Reap the benefits of low turnover, happy employees with data-based improvements.
By Jacquelyn Kung
It’s common knowledge in our industry that the operator makes or breaks the financial returns of a project. More specifically, it is an operator that not only meets budget forecasts, but also has a solid people strategy. We are in the care services business after all.
But, aside from budgets, few ways exist to measure an operator — or predict which one will be good and stay good. Great operator cultures translate into investment returns. But how do we measure high-trust, high-engagement cultures?
Significantly lower employee turnover
Average employee turnover in our sector is north of 40 percent per year. In skilled nursing, it’s usually much higher.
Each employee who leaves an operator is expensive, costing thousands of dollars in lost time and training. However, decades of research have shown that turnover is significantly lower in great cultures.
For instance, the Great Place to Work Institute reports that the Fortune 100 Best Companies to Work For have, on average, 50 percent lower turnover than industry benchmarks. It should be no surprise that these effects are shown across generations too: Millennial, Gen X, and Boomers all stay longer at companies with great workplace cultures.
More satisfied customers and referrers
A Cornell University study showed that companies on Fortune magazine’s list earn higher customer satisfaction ratings compared with their competitors. Within healthcare, hospitals on the list receive higher Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) scores. What’s more, their patients and referrers report higher Net Promoter Scores, which means they say they would be more likely to recommend the hospital.
Higher productivity and fewer injuries
Harvard Business Review has reported up to a 40 percent increase in productivity from great workplace cultures.
In terms of head count, a more engaged team operates as though it has more people (i.e. 10-person team does the work of an 11- or 12-person team).
Moreover, workers’ compensation claims decrease. Data from the Great Place to Work Institute shows a lower injury rate on the job when in a good workplace culture.
As you can tell, many metrics exist tying the great workplaces to key performance indicators. As one healthcare client of the Great Place to Work Institute reported, “We segmented our 700 managers into quartiles based on their Trust Index score. The top quartile of managers not only had better employee scores, but they also beat their forecasted EBITDA margins. It was a combination of having fewer employee callouts (missed days) where they needed to hire a temp, but also because of higher team productivity.”
Measuring and improving
The Trust Index is the gold standard for tracking culture. For 30 years, Great Place to Work Institute has been the global authority on creating high-trust, high-engagement cultures. In the United States, for nearly two decades, Fortune magazine has used its methodology to rank companies for its Best Workplace lists.
The process of working with Great Place to Work on workplace certification entails two steps. First, HR or operations departments complete a culture audit. It also involves an employee survey using the Trust Index, the most widely taken employee survey in companies worldwide.
Here is where the magic happens, and how the scores are used is critical.
First, CEOs use the Trust Index score on their dashboards and Balanced Scorecard reports. Focusing the management team on improving this score has improved business performance. CEOs from companies such as Hyatt, Cheesecake Factory and Intuit credit this Trust Index score with providing them transparency on their workplace cultures.
In fact, one of these CEOs reveals that 8 percent of his compensation is tied to it, as the company calculates that over $250 million in profits is tied to being recognized as a Best Workplace by Fortune.
What you can do
Great Place to Work Institute has initiated a focus on senior care. Operators can apply, get benchmarked to their level of care and, if certified as a Great Place to Work, have a chance of being recognized in Fortune. In fact, the newest award is called the Best Workplaces in Aging Services. The inaugural list is to be published this September.
What you can do is:
1. Ask your operators to apply for this list and benchmarking (if they do not make the list, the operator is kept confidential);
2. Suggest that your operator CEOs measure, track and improve the Trust Index score (the index that research has linked to better business outcomes);
3. Share your improvements and learnings with the editors of Fortune.
Dr. Jacquelyn Kung is a senior living expert, entrepreneur, consultant and book author. She was part of the senior management team at Erickson Living, worked on the healthcare team at McKinsey, and has started two companies serving seniors at home. Her doctorate is from Johns Hopkins University and her MBA is from Harvard University.