explore the relationship between the skills of instructorsand product market strategy. The next sections outline, first, the product marketposition of the companies involved; and, secondly, the skills and training of the fitnessinstructors employed.

PRODUCT MARKET STRATEGY

A four-range typology for classifying companies according to their market positionwas adopted (see Table 1). This emerged from the industry’s and the companies’ owndefinitions of market segments as ‘premier’, ‘middle market’ and ‘value for money’.

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There was a general consensus over these categories and in assigning companies intothem. These market positions directly related to the relative prices charged formembership of the clubs and, as will be discussed later, the facilities available and thequality of the fixtures, fittings and layout. As this study included local authorityproviders, the ‘value for money’ chains were classified as ‘lower middle’, in that theycharged higher prices than the local authority sector, and were generally considered tobe more ‘upmarket’. The one corporate provider was identified as being in the premiermarket, because of the range of facilities offered and the type of customer (ie bluechipcompanies) served. Three other companies, all providing dedicated fitness clubs, werealso in the premier market. The upper-middle range consisted of three companies:UM2 operated gyms based in its own chain of hotels; UM1 was also predominantlyhotel-based but had a number of stand-alone gyms; while the other operator, UM3,had its main business in stand-alone gyms, while operating some local authoritycontracts – the market position reflects the stand-alone gyms only. Two chains (LM1and LM2) were identified as being in the lower-middle range, competing with eachother on the basis of ‘affordable’ fitness. The two companies (LA1 and LA2) classifiedat the bottom end of the market held a large number of local authority contracts. Theycharged the lowest prices and were aimed at a broader socio-economic group than theother companies.

In order to probe the extent to which skills reflect product market position, eachmanager was asked about their recruitment criteria for new instructors, what initialtraining was provided and what on-going training and development was available.From these responses, a picture emerges of the types and level of skill that aregenerally required of instructors in each of the companies. If there is a clearrelationship between product markets and skills, we would expect the premier clubs



TABLE 1 Market position of fitness companies

Market Club name* Employees Main business areasposition in the UK Stand- Corporate Hotel Local

alone authorityPremier Premier1 2,000+ ●

Premier2 2,000+ ●

Premier3 2,000+ ● ●

Premier4 Under 1,000 ●

Upper-middle UM1 2,000+ ● ●

UM2 Under 1,000 ●

UM3 2,000+ ● ●

Lower-middle LM1 1,000-2,000 ●

LM2 2,000+ ●

Lower LA1 Under 1,000 ●

LA2 2,000+ ●

* Fictitious names are used throughout this article

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to be recruiting the most highly qualified, and providing the lengthiest and moresystematic training.

RECRUITMENT AND INITIAL TRAINING

The managers at head office were asked about company policy relating to therecruitment and initial training of fitness instructors. All the companies werepredominantly recruiting those new to the industry. Of central importance to theselection process was that potential instructors possessed particular personality traits.The following comments were typical across the companies:

We need people with a disposition for customer care – that is a majorrequirement. HR director, LA1

...easy going, bubbly, very friendly, customer friendly... HR manager, LM2

Attitude is the primary thing… sociable, gregarious, fun.Development manager, UM3

...how they interact with other people – personality and character...HR director, Premier3

In addition to these personality attributes, Table 2 identifies the key qualifications

Caroline Lloyd


TABLE 2 Recruitment and initial training of fitness instructors

Market Club Qualifications Initial trainingposition normally

requiredPremier Premier1 HE/vocational 1-week induction (on site)

Premier2 Vocational 12 weeks (on the job) + first aid/lifeguard

Premier3 HE/vocational Induction (on site) + 1-week training school

Premier4 HE 1-week induction (off site) + job specific(external)

Upper-middle UM1 None 2 days (off site)

UM2 HE First aid/lifeguard

UM3 None Induction + training school (level 2*), firstaid/lifeguard

Lower-middle LM1 HE/vocational 2-day induction (off site)

LM2 Vocational Unspecified induction (on the job)

Lower LA1 HE/vocational Induction (1 day) + job specific

LA2 None 5 days (off site) + job specific

* Level 2 is notionally equivalent to 5+ GCSEs (A-C), City and Guilds Craft, RSA Diploma

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sought when recruiting to the position of instructor and the initial training provided.One key observation is that the companies adopted a variety of approaches in terms ofthe extent to which they bought in skills or trained themselves. Two companies, forexample, were seeking predominantly those with a higher education (HE), while threecompanies demanded no qualifications at all. For those requiring vocationalqualifications, a YMCA or Premier level 2 course, consisting of around two weeks’ full-time training and assessment, was the norm.

