Senior Living expert Roy Barker, Director of Special Projects at Moore Diversified Services, recently shared in a webinar what he has learned in his years of experience in the Senior Living industry about Professional Selling and how important it is to go “Back to the Basics.” Barker specifically used his mystery shopping experiences to highlight some of the main mistakes Senior Living sales staffs are still making, mostly without even realizing it. If Senior Living sales staffs take Roy’s advice and implement his suggestions, it could have a big impact on the bottom line.
If you missed the webinar, you can view it in its entirety by clicking on the video below at the end of this article. You can also view past webinars on the Moore Diversified Services Senior Living YouTube channel. This article gives a brief recap of some of the main points of the most recent webinar. Roy broke up the Sales Process into three stages: the Beginning, the Middle, and the End. But first, Roy talks about a Shift in Focus needed in Senior Living sales.
Is your company or community ready for the financial impact of rising entry level worker pay? While $15 an hour is the new “rally cry” for the minimum wage, whether it will happen nationwide can be debated. But it still begs the question, “Can your current financial structure handle entry level wages increasing to $14, $12, even $10 per hour?” Reality is there are a lot of communities that struggle even with current entry level wages somewhere between $8 to $10 an hour. A recent Wall Street Journal article indicated U.S. wages were on pace to increase at rates not seen since 2008. So while we don’t know where entry level wages will land ultimately, it is certain that wages will continue to increase, and more than likely increase at a faster pace than over the last few years.
Minimum Wage verses Entry Level Wage
An important point to note is that while minimum wage and entry level wage are used interchangeably, they can be very different. Minimum wage is mandated by a governing body of some type, such as federal, state, county, or even cities in the case of Los Angeles as mentioned in an article referenced below. Entry level wages are what companies decide is a competitive wage for new employees in entry level jobs such as dining services, housekeeping, and direct care. Most Senior Living communities pay over and above prevailing mandated minimum wage levels by an average of $.75 to $1.50 per hour.
Wage Pressures
The increase in entry level wages is due to many factors. First our economy has improved and unemployment is significantly down over the last few years. Secondly, retail giant Wal-Mart and fast food giant McDonald’s have both made commitments to raise their minimum starting salary over the next few years. In fact, the Mayor of Los Angeles, CA just signed a bill setting the minimum wage in that city to $15 an hour by 2020, making it the largest city in the country to mandate a $15-an-hour wage. Thirdly, adding to the already mounting wage pressure are predictions of a looming labor shortage in some geographic areas and industries.
On the other side of the coin we can argue that with the talk of a labor shortages, immigration reform could be on the horizon to add more labor to the pool. There is also the view that if McDonald’s entry level wages rose to $15, automation would step in and replace a large portion of their entry-level workers. Even if you take the actual dollar amount off the table for just a minute, and let’s say that you were still able to attract workers in the $8 to $10 an hour range, are you and your residents willing to settle for the leftovers? Those who couldn’t make it anywhere else? Because while wages generally don’t make it in the top 5 to 10 reasons why employees leave employers, when talking about a differential of $.10-$.50 an hour, if the difference was $2, $4, or $6 an hour, a 20% to 60% increase over current pay, this would be a game changer. Regardless of your point of view on the actual dollar amount, the uncertainty should be enough to take action to off-set wage related financial pressures, even if they are not as extreme as mentioned.
Impact To An Average Community
Jim Moore, founder and president of Moore Diversified Services, published an article in January 2015, which highlighted what a modest increase of a $1.50 per hour might mean to an average 110 unit assisted-living community. This included the payroll increase of over 10%, total expense increase of 4.5%, approximately a 12% decrease in net operating profit margins, and $2 million of decreased community value at a conservative capitalization rate of 8%. You can only imagine the impact to your bottom line if the increase was in the $4 to $6 an hour range instead of the $1.50 per hour used in the example.
Do You Have a Strategy?
