• May 20, 2016

    Meet Ed Kenny. With the second-longest tenure of any employee at LCS, Kenny truly has risen the ranks of senior living. Today, the company provides a number of functions across the nation including senior living management, development, real estate investment, home health and procurement services. Under his leadership, in 2010 LCS went from being an employee-owned company to pursuing a minority investment. Today it remains a privately held company.

    We sat down with Kenny to learn about changing the ownership structure of LCS, what it means to be a real leader, and why he’s optimistic about the future of senior living.

    As I was researching, I found out that you started as an Executive Director.

    I did, actually a trainee.

    Tell me the story of how you got started in the industry. Was that your first entry into this space?

    I grew up out east, I was the youngest of seven kids. My parents got married late in life and they retired when I was in college.

    You were the baby then?

    I was the baby, number seven of seven. When I was in college, my parents moved to Cape Cod, Massachusetts. I would work on the Cape in the hotels and loved that business, but unfortunately my mom had a stroke. I worked at the hotel during the day and would visit my mom in the evening. I was struck by the care and compassion of those folks taking care of my mom. By chance, one night I opened a magazine and read about this company in Des Moines, Iowa that was building a product called a CCRC. This was late 1978, early 1979. I wrote to them. Long story short, they said, ‘We’re a small company. We’re starting a training program, and if you want to come out and be interviewed, we’ll interview you.’ I was accepted to the class, and was a trainee in the second training class.

    The second one ever?

    The second one ever. Today, 37 years later I’m chairman of the board and CEO of the company.

    That’s crazy! Do you remember what magazine you were reading?

    My father had retired from Prudential Insurance Company. He was on the real estate mortgage side and Prudential had made a loan to build a CCRC. That’s how I [came across] it; through my dad’s former employer.

    So do you think your days as an executive director have helped you evolve in the chairman’s role?

    Oh absolutely. It’s a people business. It’s a service business. To be in the trenches and to experience the many happy moments that go on in a retirement community, the challenging moments, leading staff, dealing with families, experiencing joyful moments, sad moments—it’s made me a much stronger person and better leader for the company.

    To be in the trenches and to experience the many happy moments that go on in a retirement community, the challenging moments, leading staff, dealing with families, experiencing joyful moments, sad moments—it’s made me a much stronger person and better leader for the company.

    I’ve gotten to know Rick Exline over the years…

    Rick was in the first class.

    Really? Oh wow!

    Rick [who serves as executive vice president/director of senior living management for the not-for-profit CCRC division of Life Care Services] is the longest tenured employee in the company and I’m the second, six months behind Rick.

    Ed Kenny, LCS

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    You are primarily owned by employees, right? Tell me about that.

    Right. The company is privately held. The biggest risk I have taken was in June of 2010; LCS at the time was privately held and the shareholders were employees who made direct investments into the company. There are some pros to that structure, but there are also cons. The cons are that you’re restricted with capital access and you also have some liquidity pressures. So I embarked on going out and finding a minority investor to invest in the company. It was really a transformational event. People were really concerned about it and there was a lot of internal anxiety.

    What percent did they invest in?

    They bought 30% and people were really concerned that we would lose the culture of the organization, that it would deteriorate our value system and change the focus. That hasn’t happened at all. It’s been transformational. Our company is at a much different level than it was before that event.

    Tell me about the process with that. Did you know who you were thinking about going to? Can you tell us who the minority investor is?

    The minority investor is a group out of Omaha called McCarthy Capital and they’ve been a just terrific partner. Also, part of that capitalization was a smaller group called Westminster Capital out of Lake Forest, Ill. McCarthy Capital and Westminster Capital are our minority investors.

    More from the Leadership Series

    Did you have to go on a road show for a while to do that?

    Once we made the decision that we wanted to go out and pursue capital, we hired an investment advisor and he went out and sought capital sources. We had road shows in Des Moines mostly, and we told our story.

