Not long ago, Benchmark was struggling.
Although it had built a reputation as a leading senior living operator, the Waltham, Massachusetts-based company was staring down new competition and declining business results. Benchmark’s occupancy had fallen to below 88% in 2017, a departure from the 93% occupancy rate the company had grown accustomed to over the years. And the nearly 12% price premium it once enjoyed over competitors had almost evaporated.
Making matters worse, the company’s chairman and CEO, Tom Grape, was facing some challenges of his own.
In 2011, he stepped back from Benchmark to work through a difficult divorce, one which ultimately dragged on for five years. And although the divorce had wound down by 2016, it took its toll on the company’s leader, as he described in a recent talk at the National Investment Center for Seniors Housing & Care (NIC) annual conference, and in a followup interview with Senior Housing News.
“I was emotionally and mentally distracted and not as engaged as I’d been before,” Grape told SHN. “I was still here, but I had a big distraction in my life that was taking a large part of my focus away.”
Meanwhile, faced with a worsening business outlook, a culture of fear had set in at Benchmark, and many seasoned employees were heading for the exits.
“People were feeling like we lost our mojo,” Grape said. “We had always taken great pride in our culture. We won awards for it. So, this was a real departure.”
Grape, who founded the company in 1997, thought that something needed to change, and soon. It was clear to him that the problems were even bigger than Benchmark — the senior living industry was at a crossroads, meaning whatever change occurred had to be transformational for the company, which today has 60 communities spread across eight states and nearly $500 million in annual revenue.
“It began with a belief that what the industry is going to go through in the next 20 to 30 years is very dynamic change,” Grape said. “To prepare for that, we needed to revisit who we were at our core, not just launch some new initiative or new project.”
‘Short, pithy, memorable’
After realizing Benchmark needed to a major change, Grape got to work rebooting the company’s soul: its purpose statement. In doing so, he looked to business author Jim Collins for inspiration.
Collins, who’s authored books such as “Built to Last” and “Good to Great,” has said that great companies have great purpose statements. In crafting their purpose statements, companies should focus not on what they make, but what they stand for, according to Collins.
“He talks about how great companies have great purpose statements that are galvanizing and compelling,” Grape said. “They should follow three criteria — short, pithy and memorable — so that everybody can grab hold of them.”
With that in mind, Benchmark’s two previous purpose statements — “creatively improving the experience of aging” and “to build a great company providing world class senior living experiences” — simply didn’t pass muster.
“They had some nice words to them … but I’m not sure a lot of associates in the company could remember them,” Grape said.
Grape reflected back to all the letters and compliments the company had received over its history. He recalled that he never got a letter that complimented Benchmark simply on its real estate or services — those were the “table stakes,” he said. Instead, residents and their family members heaped praise on the company for the way it fostered social interactions among them.
And like that, he had arrived on Benchmark’s next purpose statement: “to elevate human connection.”
“It’s three words, it’s simple and it doesn’t say ‘senior living,’” Grape said. “It’s about a grander calling, and it’s something that conveys to everybody what they’re supposed to do.”
When Grape took his purpose statement back to his colleagues at Benchmark, “their eyes lit up,” he said.
“Everybody got it, and people felt like that’s why they got into senior living,” he added. “To this day, there’s great enthusiasm about it.”
‘Put the kick-ass back in Benchmark’
With a new purpose statement in hand, Grape held a town hall meeting — his first since he re-emerged from the divorce process. His first order of business: addressing the cultural problems that had plagued Benchmark in recent times.
“The first thing I did was apologize to people for the culture having gotten to where it was,” Grape said. “[I also said] we need to put the kick-ass back in Benchmark, and I got a standing ovation when I said that.”
With the help of other members of the company’s leadership team, Grape also overhauled the company’s values statement down to just three phrases: called to care, better together, be the Benchmark.
A new purpose statement and new values in hand, Benchmark underwent a rebranding in 2018. Meanwhile, things have improved steadily over the past two years.
More than 300 associates who left the company returned — and for no reason other than the culture had shifted, Grape said. Benchmark’s occupancy rate for its core portfolio also grew to 90.2% in August 2019, representing a 2.8% gain from the 87.4% occupancy Benchmark logged in January 2017.
The company’s operating margin for its core stabilized portfolio has grown 130 basis points since 2017, and turnover rates have dropped from 48% in 2017 to 43% in 2019. Executive director turnover, meanwhile, is now below 20% annually.
“It’s been a remarkable turn,” Grape said. “Virtually every measure took a significant turn to the positive.”
Now that Benchmark is on a better trajectory, the company is broadening its focus from being a senior living company to one that fosters human connections. Part of that strategy means collecting a wide swath of data on its customers.
“We want to be a more customer-intimate company than our competitors,” Grape said. “We’re trying to play that game by collecting as much customer data as we can to be smarter than anybody else about who we’re serving and what their preferences are.”
The senior living provider is also continuing to develop communities, including ones that cater to the middle-market under the brand name The Branches. Benchmark currently has one Branches community open, with two others slated to open this year and next.
“We’re viewing [these Branches communities] as early pilots,” Grape said. “We see these first three as opportunities to learn, and we’ll go from there.”
The company also formed a wellness division earlier this year with a focus on new, urban communities. Benchmark tapped Denise McQuaide, a longtime senior living and health care executive, to lead the division as president and COO.
Benchmark also has a new capital partner in KKR following Welltower’s (NYSE: WELL) decision to dispose of its 48-property ownership interest in the operator for a gross sale price of $1.8 billion. Under the arrangement, Benchmark will continue as operator for those communities.
In the months and years to come, Benchmark will seek to stay ahead of the curve, with data collection and marketing at the forefront.
“We’re shifting ourselves from being a senior living operating company, which I described as a Blockbuster strategy in a Netflix world, to becoming a human connection company,” Grape said. “We’re really focusing intently on getting to know our customers better than we knew them in the past.”