The next question is, do you have a financial strategy to combat rising wages without compromising your Income Statement, significantly reducing cash flow, or greatly reducing the future value of your community? If not, now is the time to begin formulating one. In the past wages have generally risen at modest rates and changes in revenue structures could be made to accommodate or off-set the increases without much impact on residents. Unfortunately, with all these dynamics converging to create tremendous pressure on entry level wage, you may not have the luxury of time this go around.
It’s important to start the process and begin to manage change immediately. Three initiatives to help accomplish this would be to 1) reduce overall operating expenses, 2) fine-tune existing revenues, and 3) realize organic growth through increased revenue and expanded services.
How MDS Can Help You
Entry level wages will likely increase in the near future, although how much can be debated. We at MDS believe this can be a Win-Win for communities and their workers. This will make strides in the effort to pay everyone a living wage, and with proper planning it doesn’t have to devastate your income statement. This will have a significant increase on the labor intensive Senior Housing industry; especially assisted living and memory care with heavy entry level labor concentration. There are practical strategies that can be implemented to enhance revenues, reduce overall operating expenses, and create favorable organic growth in individual communities or portfolios for multiple communities.
Now is the time to take a hard look at each and every line item of expense. Good economic times can cover excessive expenses very easily. It’s always a good practice to stay on top of changes that can be made to reduce expenses, while not compromising resident care and service to help off-set any future wage increases. A full-scale operations review and benchmarking would be recommended.
Performing competitive pricing analyses, evaluating ancillary and tier charges will insure that you aren’t leaving any revenue on the table. Make sure that units are priced according to the true value they provide residents.
Finally, don’t let 93% stand in the way of 100% occupancy. Seems that there is a mental block when communities reach 93% occupancy. Then it’s time to reduce the marketing budget or just operate under the 93% cloud. On the contrary, it’s time to push harder. The financial rewards for those next few units is what sets great performing communities apart from the good ones.
Don’t wait till it’s too late and put your communities’ financial health in jeopardy. Let’s get started planning for the future of higher wages for entry level workers today!
Roy Barker is Director of Special Projects at Moore Diversified Services, a Fort-Worth, Texas-based organization specializing in operations analysis, marketing development, and investment advisory services. Roy is an authority in the field of employee turnover analysis and retention strategies.
I recently completed a two-webinar series on employee retention/turnover. If you did not have a chance to watch those in person, please visit our YouTube channel at MDSseniorliving to view any of our past webinars. Probably the most asked question after each of these webinars was “How do you measure employee turnover/retention?” I thought this would be a good space to go into employee turnover/retention measurement a little bit further.
Defining Employee Retention and Turnover
It might be helpful to define retention and turnover. There are multiple definitions and different ways to measure each of these so I will discuss the generally accepted standard definitions. Measuring employee retention usually means picking some time frame to measure what percentage of employees have been employed with the company that long. I generally use a year as a base for retention, but the time period can be adjusted to suit your specific needs. Employee turnover is anyone who separates from the company, either voluntarily or involuntarily, and must be replaced. This could be due to retirement, being a stay-at-home parent, other self-induced separations, and forced separations.
Attainable Employee Turnover Rates
Due to the definition of employee turnover, it is highly unlikely that any company would ever have a 0% employee turnover rate. While it may sound somewhat counter-intuitive at this point, actually having 0% employee turnover rate in larger organizations would not be a good thing. It seems there will always be those in which we have to ask to leave our employment and those that move-on on their own. Additionally, bringing in new people to an organization leads to fresh ideas and new perspectives on old methods. Generally a 10% – 20% turnover rate is acceptable and attainable.
While not a lot of people measure it, job vacancy can be a crucial workforce indicator. There is an inherent cost to vacant positions, which are somewhat more difficult to calculate but it can be done. Vacancies can have a toll on workforce morale due to the added load it puts on other employees, as well as affecting customer relationships through poor service. If employee overtime is at an escalated level or has been steadily increasing and/or customer satisfaction ratings are dropping, it may also be a good idea to look at the position vacancy ratio.