    You said it was a challenging process. Why? Just to convince the employees that this wasn’t going to change anything?

    Yes, because we were a nice, collegial company. We had no outside ownership and were one big family. The thought [among employees was] we were going to bring in an outside investor, it was going to wreck the company culture, vision and values, and it took some real convincing that it was in the best interest of the company.

    What have you guys been doing with that capital? Investing in projects?

    The deployment has been through a lot of development activity. We’ve made a number of acquisitions, operating companies as well as real estate, and also it allowed us to invest some significant new capital to build our infrastructure and grow as a company.

    I’m curious, are there any challenges to running an employee-owned company? Is it any different from running a traditional company?

    No.

    It’s got to have some benefits though, I assume.

    It clearly has its benefits. It’s one thing to be an employee and another thing being an investor, as you know. It really does perpetuate some of the principles of our company and a long-term perspective, [in terms of] thinking like an owner as well as an employee.

    What was the year you joined the company?

    1979.

    When you joined did you ever think you’d be here this long or imagine what it could become?

    Somehow in my DNA I’ve always enjoyed working with seniors. I’ve never wavered from that. It’s interesting, my buddies and colleagues would say, ‘What are you doing working with old people?’ I’d say, ‘It’s really way cool.’ It’s a lot of fun, meeting some wonderful people; they’re teaching me a lot. We hire really bright people that are caring and compassionate, love responsibility, thrive on responsibility, and we give them a lot of responsibility early on in their careers.

    Leadership

    This is my favorite part of the interview; it’s a little more personal. What’s your definition of leadership?

    My definition of leadership, and we use this a lot in the organization, is possessing confident courage to execute on a vision and having the stamina to get through the obstacles required to get there. We talk about the fact that the road to success is always under construction. You’ve just got to battle through those obstacles that are out there.

    What’s the biggest challenge you’ve faced as an organization?

    The biggest challenge in the most recent past was the economic downturn of 2008. At that point we had a very robust development schedule as it related to CCRCs. We had at least three communities that were under construction or in the process of stabilizing. We had one project well along in the entitlement process. Between equity and debt, we, and our partners, had over half a billion dollars outstanding. The economy turned, the lending environment evaporated, and lenders wanted liquidity. The home sale market slowed down. A couple of things helped us weather the storm. First, our lenders and our customers trusted us. We had a really strong reputation and a good track record. Second, our business approach is to take the long-term strategy, and we were convinced that these projects were going to be successful.

    You still made some investments though, if I remember correctly. There was The Clare deal…

    That was really on the backside of the downturn and was an opportunistic event in that were invited to make a minority investment with a long-standing client, Senior Care Development LLC. The Clare was a bankrupt CCRC that was overleveraged and the price was right. Today we’re enjoying some successes there at The Clare [in Chicago, Ill.].

    Was that the first test to see if things were getting better? Was that a tough call for you to make?

    No, at that point in time it wasn’t a tough call. In that particular case it’s a fabulous location, great asset, the price was right, and we were very pleased to be able to be a partner [with Senior Care Development, LLC] in that.

    What’s the best piece of advice you’ve received in your career?

    The best piece of advice I got was early on from somebody who was a good friend and kind of a quasi-mentor who shared with me his definition on the purpose of communication: It’s not all about rushing to agreement. Communicate with somebody to learn and understand where they’re coming from. Learn and understand their perspectives. That was really important to me because talking to residents, family, staff, my kids growing up– it wasn’t all about ‘Let’s reach agreement quickly,’ it was: ‘Let’s communicate so I get a better understanding of what’s important to you and where you’re coming from.’

    Sounds like he’s almost just telling you to listen more?

    Maybe it’s to be a better listener, but it also helped a lot in developing more of a collaborative decision-making style. You have different perspectives than I, but I now understand where you’re coming from, so we’ll go with your decision.

    You mentioned your mentor, can you tell me a little bit about him?