Premier clubs

All the Premier clubs asked for some sort of qualifications although the level variedconsiderably. Premier4 manages in-house fitness facilities for corporate clients, andrecruited predominantly those having completed higher education, with some sort ofsports science qualification. Retention was seen as crucial:

If we make a mistake in recruitment then it can be very embarrassing. Thecompanies do notice when staff change. Personnel director

With many clubs having only two employees, the role of the instructor includedhelping to develop strategies to maximise the number of company employees using thegym, and interacting with senior managers both as club members and as managers ofthe contract – alongside dealing with a customer base that had a higher level of ‘risk’factors and medical problems. There was also an expectation that instructors wouldmove rapidly to a position where they managed a small club. As a result, it was felt thatthey needed a broad knowledge base, while some clients required instructors to bequalified to degree level.

Premier1 and Premier3 recruited those with either HE or a vocational qualification.However, Premier1 was in the process of changing its policy to selecting purely on thebasis of ‘personality’, ‘attitude’ and ‘willingness to learn’. The plan was that new recruitswould undertake a five-week intensive training period, including two weeks’ off-the-jobtraining. The senior HR manager claimed that the company was already known forexpertise, in terms of the knowledge of instructors and the ability to teach, but:

...we also want to be famous for service. We are looking for people whoshow empathy with the members… It’s about eyes and teeth with a bit of depth. HR manager

Premier2 preferred those with vocational qualifications, claiming that new recruitsfrom higher education ‘tend to want to be fitness managers in two months’ (HRdirector). On-the-job training lasting 12 weeks was provided, alongside courses leadingto first aid and lifeguard certification. For the other three clubs, initial training waslimited to one week full time (off the job).

Middle range

The upper-middle clubs also had a mix of recruitment approaches, with one targetingHE students and the other two setting no qualifications standard. UM2 lookedprincipally for those with degrees to staff gyms in their three- and four-star hotels, asthey wanted instructors ‘with a good base of knowledge’. Similar to Premier4,employees worked in relatively small teams, had to undertake a variety of jobs and hadopportunities to move quickly into managing a hotel gym.

For the other two upper-middle clubs, social skills were predominant:



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We look for nothing in terms of qualifications…communication is the key.Operations director, UM1

We start with anybody… some have no relevant qualification.Development manager, UM3

UM3 provided initial training to ensure that all new instructors reached level 2,while UM1 had the lowest standards of recruitment and initial training of all thecompanies in the research. After only two days of training, new recruits were able toundertake inductions and assessments. The operations director at UM1 stated that theywere competing for staff with employers outside the industry ‘such as Tesco and B&Q’.Pay was relatively low compared with the other middle-range companies, and therewas no grading structure to reflect either experience or extra qualifications. It wasclaimed that an individual’s qualifications were less important than the overall profileof the club, ‘for example that someone is on level 3, a few on level 2 and all the rest onlevel 1’ (Operations director).

Two clubs offered ‘affordable’ fitness, categorised as lower-middle. Both aimed torecruit people who already held qualifications, although there were recruitmentdifficulties in certain geographical locations, particularly in London and thesurrounding area. LM2 admitted relaxing the recruitment criteria and taking on peoplewith no qualifications, who were subsequently given training in order to reach NVQlevel 2. For those already qualified, if they were joining a new club that was opening allemployees would be given a one-week training course, but ‘for an old gym, they areleft to it’ (HR manager). LM1 provided only a two-day induction programme offsite,alongside a one-month on-the-job training period around job-specific and health andsafety issues.

