By Earl Wade, VP/Senior Director of Business Development at LCS
What’s Your Succession Plan?
It’s no secret that workforce shortages with front-line staff is a top concern for the senior living industry in the long term. In the short term, one of the bigger challenges we hear from boards of directors is the departure of C-suite and executive leadership staff. Succession planning is more critical than ever.
Here are 6 key factors to help you plan for smooth transitions before your CEO exits.
1. Prepare for the Expected Departures
There is a high number of very experienced, tenured CEOs who have helped the senior living industry experience tremendous growth over the past 20 to 30 years. Many of these visionaries have created large, complex organizations. I feel honored and privileged to have worked with many of these industry icons over the years. The challenge is that numerous industry surveys and reports show that 40-50% of senior living CEOs in the not-for-profit sector plan to leave their positions in the next 3 to 4 years. Few, if any, industries in America will see this rate of leadership turnover in this time span. Senior living organizations will face a significant shortage of individuals who have the experience to step into these large voids.
2. Understand the Risks of Leadership Gaps
Maintaining occupancy and efficient operations are keys to the business model for senior living communities. Any lack of focus on these can be disastrous to a senior living organization because industry margins simply aren’t large enough to allow for significant dips. A gap in leadership or an unplanned transition can often lead to occupancy shortfalls and cost creep in operations.
3. Don’t Underestimate Stability and Consistency in Senior Living Management
Leadership gaps and unplanned transitions can create confusion among residents and staff, or if they receive mixed messaging as to who is in charge. Confusion or uncertainty often leads to lower satisfaction levels. We see a lot of senior living organizations partner with Life Care Services, An LCS® Company, to be a constant at a community. Partner with a reputable senior living management company to provide strategic and succession planning, operating support and efficiencies, and the ability to backfill for key staff at communities in critical or emergency times.
4. Plan Ahead
For organizations or communities with a CEO planning to retire in the next 3 years, boards should conduct an objective and thorough evaluation of where your organization stands. It’s crucial to make sure your retiring CEO is leaving the organization on sound strategic and financial footing. With the complexity of the industry and competition in the marketplace, boards should objectively evaluate a community’s viability and determine if some type of affiliation or senior living management partner would enhance the future success and mitigate the future risk to your organization.
Succession planning is much broader than just your CEO. Senior living communities and systems must have a succession plan in effect for executive directors and key department heads. (See #1 about shortage of senior living leaders.) A CEO should drive the succession planning. It’s important to create a culture where department heads embrace the process.
6. Save Your Team from Lengthy Searches for Leadership
Unplanned leaves in executive roles can result in a long search process. In some cases, 6 to 12 months to find the ideal replacement. It can cause communities to operate shorthanded or board members to become more involved in daily operations. Our recommendation is to partner with a senior living management company that has a strong industry network and ability to provide an interim executive director or senior leader who is familiar with systems, policies and procedures. Your senior living management partner can also provide recruiting and leadership development services, and a creative vision in recruitment, as my colleague Yvonne Rickert shares in a recent story featured in LeadingAge Magazine.
About Earl Wade:
Earl is the VP/senior director of business development for LCS®. He is responsible for assisting the LCS Family of Companies with structuring strategic relationships, establishing new partnerships and expanding into new territories. Before founding CRSA in 1989, Earl served as a partner with the accounting firm of Ernst & Whinney (now Ernst & Young), where he led the firm’s senior housing consulting practice. He has served on the board of directors of CRSA Holdings, the BayWoods Cooperative Housing Association and the Trezevant Episcopal Home. He has also been a member of the Advisory Committee to Omega Communities, Titan Senior Living, the National Continuing Care Data Base and the NIC Owner Operator Advisory Council. A graduate of the University of Alabama with a degree in accounting, Earl is also a retired member of the American Institute of Certified Public Accountants and LeadingAge.