To calculate this measure, divide the average number of vacant positions over a specific time frame by the total number of authorized positions in the company or department.
Calculating Employee Turnover
So let’s start off by looking at employee retention of one year or more. You would take the number of employees who have been employed at your company for one year or longer and divide that by the average number of current filled positions. In measuring retention and turnover, if the number of filled positions fluctuates during the time periods you measure, it would be best to take an average of filled positions. This could be done by taking the filled positions at the beginning of the month and those at the end of the month and running a simple average.
When measuring employee turnover, there are a few more steps that we may want to go through. This can be done over any time frame in which you desire. The only thing you’ll need to remember is that you will need to annualize for any time periods that are less than a year. Because the number of separated employees will more than likely continue to grow throughout the year and the number of filled positions will remain fairly constant, the number should be annualized for consistency.
If you’re comparing one month to one month or one quarter you can use the raw number, but to measure employee turnover for one month and to use that rate to speak in general terms of employee turnover would be incorrect. A good general measurement to start with is to take all the people that separated within a specific time and divide that number by the average number of filled positions during the same time period.
There are many variations of detail in which you can measure employee turnover. While the general overall turnover of a company or department is a good place to start, if it’s a small company a large number can be misleading because there are not a lot of total employees. Therefore, each employee who leaves will appear magnified. In just the reverse, if you’re within a very large organization, a generally low number may cover up hot spots within departments or divisions within the company. For these reasons there are a few more steps that I would recommend.
Length of Employment
Probably the most important secondary measure of turnover would be the factor of time. Usually a large amount of employee turnover happens within the first year of employment, with most of that coming within the first 60 days. Selected time periods should be looked at in depth in order to find problem areas within the system. I would recommend looking at 30 day, 60 day, 90 day intervals as well as 180 day, 270 day, and 365 day increments. In order to measure this segment of turnover you would take the number of separations during the specific time period divided by the total number of separations. This should help you isolate any troubled spots.
Some of the other areas that you may want to measure would be voluntary and involuntary separations, high achievers versus low achievers, male versus female, turnover by department, and other variables that may be important to your company. These sub-measures will help you isolate any problem area to allow greater focus of developing targeted solutions.
Employee Turnover – A Runaway Locomotive
This has been a very simplistic view of employee retention/turnover measuring and I hope it has help you in some way. When I speak of other Income Statement and Cash killers such as “Cost Creep,” I call it the silent killer, but Employee Turnover is just the opposite. It is the runaway locomotive barreling down the tracks through the middle of town with everyone running and screaming to get away from it, but very few addressing the large looming issue head on. It’s difficult, there are no doubts about it, but the cost to your organization is extremely high where measurable, and damaging in areas that are unmeasurable.
If you are experiencing high employee turnover, I would encourage you to give me a call. We can work together to solve this issue. It is not one that can be solved overnight, but it is one that can be solved. Think about each employee and the cost associated with them when they walk out the door. The cost is astronomical when you assign a dollar figure to it. And there is also the toll it takes on your residents, those who need change the least.
Next Webinar — “Professional Sales: Back to Basics”
My next webinar is “Sales: Back to Basics—Lessons from Mystery Shopping.” Join us on Thursday, June 25, 2015 at 1:00 p.m. CST. Register here. We look forward to you joining us!
Roy Barker is Director of Special Projects at Moore Diversified Services, a Fort-Worth, Texas-based organization specializing in senior living operations analysis, marketing development, and investment advisory services. Roy is an authority in the field of employee turnover analysis and retention strategies.
As we get further into 2015, most of us are still planning for both business and personal success this year. Some of us may be realizing our plans are not working out as we had originally intended. This realization doesn’t mean we that we have to throw up our hands and pack it in for 2015. Rather we, at any time, can effect and create the change we desire in our lives! I listened to an inspiring interview the other day and I wanted to share the concept with you.