Local authority

The two local authority contractors had different approaches to each other in theirselection of employees. LA1 recruited those with either HE or a vocational qualification.Although there were some recruitment difficulties, the HR director felt it was notnecessary, and probably not affordable, to train people from scratch. He stressed that thepeople should have a ‘disposition for customer care’, but there was also an emphasis onthe technical and supervisory aspects of the job. New recruits were given a one-dayinduction, and courses were provided for lifeguards and first aid, where appropriate. Incontrast, LA2 recruited ‘purely on personality, nothing to do with knowledge, becausewe are a customer-driven service industry’. The manager explained that the facilitiesavailable in a local authority-funded leisure centre could not compete with the privatesector. As a result, they had to rely on quality of service: ‘The customer decides where togo to train; the service is providing them with reasons to stay’. Training consisted of aprobationary period spent shadowing the manager, and an initial five-day trainingcourse to enable the instructor to undertake customer inductions.

Although recruitment practices in the companies differed a great deal, thereappeared to be little relationship between market position and the approaches adopted.Initial training in some cases compensated for recruiting without qualifications bybringing instructors up to a level 2 (eg UM3 and LA2), while at UM1 it clearly did not.The premier clubs were slightly superior in terms of length of training and priorqualifications, but this can be considered only marginal. The difference betweenPremier1 and LM1 was three days’ training, although the former was at the workplaceand managed locally while the latter was formalised teaching off the job. The main

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contrast was between those companies recruiting instructors with a two- or three-yearHND or degree in sports science, and those who took on people who had eithercompleted a two-week vocational course or would undertake a one-week companytraining programme. The more highly qualified workers were spread across the qualityrange, and were no more likely to be found in the premier clubs than in the localauthority sector.

Developing the workforce

The skills of new fitness instructors, if taken to reflect qualifications prior to entry plusinitial training, seem to have no clear relationship to market position. Nevertheless, arethe top clubs providing better opportunities for development and training over a



TABLE 3 Instructor and management training

Market Club Dedicated On-going fitness Management position name training instructor training* training*

centre

Premier Premier1 2 Modules available 3 Specific modules

Premier2 1 Extensive (suspended) 1 16-weekprogramme +external courses(suspended)

Premier3 ● 4 Structured training 4 1-year encouraged programme

Premier4 2 Modules available 2 Piecemeal

Upper-middle UM1 2 Modules available 3 Specific modules

UM2 1 Limited 1 Minimal

UM3 ● 3 Modules encouraged 4 Managementprogramme

Lower-middle LM1 2 Modules available 2 Piecemeal

LM2 ● 2 Modules available 0 None

Lower LA1 2 Modules available 3 Specific modules,supervisorytraining, externalcourses

LA2 ● 4 Structured training 4 1-year encouraged (up to programme level 3) (level 4)

* Rather than give the precise details of the training that is available, the amount of training isranked from 0 (none taking place) to 4 (a structured or systematic programme of training isactively encouraged to take employees to a higher level). For fitness instructor training, a scoreof 2 indicates that one-off modules are provided by the company, but there is no particularencouragement for employees to take them, thereby leaving it to the discretion of localmanagers. A score of 3 indicates an expectation that staff will undertake additional training.

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longer period, thereby ensuring a more highly skilled workforce profile? Systematictraining for existing instructors was available at only one of the premier clubs(Premier3), one in the upper-middle range (UM3) and one local authority contractor(LA2) (see Table 3). LA2 was the only company to provide accredited training at level 3,and the manager regarded training as one of its key selling points, both to customersand to potential staff. For the remaining companies, training modules were available –for example, in personal training, aqua and step – but their uptake was dependent onboth the individual instructor and on the local club manager.

The route from fitness instructor to fitness/studio manager, to deputy club manager,to club manager is a fairly well-trodden path. Most of the recruitment of managers isinternal, which would suggest that the main mechanism for developing managerialskills is company-driven. The training provided for managers was extremely varied,and systematic training programmes were available only in the same companies thatprovided the structured instructor training. Not all the top clubs had systematicapproaches to training, but the worst practices were found at the bottom end of theprivate-sector market (rather than in local authorities). LM2 provided no managementtraining at all:

If someone wanted a GM position, there is coaching and extraresponsibilities but generally it is sink or swim. We leave them there andwait for them to yell if they are not coping. HR manager, LM2

For the others, training tended to comprise of ad hoc, one-off modules in areas suchas recruitment, time management and equal opportunities.

Premier2 was an exception to the pattern, in that training provision had beendrastically cut as a result of company losses. There had previously been systematic andextensive management training, including the sponsoring of MBAs, but these had allbeen suspended. This is possibly a short-term reaction – a not uncommon response inthe UK to financial pressures – but it does raise the issue of whether Premier2 will beable to maintain its premier product market position without the accompanying trainingprovision. Other companies have been able to do that without structured on-goingtraining provision (eg Premier1 and Premier4), indicating that this may well be possible.

