Senior living is still trying to find its footing with recruitment at a time when many companies are seeking hospitality professionals and other outsiders help stay on pace with the evolving industry landscape.
But operators are also subject to another challenge that many businesses are facing today due to the onset of baby boomers approaching retirement: succession planning.
For many family owned businesses in the U.S., succession planning is a not-often discussed topic, but it’s an important one that can’t be addressed soon enough. A recent survey of CFOs conducted by Chicago-based specialty investment bank Ziegler indicates many senior living organizations are not having the succession planning conversation, or that they are not having it nearly soon enough.
“I don’t think senior living is atypical,” says Lisa McCracken, Ziegler senior vice president, senior living research and development. “If you look at baby boomers, many are in their retirement years and are starting to think about their next phase of life. It’s a more pertinent topic than it was in years past.”
Senior living organizations are having the conversation more than they were two years ago, but largely, they are not taking a proactive approach to the question of who will run the companies once the current leadership retires.
According to Ziegler’s poll of 150 senior living CFOs, more than a third report their CEO has been with the organization for more than 15 years. About a quarter say their CEO will face retirement within the coming five years, with another 41.5% expecting their CEO will retire in five to 10 years.
Yet with 67% of organizations facing a CEO transition in the coming decade, only 35% report that they have a formal written succession plan in place for the CEO position. Multi-site organizations were more likely to have a place in place than single sites.
Senior living may not be an exception, but it has faced struggles in recruiting top talent in years past, and the search for new leadership could be a consolidation driver going forward, McCracken says.
“It’s one of the drivers. When you look at some of the different organizations going through transition, a lot of it has been succession planning,” she says, pointing to the recent ABHOW and be.group affiliation, which will result in a single CEO position. “I don’t think anyone would say this was the sole driver, but it’s a stronger driver in smaller organizations to get the leadership you need.”
Planning early is clearly one way for providers to take a proactive approach, but professional development throughout the organization is another important aspect.
“If it’s done right, it involves a really strong commitment to professionally developing people at all levels within your organization,” McCracken says.
Written by Elizabeth Ecker