Every single week I hear the same sentiment in different words. It always is something like this . . .
By Steve Moran
“The CEO playbook says it’s about shareholders. And so much is sacrificed for it — it’s factories, communities, jobs. But not by CEOs. CEOs have their employees suffer for them. But yet, the CEOs’ pay goes up and up and up. And so many people are left behind.” — Ted Talk titled “The Anti-CEO Playbook”, by Hamdi Ulukaya, the founder of Chobani Yogurt
Every single week I hear the same sentiment in different words. It always is something like this . . . “I love the residents, but all management cares about is profit”. I hear it from regionals, executive directors, and, yes, frontline staff. I hate hearing this because I know many of the CEOs they are talking about and — with just a very tiny few exceptions — this is simply not true. I know they are people who really care about residents and care about teams.
But . . .
When occupancies go down or expenses go up faster than rents, it becomes tempting to see cutting expenses as the first, second, and third steps to survival. This means a bunch of different things:
Reducing food costs
Reducing supply costs
Figuring out how to charge for more care
Laying people off
Using part-time staffing
It might, in some cases, be the thing that saves a project or even a company. Though the number of companies that have failed and communities that have changed hands would suggest that cost containment is not a very efficient path to success.
The Broken Down Yogurt Factory
Hamdi Ulukaya, the owner of a Feta Cheese story, received a flyer in the mail advertising a worn out, ugly, broken-down yogurt factory. He initially threw it in the trash but decided to take a look. It was bad. The prior owner thought it had no value, but he got a small business loan, hired back some of the staff, painted the building, and started making Greek yogurt.
That was in 2005. Today he and his employees own most of the factory, they control more than 50% of the Greek yogurt market in the US and have a billion-and-a-half in annual revenues.
Broken-Down Senior Living
Would I be too bold to suggest that senior living is broken? This is, honestly, not entirely true. What we have today serves a percentage of seniors very well and today’s model as it evolves will continue to do that well. But there are two huge problems, one we talk about and one we don’t.
The one we talk about is that the current model is very monolithic in what it offers and does, and it is expensive. We know for sure that we need new options and there are a bunch of people working on this problem and I believe we are getting there.
The second problem that we don’t ever really talk about is that, in general, senior living serves team members very poorly. Sure, we can point to executive directors who are making north of $300,000 a year, love their job, sleep well at night, and have a relatively low-stress life. That is not true for most senior living workers. Leaders (regionals, executive directors, corporate staff) live punishingly brutal, stressful lives driven by money and the hope of making a difference in the world. The problem is that physically and emotionally they are living in the Everest death zone, a place that kills 20-40% of the people who venture there.
Frontline staff is being served no better. They feel like they are not given enough time to do all they are required to do, they don’t feel respected, and most of them have to work 2 jobs just to make ends meet.
The C-Suite Dilemma
Most C-Suite leaders would acknowledge these problems and then ask, publicly or privately, “What can I do? Even if I took no salary, the additional money available to pay staff would be inconsequential,” and this is true. The next solution would be to hire more staff and increase wages to a more equitable level, which would then mean really substantial fee increases for residents. This, in turn, would decrease the number of residents who could afford senior living, which would make things even worse.
Or Maybe . . .
Or maybe we could do some really crazy things to make it better. Here are some ideas:
Have some frank conversations with team members, even the front line staff, about the problem. Ask them how your organization might do what they do better.
Create a profit-sharing pool for long- and medium-term team members so they can share in the upside.
Maybe, in reality, if we hired $25-an-hour caregivers, we would get such a different kind of employee that they would actually justify their pay. To the best of my knowledge, no one has tried this.
Maybe we need to consciously scale down what we offer residents so team members can have great lives. I am not sure residents really need or want 4-star dining at every meal every day.
Broken-Down Senior Living, Part 2
From time to time, I hear rumors of old, obsolete, broken-down senior living communities that are beyond salvation. Maybe that is not true. Maybe what senior living needs is a Hamdi Ulukaya who isn’t smart enough to know taking on these old buildings is a dumb idea.
If you have one of those buildings, I would love to talk to you about it. I have some ideas.