QUALITY AND SKILLS:THE LINK

The research indicates that the relationship between skills and product marketposition may be more complicated than is commonly depicted. Certainly, thegeneralisability of these findings could be called into question, given that they arebased upon only 11 companies: if the whole industry were examined, a positivestatistical relationship might be found between market position and skill. Despitethese limitations, what is striking about this study is that it points to examples ofcompanies at the top end of the market that are not utilising skills at a higher levelthan some of those clubs at the bottom. This must at least lead us to question theassumption that high-quality services necessarily require a high-skilled workforce. Inconsidering why this might be the case, some probing of the issue of quality withinthe industry needs to be undertaken.

As was stated at the beginning of this article, quality was defined in terms of theprice that can be charged for the ‘total package’ on offer. To what extent does thatpackage actually include, or is predominantly determined by, the interactioncustomers have with employees? At corporate level, the managers interviewed

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distinguished between the quality of the club (ie the market position) and the quality ofthe service. The ‘servicescape’ (Bitner, 1992) or tangibles – ie the range of facilities,spatial layout and aesthetic appeal – was what characterised the difference betweenclubs in the higher market positions from those towards the bottom end. For example,companies at the top end of the market were more luxurious and spacious, had agreater range of facilities and activities, and offered extras such as the free use of towelsand toiletries.

In contrast, a quality service was predominantly presented as being about customerservice: the way in which staff spoke to and dealt with users of the club, how they weregreeted, helpfulness etc. Only four managers (Premier1, Premier4, UM2 and LA2) citedthe importance of a good knowledge base, and partly equated quality of staff with theability of instructors to induct, assess and develop programmes for customers.Nevertheless, for two of these four companies technical skills were at a relatively lowlevel – equivalent to level 2. The overwhelming response was that when it came downto the quality of the club, what was being identified was the appeal of the fixtures andfittings, the range of facilities and the ‘extras’ provided. If employees did contribute, itwas in terms of customer service rather than technical competence. Inevitably, this isthe view from head office, and further research is required to confirm whether theperceptions and practices at the workplace are any different in relation to the ‘real’contribution of employees. However, the head office assessment of the situation issignificant because that is where recruitment and training policies and practices aredeveloped, and how they are seen to fit in with broader corporate strategy.

IMPROVING SKILLS

If the aim is to improve the skills of the workforce, then upmarket provision in theservice sector may not be enough on its own. This section considers the extent towhich upskilling may occur in the fitness industry as a result of 1) intensifiedcompetition, 2) the use of self-regulation of qualification standards and 3) improvingVET provision.

Competition

The large chains experienced a boom period during the 1990s, when they expandedwithout facing much competition. However, as the number of potential new sitesstarted to dry up and the growth in membership stagnated, companies began tocompete more directly with each other for members. For a number of companies,pressure on profits has pushed the focus towards the internal management of theirorganisations and club structures in a desire to retain membership, differentiate theirproduct and cut costs. To what extent does this mean that firms are emphasising thequality of their staff in the competition for members?

A number of the managers interviewed claimed they were paying more attention tothe quality of service provided by the staff. This was, however, predominantlydirected at the interactive element of service quality, rather than at technical expertise.For example, two premier clubs known for their technical skills were shifting theemphasis to customer service. A number of others were putting in place strategies topresent themselves more as ‘clubs’ for social occasions rather than as gyms forphysical activity. What was meant by customer service skills was evident when anumber of companies stated that their recruitment approaches were being influencedby the retail sector – ie by companies such as Tesco. Two HR directors had beenappointed directly from large retailers, partly because of their experience in recruiting



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‘similar types of staff’ and their experience of customer service. Although pay mightbe similar, directing people to the cornflakes is not generally considered to be at thesame level of competence as giving advice to someone with a ‘dodgy knee’ aboutwhich exercise to undertake.

