Papering Over Problems With Payroll

 

I’ve been involved with real estate for a long time.  It’s hard to believe it’s been more than 30 years now.

Having bought, sold and helped dozens of clients do the same, I have also seen some interesting properties and interesting people.

One of the more interesting things that I saw was the seller of a house cover up a hole in the wall with wallpaper, rather than fixing the hole.  It was a fast and cheap fix in the short-term that caused problems resulting in even more expense for the seller.

The wallpaper over the hole was a unique situation.

A similar situation that isn’t unique enough happens when the owner of an assisted living facility covers over holes in staffing with extra payroll.   It happens when a manager isn’t managing, when overtime becomes the norm, when consultants are regularly hired to fix problems, or when sales slide because marketing staff are reassigned.

Holes in your staff drain your facility’s bottom line when payroll costs expand to fill the holes.  But those holes can be avoided or filled quickly if you do these things:

 

Hire enough staff.

Some assisted living facilities try to get by with a limited staff.  It’s not always easy to hire good staff but it’s important to have enough people on your team to fill each shift and cover for each other when sick days or vacation days happen.  Relying on overtime to fill open shifts costs more and leads to staff burn out.

 

Train, train and train.

Mistakes and errors are more likely to happen when staff is unsure how to handle a situation.  Fixing mistakes and errors is always more costly than preventing them.  That’s why training is so important, and not just the minimum required training but continuous training to improve your team’s skills and readiness to handle more situations.

 

Set reasonable expectations, and then hold your team accountable.

Does everyone on your team know their role or roles?  Assisted living facilities often have staff that are universal workers, spending part of their shift as a caregiver, part helping with dining, and maybe part of it with housekeeping.  Likewise, managers at some assisted living facilities may have duties that include accounting and marketing.  When anyone on your team wears many hats, they inevitably find a favorite and may not give their best effort to a still important role in your community.  If a manager enjoys time in his or her office handling bookkeeping but doesn’t get out of the office to visit referral sources, occupancy and the bottom line may suffer.  Don’t ‘paper’ over this problem by hiring marketing staff to do a job that’s already on another’s job description.  Ensure that everyone on your team knows their roles and meets expectations.

 

Address problems sooner rather than later.

Don’t let underperformance go unaddressed.  Weak links on your team can lead to low morale and a downward spiral with your team.  Some will simply add more people to make up for the low achievers.  This not only costs more but creates a toxic environment where underperformance becomes the norm, and strong staff will look for work elsewhere.  Help underperforming staff turn things around, or give them an opportunity to work somewhere besides your assisted living community.

 

Avoid Management Burnout.

Managing staff can be one of the most challenging jobs in an assisted living community.  Over time managers, whether they’re the owner or an employee, can become worn down dealing with the challenges of operating an assisted living community.  Managers who become burned out often turn to the easy way out – allowing overtime, hiring ineffective staff, overlooking their own rules – rather than doing the difficult to prevent holes in the staff.  Don’t let this happen!  Schedule time away from your community, take vacation time and keep balance in life.  Attend meetings and events with others who have a similar position and trade stories, if for no other reason, to know that others face the same challenges as you.

 

Holes in your staff and management team might be covered up in the short-term by spending more on payroll.  But it’s a temporary fix that will cause bigger problems and result in even more costs in the long-run.  Fix holes in your staffing quickly and completely to create value in your assisted living facility.

 

Comments

  1. I am a Disabled Veteran with and have just completed the Veterans Accelerator Program for business, and the Kauffman Fasttrac business course to start an Uncommon company. I will have a complete business plan with next week: I am trying to start an assisted living home(Personal Care Home) in Prince George County Md, with 6 to 8 residents to start. I will have a contract agency come in to handle the clients. My wife who has worked in the federal government as a Revenue Tech for 28yrs and her sister,(my sister -in law- who has worked as an Assisted Living Director for 20 years will oversee the contractors, and I will be the owner and sponsor to make sure the business grow and all regulations are adhered to. I have been trained by the Department of Veterans Affairs , to build a name in the industry and compete foe Veterans sole source contracts, as a Service Disabled Owned Veterans Business. How can I come up with other billing methods to generate income besides bed space.How much can I make by contracting with a home health agency? The VA also sent me to real estate school also, to help grow the business and reinvest the proceeds into the growth of the business,
    what do you think about my plan?

    • Antonio – First, thanks for your service to our country! Second, overall your plan appears to be similar to that used successfully by a number of others who own an assisted living facility and hire a third-party management company to operate the facility – I do that myself. As for other billing methods to generate revenue, that’s a great question. The key is always to maintain maximum occupancy, keep rates competitive (i.e., don’t allow your facility to be underpriced), and look for opportunities to provide more services to your residents that should result in more revenue. I hope your plan is a wonderful success. Please check back here with updates along the way. Mike

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