The Maverick Interview Series - Meeting inspirational leaders of fast-growth organisations to discuss all things people and culture.

Today’s conversation is with John Treharne, Founder and CEO of The Gym Group and credited with shaking up the UK’s fitness scene by spearheading the low cost model. In a career spanning more than three decades, John has played an integral part in bringing fitness to hundreds of thousands of people. From The Gym’s first site built in South-West London in 2008, to overseeing an ever-expanding empire of 100+ clubs, The Gym Group boasts a membership base of over 400,000, and was the first health club group to run a successful IPO in the UK for over 12 years.

And all this has not gone unnoticed, with John recently taking his place on the board of UK Active and voted CEO of the year for the South East by the British Private Equity and Venture Capital Association.

In this exclusive interview, we discuss John’s story, and cover a range of topics from the rise of the low-cost fitness business model and its implications on the industry, to where the leaders of tomorrow are coming from and what it takes to create and maintain a high performance. As always, I’ll be asking John his advice for you, the business leaders of tomorrow.

www.thegymgroup.com

EL
It’s been over ten years since you started The Gym Group, when you look back and all you’ve achieved, what are you most proud of?

JT
Taking the business from startup to IPO in under ten years is a great achievement for me and our team. One of the major benefits of the IPO process is all of our employees becoming shareholders, so it’s very much a collective reward. Everybody told me that it wouldn’t work; that the market didn’t want online registration or 24/7 access, and that you couldn’t make any money charging £15 a month. We’ve proved that you definitely can.

EL 
What was the opportunity that you saw in the fitness industry in 2007 that prompted you to enter with a low-cost model?

JT
The UK market had become very stagnant, somewhat complacent and extremely expensive. Rates for UK gym memberships were the highest in the world, and businesses like Planet Fitness in the United States were successfully disrupting local health club markets, and I believed it could be done in the UK.

You do that by creating a culture where the site managers are effectively running their own business, because it attracts entrepreneurial spirit and creates a very committed management team.

EL
You have a reputation of someone who puts people and culture at the top of the agenda. Why has this been part of your success?

JT
It was something that I learned from my mentor in the early days. At one stage he was running 265 hotels around the world, and I remember him saying that the only way you can run a business of that size is to invest in high quality site management and reward them properly, because you cannot run a business like that from the center. I’ve always believed that you’re far better without, what I call, the ‘porridge’ at the center of a lot of businesses and replace it with high calibre local site management.

You do that by creating a culture where the site managers are effectively running their own business, because it attracts entrepreneurial spirit and creates a very committed management team. We have incredibly high management retention levels, and we don’t have the inefficiencies of middle management. Site managers can make quick decisions because they don’t have to go through layer upon layer of management. You can very successfully manage a big company with a lean center with intelligent sourcing of operations that aren’t your core business.

For instance, we have a small marketing team at our center, and we go outside for much of our design, buying and production – not only because it’s more effective but, significantly, you get more innovation from agencies who have a wide variety of experience. We’ve gained a lot by tapping into the economies of scale of other businesses. I remember taking over a mid-market chain for a period of time and, although it wasn’t a pleasant process, one of the things we did was remove 36 members of the middle-management team and more or less immediately the business started to perform better.

EL 
You’re opening between fifteen and twenty locations a year, which is tremendous growth. How do you compete for talent both in the UK and abroad?

JT
We have a reputation for being a very good company to work for. Since our IPO we’ve put together very attractive incentive schemes throughout the business with shared equity schemes, and for every share an employee buys they get another free share. Aside from financial incentives, we have an internal management training programme that has taken our people from entry-level work experience through to building and managing sites with thousands of members. The entrepreneurialism and opportunity for progress creates a very healthy spirit and culture in the business.

Nevertheless, no matter how big or small you are, if you want to retain good staff you need to invest in them

EL
Along with the low cost model, we have a huge growth boutique fitness – do you feel the founders and CEOs of these start-up fitness clubs have an obligation to invest in their people?

JT
Ideally yes, but it could be more difficult as there are fewer resources. Nevertheless, no matter how big or small you are, if you want to retain good staff you need to invest in them. When we’ve done staff surveys about which benefits motivate them, training always comes very high up which is part of the reason why we continue to develop our training programmes. When you’re smaller it might be a challenge in terms of resources, but it’s no less important.

EL
Is investment in people something that can be retrofitted down the line?

JT 
Ideally you will invest in people and culture from day one, because changing the culture is one of the hardest things you can do in a business. If you believe it’s the right thing to do, it’s better to do it from the outset.

You need people to question assumptions and long-held belief and bring new perspectives to the table

EL 
Where do you see the next generation of fitness leaders coming from?

JT
Whilst leaders will continue to be developed from within, I think we’ll see more leaders coming from outside the sector which I think is very important. For a business to evolve it needs people from various backgrounds, not just from health clubs. If you look at our executive management team, I’m the only person there with a health club background. You need people to question assumptions and long-held belief and bring new perspectives to the table.

EL
To wrap things up John, I have a couple of ‘quick fire’ questions. In only a few words, what would your greatest piece of leadership advice be?

JT
Be in love with the business, not the game. Don’t let passion overrule common sense.

EL
What are the most valuable skills needed to successfully navigate today’s world?

JT
Using common sense and taking the time to think things through.

EL 
And finally, what piece of advice would you give to your 16 year old self?

JT
If I was looking to start a business, I’d strongly advise myself to learn and hone my skills first with an organisation that will invest in their training. Learn as much as you can before starting out on your own.

EL
That’s great, thank you very much for your time John.