Neil Patrick Harris has been making the rounds plugging his book entitled “Choose Your Own Autobiography”. While I have not read this book yet, the title really struck me. It’s very simplistic and yet very powerful at the same time. Choose your own autobiography should be the model we live by every day! It’s not always simple, and there are a lot of outside influences in our personal and professional lives that affect our decisions and life direction. However, if we keep the idea that we are in control of our own fate in the forefront of our thoughts, it will have a huge impact on our thinking and decision making throughout the day. Living with this in mind will then impact the course of our lives. We don’t have to be stuck in the spot we are in today forever. We have control of our destiny and can make our future whatever we choose. We can take a poor situation and make it work for us.
Where are you today?
So many times we can easily find ourselves in a rut both personally and professionally. Maybe it’s a situation that seemingly has no answer, and as a result you feel helpless and hopeless. Sometimes we lead ourselves into these places and sometimes we’re forced there. The good news is that we can still have an impact on the direction and action we take based on where we want to end up. It’s not always easy to effect change and it doesn’t come without some hard work, and of course it won’t happen overnight, but it can happen.
I am definitely a proponent of getting ourselves squared away in our work lives in order to have a more productive and fulfilling personal life and vice versa. It’s all about finding that elusive balance in life. While there is a lot of ground that can be covered on the personal side, I want to remain focused on the business side.
I have been blessed with the good fortune of analytically-based careers. Analytical careers have allowed me to look at procedures and processes from a fact-based perspective and not be as emotionally charged in decision making. This analytical mind-set can prove to be very helpful when making tough decisions. However, even with this skillset, the hardest part of any decision is usually getting started. It’s much easier to stay where we are today, whether it’s good or bad, than change something. It’s a scary thought to step out there and do something different.
Taking the First Step
Making the decision that we do not like where our business is currently or realizing that we could do better is the first step. But coming to this realization doesn’t fix it. We need to take the corrective step to effect change. Finding what needs correcting or if you know what needs correcting, what do you do differently? (This can be the challenge!)
Analyzing the issues are an important part of developing the fix. Sometimes a Band-Aid fix doesn’t correct the underlying problem. Sometimes a quick fix is the easiest and least painful. However, if we don’t fix the underlying problems in our lives, they will just continue to resurface. And more than likely without a permanent solution they will continue to worsen.
Without getting into the nuts and the bolts of the change process in this forum, I mainly wanted to convey the message that we can effect change. Even though sometimes things look like they can’t be changed, you don’t know how to proceed in making changes, you’re hesitant for some reason to take that first step, or you feel like you just don’t have the energy to figure all of this out, it can be done. Promise!
Write Your Own Success Story
You don’t have to live with mediocrity or disappointment in your current situation. Just make the decision that you know it’s time for a change and MDS can help you take it from there. MDS has worked with clients from all types of Senior Living and Healthcare companies with a multitude of issues, problems, or concerns.
Call me and put the experts at MDS to work for you. We specialize in finding the best building location, repositioning a current community, or improving income statement issues, such as increasing revenue and decreasing expenses. Moore Diversified Services also provides market feasibility through market studies, competitive analysis, and pro-formas.
We help to optimize income statements by increasing revenue and making sure your monthly service fees and tier charges are correct for the market. Once pricing is optimal, we can then take a look at expense control. We don’t want to cut back to a point the service is diluted, but make sure expenses are within acceptable limits. Next on to marketing. We check to see if your marketing efforts are well-rounded, from traditional print and other collaterals, to ensuring that you are taking full advantage of the digital footprint available to you. It is also imperative to assess your employee retention efforts. Consider your employee turnover rate. What about your company culture? And other important points to attract and retain top talent in the industry.
The good news is that you don’t have to continue to survive in a less than optimal situation. You can thrive! It’s up to you to write your own Autobiography, let’s get started today!
Roy Barker is Director of Special Projects at Moore Diversified Services, a Fort-Worth, Texas-based organization specializing in operations analysis, marketing development, and investment advisory services. Roy is an authority in the field of employee turnover analysis and retention strategies.
