2020 made it clear - CEO Succession Planning isn’t Optional“We really need to have a name in the envelope as soon as possible.” So begins many of the discussions we’ve been having lately with board members who are frantic about CEO succession planning. 2020 brought an unprecedented wave of early retirements. This unanticipated contingency highlights the importance of succession planning. Succession planning is the essential practice of identifying and developing leaders within your organization for their advancement. Successful succession planning yields a stronger workforce and better long-term outcomes. Organizations must not bank exclusively on a few key leaders. CEOs can account for a 30% variance in their organization’s profitability, and research suggests that top management has an even greater impact on organizational performance than the CEO. Succession planning should be among the most important considerations for any organization. Yet, the research and statistics collected below tell a different, and rather unnerving story. Most organizations are unprepared to replace the individuals in their highest leadership positions. Here are 12 shocking statistics on CEO Sucession
"LM Hurley & Associates did an amazing job conducting our search for a VP to succeed the CEO of our CCRC. The board of our organization could not have asked for a better selection of candidates and the offer and acceptance process went seamlessly. The entire board appreciated their detailed process, their dedication, and the expert candidate insights that Lauren Hurley and her team provided throughout the search from kick-off to on-boarding." Reference from a recent client: Board Member and Leader of VP Search Selection Committee 1. Show our resiliency…
Valerie Whitman, Vice President of Senior Living, LeadingResponse We are a resilient industry. We need to always be sure we show that to the world. As we saw in the last year, our industry was constantly being portrayed as a place where COVID thrived. This information shook consumer confidence and further created misperceptions of truly how safe our communities are. Our hurdle and opportunity is to be transparent and show the world how we have remained resilient during a pandemic. There are countless stories of how providers have ensured the safety and quality of life for residents as well as their families and staff. 2. Be the best choice… Mark Marasciullo, Chief Investment Officer, The United Group of Companies There are no hurdles to be cleared in choice-based senior housing. During the height of the pandemic, we did not witness a drop-off in either occupancy or revenue in most of our portfolio. This is largely due to the measures taken at our properties to reduce the risk of potential exposure to the virus, and the fact that our residents do not require onsite healthcare. We expect leasing activity to continue accelerating as the single-family sales market has a multitude of tailwinds: all-time lows in mortgage rates, a flight to the suburbs out of urban cores and the emergence of single-family rental buyers that are changing the nature of the marketplace. In short, the future is bright for choice-based seniors housing, and the sun won’t be setting on it anytime soon. 3. A simple proposal… Jerry Frumm, Chief Investment Officer, Senior Lifestyle Corp. For me, the question is answered in three words: Time, trust and value. 4. Rebound on the way… Brad Goodsell, Senior Vice President, Senior Living Investment Brokerage A common obstacle is perceived safety and visitation restrictions. Really, it’s twofold — safety, in that the facility doesn’t have COVID, and that once the resident moves in the family will be able to visit without restrictions. Once this happens, I believe we’ll see a rebound in occupancy, as people become comfortable again with moving in or having their loved one in a senior community. On a positive note, I’ve heard some great stories in the past month about an increased tour volume and deposits at certain communities. 5. Vaccine is the key… By Michael Stoller, Managing Partner, CEO, LCB Senior Living It’s impossible to identify all the hurdles. We still don’t know what’s coming. Forecasting has never been harder. There’s been massive change with the vaccine rollout. Referrals and inquiries are scaling up. Some communities are even exceeding pre-pandemic levels. There is pent-up demand. We see hope but also worry about the potential for a new wave. The largest hurdles that remain are unpredictability and human nature. The stronger and more adaptable we are as people the better we can overcome. And we will. 6. Achieve total transparency… Margaret Wylde, CEO, ProMatura Group What needs to be overcome is lack of transparency. You must be totally transparent with the price and details of the services residents will receive, the communities’ history with COVID-19 and vaccinations, and demonstration of precautions. You could lose 20 percent of your prospects by not providing this information, especially pricing, at the outset of communication. Seventy-eight percent of both prospects and family members rated pricing information difficult to impossible to obtain. These results were obtained from a recent survey conducted for the American Seniors Housing Association. The report, “Messages That Matter,” will be available from ASHA in the near future. 7. Technology can help… Avi Begun, Senior Vice President, Meridian Capital Group This pandemic has caused a significant amount of uncertainty and turmoil. The good news is that we are in a much better place now than we were in March 2020. There are still several factors that would make a big impact in helping occupancy and revenue rebound. The most important of these factors is already underway, which is administering the COVID vaccine to all residents and staff. I believe that will be a huge catalyst to seeing occupancy climb to pre-pandemic levels. Another factor that could instrumentally help drive both revenue and occupancy is further embracing technology for efficiency and using social media as a primary source of marketing. A fresh perspective and strong plan of action embracing these new forms of technology and new channels of communication will help attract new residents and drive occupancy and revenue back up. Source: Seniors Housing Business By all accounts, 2020 was a tough year for the senior housing sector. But the availability of COVID-19 vaccines, reduced state restrictions, and strong safety measures can help guide the success of the market moving forward — and provide renewed opportunities for investors to add senior housing properties to their portfolios. First, it's important to understand the impact of the last 12 months on the industry. Senior housing encompasses a broad range of property types, including independent living, assisted living, memory care, and skilled nursing. But in the early days of the pandemic, the public perceived all sectors of senior housing as one and the same — to the detriment of the industry, said Scott Stewart, founder and managing partner of Capitol Seniors Housing (CSH), a private equity-backed real estate acquisition, development and investment management firm based in Washington, D.C. While there were many cases of COVID-19 in skilled nursing facilities, the same was not true across the range of independent living, assisted living, and memory care communities, Stewart explained.
