We’ve been seeing subtle and not-so-subtle signs that a decade-long bull market has entered the home stretch. But who really knows?
What can be said with some certainty is that senior living businesses and others sure seem to be acting as if an economic downturn is imminent. One telltale clue? An almost universal interest in cost reduction has suddenly gripped the business sector. That’s usually a pretty good sign that the coal mine canaries are in no mood for a melody.
In fact, nearly two-thirds of businesses in this country (64%) say that cost reduction is the top challenge they anticipate in the year ahead, a OrgVue survey has found.
The issue is especially germane to senior living, where pressures to cut costs are by some estimates unprecedented. And yet operators are finding it more difficult than ever to find and keep employees. Trying to upgrade both the quantity and quality of a community’s workforce while cutting overall costs can be a maddening exercise, as many communities are fast discovering.
So what’s an operator to do? You could do far worse than taking in the cost-cutting advice served up by the late Peter Drucker. In his book Permanent Cost Control, he noted that no matter how well-structured an organization happens to be, its cost effectiveness needs to be repeatedly examined. And here as elsewhere, the optics can make a huge difference.
“If cost control is seen as cost cutting, the workforce will see it as a job threat and will refuse to support it. But if cost control is seen and practiced as cost prevention, then the workforce will actually see it as an opportunity, or at the very least it will support the cost control for the sake of better and more secure jobs,” Drucker noted.
The OrgVue survey of 400 human resource professionals also unearthed these gems:
- While 45% of HR leaders believe their rapport with finance is productive, just 25% of finance professionals feel their relationship with HR is collaborative.
- HR firmly believes workforce planning should be their responsibility (76%), whereas more than 55% of finance respondents disagree, believing it to be the responsibility of their department.
So what are the key survey takeaways? I think two bear a mention.
One is that whether or not the economy falters, the business sector is not taking any chances. Anything that can go will go, at least as far as optional and/or unnecessary expenses are concerned.
Less obvious but also notable is that at many firms, human resources and finance are having a bit of a turf war. Clearly, both sides are laying claim to the same territory, especially as it affects the future. Not that it’s really a fair fight. For as anyone who has been through such skirmishes in the past will tell you, the person who controls the purse strings is almost always the first among equals.