By Steve Moran
It was the Southwest Airlines meltdown that got me to thinking about this, but it goes way beyond SWA and extends into senior living, and particularly into the sector of publicly traded companies.
Time and time again we see C-suite leaders (CEOs since that is where the buck stops) who perform badly, costing shareholders millions and billions of dollars. They continue to earn multimillion dollar salaries and collect stock options (though mostly these are worthless for poor-performing CEOs) and get all kinds of other perks.
What Is Particularly Galling …
Senior living companies, like all companies, have job standards. And if you deviate from those job standards significantly, you lose your job.
- Caregivers have to provide good care for a certain number of residents each day. If they don’t, they get fired.
- Salespeople have to meet certain move-in and occupancy standards, or they get fired.
- If an executive director does not make their occupancy numbers, they will get fired as well.
And when they are fired, they will get little or no severance pay, and why should they?
But when it comes to the C-suite, the rules are completely different. The company loses money, shareholders lose value. No problem, the big fat million-dollar-plus salaries keep on flowing, even increasing. After all, it is like hazard pay to run a company that is bleeding red.
The Real Blame
The real blame, of course, lies at the feet of the board of directors who hire and should fire these executives. They simply should not tolerate bad performance, because that is exactly what it is.
But also blame the leaders. If they are underperforming, they could do something about it. The problem, of course, with doing something about it, is that this requires admitting what you are doing is wrong, is not working, that you need help.
In senior living, there are organizations that, in spite of low industry occupancy and inflation and staffing challenges, are making money. They have good occupancies and team members who love coming to work each day.
When C-suite leaders underperform, they hurt everyone, not just shareholders. They hurt team members, they hurt families, and they hurt workers.
It is just wrong.
If these C-suite leaders behaved with honor, they would do one of two things, with the first being better than the second.
- They should do whatever it takes to fix the problem. Admit what they were doing doesn’t work and do something different.
- They should resign and let someone else make it better.
A Final Note
Being the C-Suite leader of a company that is in decline is not automatically a moral challenge. I have met some wonderful people who just shouldn’t have been in the positions they were in. I have even been that person.
I am not so sure it is as moral to stay when they know they are not having success and are unwilling to shift directions.
Where are their boards and large investors?
I fail to understand why large investors aren’t pushing for meaningful change when value is destroyed year after year.
I am completely baffled by this as well. Except that on the few boards I have been a part of there is typically one person who dominates with personality or stature and the rest go along.
Even when there are opposing voices (often me) those voices carry little weight.
And… early on in my life I was that person who pushed something like that through with little opposition. I got my way easy as pie but the results were not great. Once was enough to learn my lesson.
Here, here. But, in so many cases, the board doesn’t understand its own legal responsibilities as “over-see-er.”
Could it be that they were chosen because they were yes-prrsons, or friends of the administration?
Perhaps residents will begin suing board members for breach of fiduciary duty, or attending shareholder meetings and speaking up. Incoming boomers won’t tolerate much incompetence.
We all know the senior living field is overdue for some serious reform.