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Earlier this week, LTC Properties (NYSE: LTC) announced longtime CEO Wendy Simpson is transitioning to a board leadership role, with two other leaders set to take the reins as co-CEOs.
In the announcement, the West Lake Village, California-based real estate investment trust (REIT) said the appointment of Pam Kessler and Clint Malin would spur the company onwards as the REIT enters “a new phase of growth through ongoing investments and the addition of a RIDEA structure to our business.”
This is not a radical new direction for LTC, as both Malin and Kessler had previously served together as co-presidents. But I think the fact that the two were elevated to the co-CEO position shows an accelerating industry trend.
In November, I wrote about a handful of senior living operators that have switched to a co-leadership and shared leadership structure. Recent data shows why senior living operators are adopting the unique leadership structure, which also carries unique challenges. And while I don’t think it will be a common practice, I do believe more operators will experiment with these kinds of leadership structures in the years ahead.
In this week’s members-only, exclusive SHN+ Update, I analyze the growth of shared leadership structures in senior living, and discuss the following:
- How and why some senior living operators have embraced co-leadership
- Challenges to making these models work on the ground
- Data showing the advantages of co-leadership
How senior living interacts with shared leadership models
While a minority of senior living companies currently employ a shared co-leadership model at the CEO or president level, real-world examples show the benefits of creating a collaborative leadership structure to meet goals.
Some other senior living organizations that have adopted co-leadership models in recent years include Gardant Management Solutions, New Perspective Senior Living and Savant Senior Living.
Earlier this year, New Perspective entered into a RIDEA-structured deal with Welltower (NYSE: WELL), along with launching a $500 million investment and development pipeline. And New Perspective Senior Living Co-CEOs Chris Hyatt and Ryan Novaczyk both told me that they believe their steady growth as an organization stems from their shared leadership structure.
“We’re constantly asking questions, challenging the assumptions to lead us to fruitful solutions, and it doesn’t matter whose title it is,” Hyatt told me.
But Hyatt believes that some organizations in the senior living industry, without having co-CEO or co-president leaders, often make decisions behind the scenes similarly to how a shared leadership organization functions.
“I do think there’s more [shared leadership] out there than we realize,” Hyatt told me. “If someone’s CEO and someone’s president, I bet you there’s a lot of shared collaboration that’s happening, but for whatever reason, that name tag hasn’t transformed to outwardly show that there’s a shared responsibility.”
Making this public announcement, both to employees and partners, of a change in typical hierarchical titles to co-leadership “lets folks know there’s a joint model,” Novaczyk told me.
“It really helps speed up decision making and giving people resources on demand in a way where [if] you have that typical staffing pyramid, doing that can be more difficult,” Novaczyk said. “I think it’s already happening and we’ll probably see more of it in the future.”
Still, there are challenges to co-leadership, including inefficiencies in decision-making, dueling leadership styles and creating unclear directives for staff.
Downey, California-based Savant Senior Living co-CEOs Adam Zenou and Mochi Bercovich told me that having a shared leadership structure only works if the leaders in question bring complementary skills and share equal responsibility in weighing risks.
“They definitely need to be on the same page and they need to get along, although disagreements always happen; but as long as you meet those requirements, I do believe we will see more of it in senior living,” Zenou told me.
Bercovich added it’s important for an organization considering a shared leadership shift that the preparation and build up to making that change must be well thought out.
“Any organization that wants to have a dual leadership position, I think it should be planned well and make sure that everyone gets along,” Bercovich told me. “You will enhance the overall operations and value to the residents at the community level.”
Based on these operators’ experiences, I think the case for co-leadership in senior living is clear. But I also don’t think the leadership style is right for every company. As Bercovich noted, co-leadership could create conflicts of leadership for vision or strategy, and operators must carefully plan them. And although many companies say they are collaborative in nature, plans are sometimes still subject to executives’ egos.
Writing in the Harvard Business Review this year, Anand Joshi laid out eight common reasons why co-CEO arrangements fail. Joshi is founder of leadership advisory firm Future Proven.
Among the pitfalls that Joshi warned of, one that I found particularly interesting was failure to identify synergies. To my mind, it stands to reason that co-CEOs would divide up the work to be done according to their skillsets and areas of expertise. But that can lead to a division of work that is more favorable to the CEOs’ preferences than the needs of the business.
“Instead of focusing on what they want, or where they have experience, the co-leaders should address the opportunities and threats for each area and lay out responsibilities according to the potential value to be created,” Joshi wrote. “Some areas indeed can be safely divided up, but others will benefit from working collaboratively, to achieve a ‘1+1=3’ result.”
Another point of interest to me: the need for co-CEOs to maintain “creative tension.” While it’s important for co-CEOs to present a united front publicly, they also must be willing to challenge each other privately. Otherwise, they could fall into a sort of groupthink and fail to address sensitive but mission-critical areas, in an effort to maintain harmony.
At LTC, I think that Malin and Kessler might already have worked through issues such as these, at least to some extent, given that they have been serving as co-presidents. It’s a point that Simpson made to Skilled Nursing News this week.
“The team has worked together successfully for quite some time, and they will continue to work toward growing the company now and into the future,” said Simpson.
But while leadership succession at LTC appears to be proceeding entirely according to a preconceived plan, with no major strategic changes on the horizon, I do think that Malin and Kessler would benefit if they can deliver a notable success soon. That could come from backfilling Malin’s role, which still is on the to-do list. As Joshi wrote:
“Delivering joint quick wins in the first few months will also help [co-CEOs]. These can be external, such as generating impact with a key client, or internal, such as appointing key people or even changing the whole leadership team smoothly. Simplifying decision-making around a key issue can also help with credibility here, as it shows the co-heads’ effectiveness in improving how the organization works toward creating value.
At the end of the day, I do think the management practice will be more common. But operators’ experiences show they must tread carefully before changing their management structures.
Advantages, challenges of co-leadership trend
According to the Harvard Business Review, public companies led by co-leaders have outperformed a stock market index of 87 companies in 25 years. Shared leadership models can also improve overall team performance by up to 20%, according to a meta-analysis cited by Leaders.com.
As I noted in November, Netflix has quickly grown under a shared leadership structure with co-CEOs Greg Peters and Ted Sarandos.
But some companies have rolled out shared leadership structures only to walk back on those initiatives due to various challenges, including inefficiencies in decision-making or resistance from top leaders used to typical hierarchical staffing models, according to Valamis, an enterprise software company.
I think a challenge in shared leadership that remains particularly relevant to senior living operators, especially those seeking to grow in new markets, is around clear communication and execution of directives from leaders. Senior living operators often rely on regional teams to spur community-level growth, and without clear communication, I believe an operator’s future growth could be stunted.
Still, I believe the benefits of shared leadership can outweigh the risks of taking this less traveled path.
The senior living industry is as complex as it has ever been, with more moving operational parts than in the past. Not only must operators grapple with the normal pressures of occupancy and margins, they also must explore new technology, ponder creative models for operations and payment sources, find new avenues for growth and manage complicated workforce issues.
I also think such leadership styles can get past the egos involved, and could create a more collaborative culture for staff.
Although the typical senior living C-suite includes different roles meant to address each of these, I also believe that the CEO role could be too big of a job for one person, given all they must think about. And while I don’t think most companies will need to adopt a co-CEO style, I do think more will explore it as they look to maximize their companies’ gains in the coming years, as LTC and others have done.
