It’s important to have the right people in the right positions at all levels of a senior living company to ensure the organization operates effectively. But recent research indicates that it may be even more critical to ensure the right channels run between them.
“Our research shows that the fundamentals of good execution start with clarifying decision rights and making sure information flows where it needs to go,” reported Gary L. Neilson, Karla L. Martin, and Elizabeth Powers of Booz & Company in the June 2008 issue of Harvard Business Review.
Certainly, the flow of information and clarity of decision-making authority can become more challenging as a senior living company expands and adds layers. Companies report different strategies for overcoming that challenge.
Several years ago, executives at McLean, Virginia-based Sunrise Senior Living started to see a level of inconsistency in performance at the community level. The company had grown significantly in recent years and the organization’s leaders struggled to impact program quality and consistency at the local level.
“We determined that we had too many layers between the senior leadership and our communities. Our senior leaders were not able to impact the business as they could when the organization was smaller,” says Daniel Schwartz, senior vice president of field operations.
Sunrise’s remedy was to convert from an organizational structure with three senior vice presidents to one with six regional vice presidents. Each region includes a resource team for operations, sales, resident care, human resources, and analytics. Each region contains six to seven areas. There are eight to 12 communities in an area, and about 60 to 70 communities in each region. Each area provides a resource team for operations, sales, and resident care.
“This enables us to flatten the organization by reducing the number of layers between the community and senior leadership, shrink the spans of control, and move our resources closer to the communities they serve,” Schwartz explains.
Hershey, Pennsylvania-based Country Meadows Retirement Communities took a different tack. When leaders became frustrated that they were not hearing about community-level problems in a timely way, they changed the reporting structure so that marketing/sales managers on the community level now report directly to a vice president of sales in the corporate office, rather than to the community’s executive director. If there are problems at any community that could ultimately hurt sales, the corporate office will hear about it right away.
“We’re like other companies, a fairly flat regional structure where regions have a lot of authority. That’s a proven model. Where we differ is we took sales and marketing out of that structure so that if anyone squeaks about program problems, we’re going to hear about it quickly,” says COO David Leader.
While such a strategy would not work for every company, Country Meadows points to its average occupancy level of about 95 percent, with a third of its portfolio at 98 percent. —W.R.
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