    My mentor is a really special guy and that’s my father. My father passed away over 30 years ago. To this day he still serves as my mentor. He was a very insightful guy. He had a great work ethic. He was a very caring and compassionate individual and he was respected. As a little kid I remember being proud that I could observe that people thought my dad was pretty cool. I had an older dad, so being the youngest of seven kids, going to Little League banquet and having an older dad wasn’t way cool. [But] I could see the younger dads wanted to hang out with my father because he was a respected guy. He was my mentor.

    Very cool. I don’t know if you’re a big reader, but if you would recommend one book on leadership what would it be and why?

    I’m not as big of a big reader as I should be. One I’ve read is a book called “Servant Leader” by James Autry. Jim and his wife Sally live in Des Moines. Jim was the former CEO of a company called Meredith Corporation, a big company. The focus is on workforce and the bottom line of how you achieve that balance. I love that book.

    What would you say some of your greatest strengths are as a leader?

    Not to be self serving here, but proper focus on people. That permeates throughout our company. We really focus on our people. I think I’m good about setting the tone.

    Does the tone change depending on the situation?

    Yes, it is important to continually challenge the status quo. I’m always asking about the future, what this means for the future. Again, myself and a lot of people in our company, we lead by example. Understanding the numbers, you’ve got to know the numbers. Those are some of the aspects.

    As the leader of LCS you talk about looking forward to the future. Do you ever worry that you might be looking out too forward at times?

    No, I never worry about that.

    How far do you usually like to look out?

    Our planning process is over five years, but my real focus is years one to three, and then I think it’s really important you have that longer-term focus for at least three to five years.

    We talked about strengths. What are some things you think you could do better at?

    My colleagues tell me that I get into the weeds too much, a little too much into the details. I’ll accept that.

    Do you like getting into the weeds?

    I do… I like to understand things, so I find myself being inquisitive. I want to understand, and then I realize OK, I’m going too deep.

    Senior Living’s Future Leaders

    One of the things we’re noticing is operators are finally starting to actually pay attention to people coming out of college, trying to get them in as EDs. Say I’m about to graduate college. What would your pitch be to me on why I should join this industry?

    I give this pitch all the time. The opportunity for entering senior housing or senior services is going to be richly rewarding on two fronts. If you’re a people person, there’s great opportunity to have some wonderful interaction with the residents and staff and you learn a lot. If you [are not so much a] people person, you have the opportunity to work in an industry with companies that have a lot of needs. On the people side, you can be running a community, you can be in marketing and sales, you can be in many of the aspects of the hospitality and health care industry. But there are also opportunities in market research, tax, accounting, finance, real estate, development, health care, compliance and regulatory review, so there’s a lot of variety within the space. People don’t have an appreciation for that. As demonstrated by our company and other companies, there are great opportunities for professional development and advancement.

    Do you think the industry does a good job of taking people from the front lines and giving them a path? You’re unique going from an ED to now the CEO.

    We have folks in senior-level positions at LCS that were activity directors at communities, or that started out as a marketing director. There are those instances where people have been tapped early on and grow within the industry. That said, we can do a better job. I think the good news is we’ve elevated the discussion, we’re really talking about workforce development, we’re really talking about getting together with various colleges and educating their students on the opportunities within senior housing. But we need to go even lower. As an industry, what are we doing to reach out to guidance counselors and telling high school guidance counselors that this is a potential career opportunity?

    As an industry, what are we doing to reach out to guidance counselors and telling high school guidance counselors that this is a potential career opportunity?

    I was at a community doing research on dining and I asked how they were doing with staffing. I asked who their biggest competition was and their comment was Chick-fil-A. This shocked me, but the more I bring it up to people they say it doesn’t really shock them. Do you find it interesting that we’re trying to compete with fast food for some of our frontline workers?