“The biggest thing we had to deal with early on was the perception of senior housing," he explained. “The numbers were being promoted as a proving point that senior housing was not the place for your loved ones." A Double Whammy for Senior Housing The industry also felt the impact of the pandemic through a loss of occupancy and revenue as well as an increase in expenses — what Stewart called a “double whammy." “We got hit on both sides of the equation," affirmed Julie Ferguson, senior vice president of senior living for Ryan Companies, a national builder, developer, designer, and real estate manager based in Minneapolis. “Because we had to shut down our communities, our lease-up velocity was slowed. We also incurred a lot of unanticipated expenses related to personal protective equipment as well as hero pay [for employees working during the pandemic]." Mark Ivancic, Ryan Companies' vice president of asset management for senior living, noted a spike in move-outs in their independent living properties as a result of seniors seeking freedom from burdensome quarantine restrictions. That exodus did not extend to assisted living and memory care residents, for whom senior living is more need-based, he said. Still, without the ability to welcome new residents after former residents moved or passed away, senior housing communities nationwide experienced a significant decline in occupancy. According to the National Investment Center for Seniors Housing & Care (NIC), U.S. senior housing occupancy fell by 6.8% from Q1 to Q4 in 2020. In fact, senior housing occupancy in the fourth quarter of 2020 was the lowest on record at 80.7%. The occupancy rate for independent living properties, assisted living properties, and nursing care properties averaged 83.5%, 77.7%, and 75.3% during Q4, respectively. A Dip in the Pipeline While many senior housing projects that were already in progress have been able to open successfully amid the pandemic, new construction starts have dropped significantly, Ferguson said. “The pipeline took a dip during the recession that was brought about by the pandemic, so there has been a decrease in the supply for senior housing," Stewart affirmed. For developers who are well-positioned in the market, decreased competition is good news. “We love the fact that when we open projects 18 to 24 months from now — our life cycle on construction — there will be less competition in the market," Ferguson said. “Consumer demand still exists." Finding Top Senior Housing Markets Over the last 10 years, senior housing returns have consistently outperformed other types of real estate, according to data from the National Council of Real Estate Investment Fiduciaries. But when it comes to finding good markets, strategies vary. Capitol Seniors Housing, for instance, operates in the suburbs of major markets such as Boston, Chicago, New York City, and Seattle because that's where the adult children of seniors typically reside, Stewart said. During the pandemic, he didn't see much migration out of these suburbs. At Ryan Companies, Ferguson said her team looks for projects and markets based on two fundamental factors: competition and population. They look at other senior housing communities in the area to see if they're struggling to get occupied or if they're fully leased up in a short period of time. They also consider the population to ensure they're building in a market that has income-qualified seniors who can afford to pay for the services they provide. “We don't think there's any one magical place for senior living, because there are seniors everywhere," Ferguson explained. “We prefer to keep our asset types diverse to reduce our risk." According to the latest NIC data, three metropolitan markets have seen more than a 10 percentage point decline in stabilized occupancy for independent living since March 2020 — St. Louis, Tampa, and Las Vegas. Miami had the largest decline for assisted living during this period. On a positive note, the smallest stabilized occupancy declines since the pandemic began have been in San Antonio for independent living, and Kansas City for assisted living. Managing Senior Housing Investments With such an array of investment opportunities, are senior housing properties best managed through a portfolio of similar properties, or is it advantageous to buy one or two as an entrepreneurial, non-institutional investor? “The key is the operator, and the capital structure is secondary to that," Ferguson said. “Unlike some other asset types where real estate is the primary component, ours is really about the performance of the community as it relates to leasing it up and keeping it full, and then managing expenses to hit your net operating income." Of course, all senior living operators are not created equal. “We do best when we're working with regional operators, where the operator can drive by the communities if they need to. It's a rubber-meets-the-road perspective," Stewart explained. “They know their key employees at each of the communities, and they know what their competitors are offering." In the end, the need for senior housing remains, and experts are hopeful about the market moving forward. “With the vaccine, I'm optimistic that 2021 will be a very good year," Ivancic said. Source - Robyn Tellefsen |
Senior Living Recruiting is what we do.AuthorLM Hurley & Associates Executive Recruiting Archives
July 2021
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