By Jack Cumming
Ever since the Emeritus merger, Brookdale has struggled to find its identity. It may have struggled before that, but the size of the merged organization has made Brookdale’s identity crisis central to the identity of the entire senior living industry.
It’s Not the Corporate Form
“But wait,” you may be thinking, “Brookdale is profit-driven, and most of the industry is not-for-profit.” At one time, there was a clear market advantage from nonprofit status. While that status still has some weight, more and more consumers shop for senior housing without distinguishing whether they are tax-exempt or not.
As we’ve been reporting of late, Brookdale is now going through another of its periodic existential crises. Cindy Baier is out as CEO. Senior Housing News reports, “Brookdale Chairman of the Board Denise W. Warren will serve as interim CEO and is joined by three independent directors on a CEO search committee, supported by executive search firm Spencer Stuart, according to an announcement.”
It sounds like another boardroom revolt. Ms. Warren sports a six-page curriculum vitae (CV). Conventional thinking today is to hire an executive search firm to find a suitable CEO when there’s a vacancy. It’s evident that Ms. Warren and the Brookdale Board are following that responsibility-deflecting convention. Truth to tell, though, talent is scarce. If the board members are suited to their oversight responsibilities, they should know already who might achieve better outcomes, and they should be able to recruit that person directly.
It’s Strategic
As noted in a previous article, it might require a merger to obtain the best talent. Talent in the leadership chair is that important. As positive as Spencer Stuart’s reputation is, Goldman Sachs or, say, Boston Consulting Group, might be a better choice for advice.
Here’s some commonsense. The best person for the job isn’t looking for a job. That person is already happily building value elsewhere. Moreover, that person isn’t looking for more money, though few people turn down money if the job is attractive and money is thrown at them.
Recruiting Talent
The kind of person who can lead Brookdale out of its doldrums will only be attracted to the challenge. The best prospects can change aging in America. They also want to do that. To succeed, they have to be given a free hand to get the elements in place, including a talented board, that they need to succeed.
The Board may not be sufficiently engaged in Brookdale’s industry to know who’s talented. That’s the implication of their hiring a search firm. They may not have that know-how, but I can think of three or four people, now running successful large companies, who might have the right mindset.
If that’s true of me, how much more should it be true of Brookdale’s Board? To know if the best prospects do or don’t have that mindset, though, we would have to ask them what their plan would be out of the gate, and if they’re the right person, they already have an answer in their minds.
That brings us to the toughest part of landing the right person for the job. Who knows? It might even be Cindy Baier or Andy Smith, though that’s unlikely. If you get someone interested, you have to land them right away. They’re not going to submit to the kind of interview sweepstakes that search firms are so fond of. They just don’t have the time for that kind of nonsense. The best talents want to get going and hit the ground running.
Key to Talent
Edgar Woolard was the kind of director who made a difference. As Apple’s Board Chair, he was astute enough to recognize that Steve Jobs was the right man for the job. Sure, Steve Jobs was obnoxious, but he was key. The Apple Board had followed convention in throwing Jobs out and letting a search firm bring them John Sculley. If you follow the Apple story after Jobs was restored to the helm, you can see the potential that Brookdale has if the conventional mindset of the board is tossed aside and they simply go for the right person to build a great enterprise.
Let’s be plain. Emphasizing profit will never build shareholder value. Shareholder value comes from investing in an effective leader with a world-changing vision who understands customers and how to please them. Shareholder value comes from growth, customers, and volume, not from margins and exploitation.
Stop the Mediocrity
Change the focus. Give customers what they will want. The customers may not know what they want until the creative genius shows them. That’s what makes great entrepreneurs. Maybe it won’t even be healthcare per se or senior living per se once Brookdale’s latent potential is unlocked.
Grow the business. To do that, a five-step search process won’t help. Case studies and professorial pontification won’t help. Find the right person and get that person in place, pronto. By way of full disclosure, I am a long-term Brookdale investor and would benefit personally from a growing, successful enterprise.
Jack,
As always, your perspective is insightful and your commentary on the mark. You make so many valid points in this article. And you know this – your comments are relevant to most NFP Boards I have worked with. So, you are right. If Brookdale can hire someone who realizes that the consumer wants vitality, not care, Brookdale can lead a “senior living revolution” that focuses on social connection, agency, purpose, and Healthcare and Wellness Navigation – the for cornerstones of the vitality model – we would change so many lives for the better and remain relevant.
Thanks, John. Coming from you, that means a lot. I’m working on a follow-up article to suggest ideas that a bold thinker at Brookdale might want to explore. Nonprofits have long dominated the industry, but nonprofits don’t have access to the equity capital markets, and senior housing is a capital-intensive business. That’s something that industry leaders should focus on. I look forward to any ideas you may have.