    Yes and no. It is an entry level position. The profiles of many people in the dining room are high school kids, but I’m always encouraged that there is a large segment of that group that’s there because they like seniors. They talk about the fact that they have grandmothers or grandfathers and that’s really way cool. At the end of the day, it is a fickle group and they may go to other companies. It’s interesting though that you mention Chick-fil-A. Chick-fil-A is another organization that has a strong culture and really strong value system so I can see how people from senior housing go there, because there are some potential parallels to how they conduct themselves and what their purpose is all about.

    What about developing the next generation of leaders? What’s LCS doing in that regard?

    I’m really proud of what we do there. That’s a big deal for us. Promoting our culture, promoting our talent, executing our vision is stuff that we talk about all the time. For our professional development program, we invest a lot of money in that and we have a pretty cool program in place where we select 20 people to participate in a professional development class. It runs over two years and we typically like to start two classes per year. So again, taking a longer-term vision, every five years 200 people have gone through this class. It’s pretty intensive. It’s all about focusing on knowing yourself, knowing your team, knowing your organization and then knowing your market.

    We have a firm belief that you cannot be a good leader until you really know a lot about yourself, so there are a lot of assessment tools that we use. Every individual in the class has a professional coach assigned to them. We’ve gotten tremendous feedback from this program, particularly from folks that have been hired into our company from other industries.

    They’ve said that they’ve been through these programs before with other companies, but this one’s really way cool. Real pleased with that, it’s going really, really well, so that’s one of the areas of how we’re working on professional development. It’s critically important when folks are given new responsibilities that you support them and help them be successful. We’re very attentive to that and promoting people, saying ‘OK, now what can we do to help them be successful?’ We spend a lot of time talking about that and supporting them with our various resources to make them successful.

    What do you think is the biggest challenge the industry faces today?

    The workforce issues are out there, but I think there are so many great things going on in the senior housing/senior services business that we’re not doing an effective job of communicating. The biggest challenge is coalescing the industry and various associations to do a stronger job of promoting what we do and the service that we provide. We’re making steps on that; ASHA is doing the ‘Where You Live Matters’ [initiative]. Another thing [we need to work on is] a unified front as it relates to federal and state advocacy. In many ways, we are serving a vulnerable population, and when things go bad, people overreact and say: ‘OK, because of this we have to do that.’ As an industry we need to make sure we get in front of these types of situations and have a unified voice, a unified front as it relates to federal advocacy issues and also state advocacy issues.

    The One Voice initiative didn’t go through though.

    It didn’t go through at that point and that time. I think we have to continue to dialogue about it, and maybe that wasn’t the right approach, but many of the aspects of One Voice that we wanted to achieve—standardization, credentialing, federal and state advocacy—can still be achieved.

    Are there ever times that you try to get something done like that, where you have to reassess how you did it and take another step?

    That’s business every day. It goes back to that collaborative decision making process. I think we’re in a re-direct stage right now, but the good news is we’ve elevated the conversation, we’ve sparked the debate, and people are talking about what do we do to move forward.

    So you seem confident that something will get done eventually with the One Voice campaign?

    I do, I do. As you can tell I’m very optimistic.

    Tell me about the future of senior living.

    I’m very optimistic about the future of senior living, and the key is moving forward. We all need to focus in our markets, know our competition and invest in our workforce. If we do that we’re all going to have a lot of fun and enjoy a lot of success.

    I’m very optimistic about the future of senior living, and the key is moving forward. We all need to focus in our markets, know our competition and invest in our workforce. If we do that we’re all going to have a lot of fun and enjoy a lot of success.

    Do you worry about the building going on right now? You guys are one of the leaders in that too.

    Do I worry about it? No. Everything goes in cycles, so you’re going to have the ebbs and flows and I’m a strong advocate that competition is a good; it brings out the best in folks. Are there markets that are overbuilt? Yes. From a macro point of view I’m not concerned that the industry is headed for some sort of cliff.