Self-regulation of qualification standards

The industry’s own attempts to improve the quality of employees has been through theRegister of Exercise Professionals (REP), established by the Fitness IndustryAssociation and SPRITO, aimed principally at technical skill requirements. Scare storiesin the press about the use of unqualified instructors, fears over litigation, broadconcerns about the level of professionalism within the industry and the threat ofmandatory coaching certificates have no doubt contributed to moves within theindustry to establish some sort of standard for instructors. The REP provides amechanism for existing vocational qualifications and companies’ training programmesto be validated against National Occupational Standards and used as entry criteria fordifferent levels of registration. Registration is voluntary, and 16 months post-launch anestimated 28 per cent of instructors had registered.

When the interviews were conducted, six months after the launch of the register,there was general support for the principles involved. Five companies wanted toregister their workforce and were willing to pay for them, although two of these wouldhave to make significant improvements in their training provision to reach this level.One was UM1, which recruited people without qualifications and then gave themtraining of around two days – among the poorest of the chains. A subsequentdiscussion reveals that training has been totally revamped with the view that level 2(rather than level 1) should be the minimum, with two or three staff in each club atlevel 3. Premier1 had also overhauled its instructor training and on-going training tomatch level 2 and level 3 on the REP.

There was some evidence, therefore, that the Register was beginning to have animpact on training provision, at least at level 2. It may also push companies to invest inlevel 3 training so that instructors are able to register as personal trainers. The REP canthen be seen as a motivating factor in encouraging firms to improve their training,although its very establishment suggests that the main companies (those active in theFIA) were already keen and willing for this to happen. If level 2 becomes the minimumstandard within the industry, then the REP will have had some impact – at least onformal qualifications. Nevertheless, this is a relatively low standard, and is significantlybelow the levels identified in other European countries, where a level 2 is considered tobe a trainee and a level 3 an independent instructor (EOSO, 1999; REP 2003).

Improving VET provision

Would boosting the supply of skills through, for example, more HE-relevant coursesraise skill levels within the industry? The evidence indicates that, despite claims bysome companies, skill shortages are not a major constraint within the sector. A surveyby SPRITO found that less than 8 per cent of companies had hard-to-fill vacancies(SPRITO, 2001), significantly less than the national average (DfEE, 2000). There aresome recruitment difficulties, predominantly in London and the surrounding area, butthese can be linked to the relatively low rates of pay on offer and the extraordinaryhigh levels of labour turnover. Rates of 50-60 per cent were not uncommon and, formany managers, this was viewed as an accepted feature of the industry. The job wassaid to attract employees who were young and often transitory and, as a result,turnover could not be significantly reduced. However, one company had successfully

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improved labour retention because it found that keeping staff was an essential elementof its business strategy. Premier4, which managed gyms for corporate clients,undertook a more rigorous recruitment process and had significantly higher levels ofpay, alongside opportunities for career development:

We are not just looking for someone who will stay for six months, but thatthey will start as a fitness instructor and then move to managing a one- ortwo-person site. Personnel director, Premier4

Why are other companies not following this approach? There is a generalacceptance across the industry that pay is too low and needs to improve, yet a numberof operators lobbied against the minimum wage (Terry, 2003: 3). It is not a low-profit/low-price industry, as companies (in the private sector) tap into the consumermarket of top- and middle-income earners. It could be argued that the stream of youngpeople coming out of educational institutions, who may also have completed industryvocational qualifications, provides little incentive for companies to change their currentemployment practices. The industry has an attractive image, and there appears to beno shortage of young people keen to enter. However, many leave within a relativelyshort time, having decided that they have little reason to stay. Pay is low and theunsocial hours may make it unappealing for older workers, particularly those withfamilies. Career progression is largely restricted to moving to managerial positions, yetin many companies instructors lack the appropriate skills, training or experience totake on these responsibilities. The provision of more qualified people entering thelabour market at the level of fitness instructor is unlikely to challenge existingapproaches to managing staff.

From a brief consideration of three possible mechanisms to improve skills within thefitness industry, it seems that self-regulation through the REP looks like having themost positive impact. Increasing the supply of skills through more HE/FE programmesis likely only to exacerbate existing problems of low pay and high labour turnover. Themain issue is to change employers’ behaviour so that they will develop, employ andutilise the skills of their employees. This is likely to happen either through a belief thatcompetitive advantage can be achieved through emphasising the technical competenceof their instructors (yet to happen) or by regulations that force employers to improvethe skills of the workforce. The self-regulation that is currently taking place has beenrestricted to ensure that minimum standards are low enough to be generally obtainablethroughout the sector. A more stringent REP might have a bigger impact throughstimulating employers’ demand for skill, but there is nothing to indicate that either theindustry or the government would like, or is willing, to undertake such a venture.