Moore Diversified Services presents Plug-In and Prosper Webinars:
Part 2 of 2: 10 Critical Steps to Increase Employee Retention Thursday, April 30 1:00-1:30 p.m. (CDT)
At Moore Diversified Services your success is our goal. We are committed to equipping our clients with tools and strategies to make their businesses successful. MDS would like to offer a special, COMPLIMENTARY webinar on Employee Retention.
Join Roy Barker, Director – Special Projects at MDS, for Part 2 of 2 – “10 Critical Steps to Increase Employee Retention”, steps 6-10, as he provides various ways to increase employee retention. Topics will include:
Create opportunities for advancement
Challenge employees
Praise employees
Develop an awesome company culture
Really get to know your employees
Space is limited. Don’t miss out on this special opportunity to learn from a company with over 40 years of experience.
Are you about to move right past this post because you don’t believe you need one? THINK AGAIN!
Digital Media is now an integral part of any comprehensive marketing strategy/plan. While some products and services may use digital media more than others, every business needs to utilize digital media in some form to build and enhance client and customer relationships.
Product Marketing vs. Relationship Marketing
There was a time when you strictly marketed your product or service to your target audience. While that is still a part of an effective marketing plan, relationship marketing is extremely effective in our industry. As a provider in the senior living and housing industry you actually have two target audiences. The first target audience is the senior themselves. The second is the family members of the senior who may be the primary decision maker or at minimum highly influential in the decision making process. You must be building relationships with current and potential customers as well as their family members.
In the case of a senior living and housing community, if an individual is not a resident or has a family member as a resident, you still want to be the first community they think of if the need arises or if someone asks for a recommendation. This means getting your community name out there and engaging with the public, resident or not. This process does not have to be complicated. Start with a simple plan and build from there.
Website
First, no matter your marketing strategy, your size, your mission or your occupancy rate, you must have a presence on the web. One of the first places, a potential resident or family member will go is the web. Whether it is to just get contact information, an address to pay you a visit or to get an idea of what your community looks like, a large percentage of people immediately will look up your website opposed to the previous process of looking you up in the phone book.
“Up to 84 percent of all Americans now expect the Internet’s World Wide Web to provide them needed information on government, news, healthcare, and commerce, according to a new survey compiled by the Pew Internet and American Life Project.”
Having a website is 24/7 marketing. Websites market to those around the country. It can market to those you don’t even realize need your services; think out-of-town family members doing preliminary research on a community for their senior. It would be difficult to direct-market by mail to that particular audience.
Blog
If you have a website, the next easiest step would be to add a blog to your site. While blogs can be intimidating, they don’t have to be! Use it to simply give updates about your community, upcoming events and most importantly provide your audience some general tips, hints and information. This can include:
What is happening in your immediate area, not just your community
Helpful tips from your current residents about downsizing and moving
Advice on what to look for in a senior living community
Great recipes from your residents or their families
Profile some of your residents (with their permission of course)
A blog can be as simple or as sophisticated as you make it. Just be sure to keep it current so that anyone who makes it to your website will know the information is up to date.
Facebook
The next logical step would be to create a Facebook page for your community. You can basically use the same content as your blog on your Facebook page. Family members who are already on Facebook will enjoy seeing updates about where their parents, grandparents, aunts, or uncles are living. So many communities already have a presence on Facebook and have found great success with this strategy.
Resources
There are more resources available than we could list, so here are a few of our suggestions to get you started:
Stuck and don’t know the first step or maybe you need some reassurance about the path you’re taking? Let me help! I can perform an audit of your company and/or community’s digital footprint, provide guidance, and a sound plan of action for you.
Roy Barker is Director of Special Projects at Moore Diversified Services, a Fort-Worth, Texas-based organization specializing in operations analysis, marketing development, and investment advisory services. Roy is an authority in the field of employee turnover analysis and retention strategies
Kim Jimenez has been a regular contributor to the MDS website and MDS blog for the past 15 years. Kim holds a supervisory position in a Fortune 100 company and has extensive experience with a multitude of employee, training and leadership issues. She is currently obtaining her degree in Human Resource Management at Southern New Hampshire University.
