To grow and thrive as an industry, Senior Living needs to address our workforce challenges.
By Jacquelyn Kung
To grow and thrive as an industry, Senior Living needs to address our workforce challenges. A strong people strategy should be part of any strategy. The organizations that prioritize being a great place to work see lower employee turnover, higher revenues, and higher net margins.
There have been decades of research across industries to illustrate the business case: for instance, figure 1, below shows voluntary turnover across industries. Aside from the immediate business case, this strategy is sustainable and gives us an edge when our industry’s fundamentals change.
To illustrate, let’s look at the case study of a struggling nonprofit in healthcare which turned itself around to be a national leader in the face of healthcare reform.
Figure 1: Annual voluntary turnover precentages by industry
Background: Why We Need To Act
Workforce challenges tops the minds of many CEOs and Boards in our industry. The reasons are immediate as well as deeper:
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Immediate staffing shortages. As a growth industry, we have a high vacancy rate for key positions, especially those in nursing, caregiving, and dining. Over the next years, we need 1.2 million additional staff for our communities and organizations.
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High employee turnover. Talk to any CEO or leader in our industry, and he or she will admit that they have an employee turnover and retention issue.
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Stigmatized worker perceptions. Our industry is vibrant with different types and settings of care. But with Hurricane Irma and Brookdale’s issues, what is plastered on the front pages of newspapers is a constant stream of negative news and perceptions of our sector. It’s no wonder that droves of job seekers do not seek us out.
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Need for innovation. With the Boomers jaded by their parent’s aging experience and wanting something different, we know that aging services will change dramatically in the next twenty years. Innovation will keep us alive and thriving. Our employees must trust their workplaces not to punish them for trying new things — and to be engaged in new ideas.
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Lack of leadership bench strength. Looking across LeadingAge, the majority of CEOs are over age 55 and looking to retire in the next decade. We need to grow our talent from within to have leaders who truly understand our complex organizations. Even at team lead and supervisor levels, we lack bench strength.
Strategy: What We Need to Do and How We Do It
An overall strategy for any organization needs to be aligned in its elements. Having a strong people strategy can involve choosing a strategic priority such as becoming a great place to work. It can and should be complimented by a few focused strategic priorities, such as resident care and profitable growth. In this way, a strategy is strong.
Tactically, to set and achieve a strong strategy requires a few steps:
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Focus — As an organization, choose and resource no more than 3-5 strategic priorities. Giving priority to becoming a great place to work is at the top of many strategies of top-performing organizations.
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Measure — Each strategic priority must have a clear, measurable goal, with clear benchmarks of where the industry is, where the organization currently is, and where the organization seeks to be. If becoming a great place to work is a goal, many organizations have chosen an employee engagement standard in the Trust Index™ engagement score and made a goal to achieve a score of 80 or more.
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Plan — Starting from the C-Suite, teams at all levels of the organization must plan for how to achieve the goals. C-Suites often take 1-2 days for a management retreat to create a strategic plan. At other levels of the organization, teams have meetings to create action plans tied to the measurable goals.
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Monitor — Once a goal has been reached, we need to celebrate! But then, we cannot rest on our laurels: we must monitor and sustain improvements.
Results: Case Study of One Healthcare Nonprofit
Let’s use a real-life nonprofit organization. It has 27 locations and over 13,000 employees. A new leader arrives: unfortunately, his new role involves solving issues:
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High employee turnover
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$20 million in operating losses
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Union risk in its CNAs and other hourly staff
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Bottom-ranked resident satisfaction
This new leader (“Matt”) recounts the story of how he got hurt as a police officer and had to take a job as a security director at a local hospital. One day, the CEO of the hospital walks in the hallway – and does not even look at him!
Matt is committed to his organization not being that way. He believes every employee deserves to be treated as a person. In the face of his many issues, Matt leads his organization to make some strategic priorities and creates actionable change:
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Strategy/Focus. With his leadership team, Matt focuses on a few strategic priorities. At the top of his list is to improve employee engagement and sets a goal of becoming a Great Place to Work.
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Measure. They choose the Trust Index score as the measure that goes on his CEO dashboard. They baseline their scores – it is dismal – but they press forward with a goal for improving it.
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Plan. During annual leadership retreats, they pour over the data and identify the gaps where they fall short of employee engagement. He assigns a “Leader100” group of up and coming leaders and they advocate for bottoms-up changes at their locations.
Moreover, they discovered that top managers got better engagement scores, lower employee turnover, and beat their budgets – and put in programs for disseminating learnings across sites and departments.
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Monitor. Each year, they compete to be named to Fortune’s best workplaces lists as an effort to monitor sustained improvement.
What resulted is incredible: not only did employee engagement score increase by 54% but employee turnover dropped significantly and patient satisfaction shot up from 10th percentile to over 90th percentile. The $20 million in operating losses turned to $100 million in profits (largely from call-outs decreasing and productivity increasing, yielding lowered overtime and per diem agency usage). They were able to invest the savings into other strategic priorities, including measuring cost variations and patient care.
Moreover, when the Affordable Care Act and health care reform at state and Federal levels occurred, this nonprofit health system grew revenues and took market share from competitors who used to beat them. Asked how they could win in the face of change, Matt credits his engaged team — and prioritized focus on making his organization a great place to work.