CONCLUSION

This research has attempted to open up the difficult linkages between competitivestrategy and skills through an analysis of skills and business strategy in the UK fitnessindustry. The main conclusion from the initial findings is that there is little support forthe hypothesis that higher quality necessarily requires a workforce with higher-levelskills. Recruitment and initial training practices, although varied, did not systematicallyimprove as firms moved up the quality chain. On-going training provision was morethorough towards the higher end of the market, but the same could also be said for the



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local authority sector. However, the differences between the clubs were certainly notsubstantial. Although the research is restricted to the views of senior managers of thelargest operators and representatives of various bodies within one sector, it doesprovide some critical evidence on this under-researched area.

A key finding is that the relationship between quality and skills appears to breakdown because of the nature of ‘quality’ within the fitness industry – that is likely tohave resonance with other service industries. It is apparent that the technical aspects ofemployee skills are relatively marginal to how companies identify their product marketposition. Even the ‘customer service’ elements did not seem to be central to defining apremier club. Instead, the ‘servicescape’ was of overwhelming significance, pushingfurther the argument made by Nickson et al (2002: 17) that ‘within certain areas ofhospitality… the tangible elements of the hospitality product are also extremelyimportant’. This would suggest that the balance between tangible and intangible indefining the type of service offered, and which is included in one of Lashley’s (1998)typologies, is likely to be a key factor that intervenes in the relationship betweenquality and HR (or skill) strategies.

If high-quality markets are not enough to ensure high-level skills in sectors in whichthe tangible element of the service is of central importance, then what can this studytell us about other factors that might drive up workforce skills? First, managementhave a role to play, in that there is certainly an element of choice available in theirapproaches to recruitment and skills. However, it was noticeable that those companiesthat did concentrate on higher-level skills were serving a particular market niche,rather than just a high-quality market. For the rest, the model was not of a trained(associate) professional but of a young, mobile, relatively uncommitted worker whowas employed with whatever training they had gained prior to entry or within the firstweek or so at the club, and who would probably leave within a year. Is it the case thatthe skills are not required or that, without any constraining factors, companiesundertake the lowest-cost (short-term) approach possible?

What companies can ‘get away with’ relates partly to what consumers will accept asthe norm. In general terms, this is about consumer expectations, and in the fitnessindustry there seems to be a lack of concern that instructors may be more adept atsmiling than they are at understanding knee ligaments. As Hunter (2000: 477) hasargued, ‘bad service-sector jobs are in part an outcome of consumer preference forgeneric low-cost services’. Some of this is undoubtedly about the inability of a largesection of the UK population to afford better services (see Keep and Mayhew, 1998), butalso reflects a culture of low expectations even where prices are relatively high (egquality of food in restaurants, the knowledge of shop assistants in retailing). Educatingconsumers might affect the behaviour of wealthier consumers but it can have littleimpact on the rest until levels of poverty and inequality in the UK are drasticallyreversed. Regulation of occupations through the use of qualification standards in theservice sector may be an alternative or complementary approach. However, despitesome initiatives in the security industry and in care homes, there appears to be littlesign that the UK government will follow this up in other sectors.

This research indicates that the relationship between competitive strategy and skillsmay be more complex in the service sector than in manufacturing. This propositionarises from the role played by the ‘servicescape’, as opposed to the ‘service encounter’,in the definition of service quality in a number of sectors. Commentators in the UK (egAshton and Green, 1996; Keep and Mayhew, 1996: 305; Coffield, 1999; Rainbird, 2000:1) who have argued that demand-side strategies are required to shift the UK from itslow- skill equilibrium must recognise that shifting firms upmarket, however

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challenging, may simply not be enough. Identifying the ‘other factors’ required wouldseem to be of central importance for those involved in the UK skills debate and for anygovernment service-sector strategy that might one day emerge.

Acknowledgements

This research is funded by the ESRC Research Centre on Skills, Knowledge andOrganisational Performance. I would like to thank Ewart Keep and the two anonymousreferees for their helpful comments on earlier versions of this article.

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Competitive strategy and skills: working out the fit in the fitness industry