We at MDS would like to take this opportunity to wish all of you dedicated to the service and care of the many residents aging successfully in communities around the world a Safe and Happy Holidays!
We especially thank those that will tend to residents on Christmas Eve and Christmas Day; there is no day off in an industry such as ours. To many of these residents, you are their family and you will make their holidays bright!
Thank you for your commitment to the betterment of the Senior Living and Senior Housing Industry.
The sign of a true leader is one who is constantly creating new leaders. These type of leaders inspire, motivate, educate, support and mentor others into positions of leadership. They cultivate the skills of others and strengthen their weaknesses.
In Boy Scouts, one of the main premises of the Eagle Scout project, and something you will be grilled on in you Eagle Board of Review, is the question: could your project have happened without you? In order to have a truly successful project, it must be so well planned out AND you must have designated, informed, trained other participants that a) you as the project leader do not actually work on project day and b) if you cannot show up for any reason, the project proceeds as planned.
This so goes against our nature of needing to be needed. We tend to feel if our business or department can survive without us, we have no value. We MUST adjust this way of thinking! If business as usual can proceed without you, then to your credit you have hired some very capable employees and you have trained them so well they know how to do their job. This then frees you up to focus on the big picture, more time for strategic planning and business growth.
Do you think you must be involved in every little aspect of your department? Do you require frequent updates and details on every project? Now we get into micromanaging, stay tuned…
Kim Jimenez has been a regular contributor to the MDS website and MDS blog for the past 15 years. Kim holds a supervisory position in a Fortune 100 company and has extensive experience with a multitude of employee, training and leadership issues. She is currently obtaining her degree in Human Resource Management at Southern New Hampshire University.
I want to thank everyone who joined us for our Strategic Planning Webinar Series. If you missed the opportunity to participate live, here is your chance to view these recordings. These webinars contain important and helpful information to remember as you finalize your Strategic Planning journey for 2015.
We are busy putting together some new webinars that you will not want to miss. These can help you take your organization to the next level. I am currently planning for late January or early February. Watch our blogs and newsletter for more information. To sign up just enter your email in the box on the left hand margin. Also, please send me an email with any suggestions you might have for both blog and webinar topics. Let us know what your specific challenges are and I will try to accommodate as many requests as possible.
Below you will find links to MDS’ recent Webinar Series on Strategic Planning, both Parts I & II. The images are linked to the MDS YouTube page, so just click on the image of the webinar that you want to view and it will open up the presentation video in a new window for you.
Roy Barker is Director of Special Projects at Moore Diversified Services, a Fort-Worth, Texas-based organization specializing in operations analysis, marketing development, and investment advisory services. Roy is an authority in the field of employee turnover analysis and retention strategies.
Moore Diversified Services presents Plug-In and Prosper Webinars:
A STRATEGIC PLANNING SERIES
Part 2 – “Putting It All Together”
Thursday, Nov. 20
1:00-1:30 p.m. (CST)
At Moore Diversified Services your success is our goal. We are committed to equipping our clients with tools and strategies to make their businesses successful. As we close out fiscal 2014 and approach 2015, MDS would like to offer a special, COMPLIMENTARY webinar series on Strategic Planning.
Join Roy Barker, Director – Special Projects at MDS, for Part 2 – “Putting It All Together” as he provides insights into strategy planning. (It is not necessary to have participated in Part 1 in order to join us for Part 2). Topics will include:
Recap of:
– SWOT
– key financial indicators
Align with company mission and vision
Set measurable and realistic goals and timelines
Develop an Operational Plan
Monitor and Evaluate
Refine and Adjust
Space is limited. Don’t miss out on this special opportunity to learn from a company with over 40 years of experience. CLICK HERE TO VIEW WEBINAR FLYER
