Meet Randy Richardson, president of Chicago-based Vi. The company, formerly known as Classic Residence by Hyatt, operates 10 continuing care retirement communities across the country. Richardson, who was recruited to Vi from outside the senior living industry, led the company through its growth and rebranding to Vi, post housing-crisis. Today, the company is highly focused on employee engagement, reducing turnover and providing a high-quality resident experience in desirable markets. We sat down with Randy to learn about what it was like moving away from a big-name brand, why he got into senior living in the first place and how he has sought advice from outside senior living to help improve business operations.
Spotlight on Technology
Do you think the industry has done a good job investing in technology?
No. Short answer. I did a presentation at a senior technology conference recently. I asked the 80 operators there: How many of you have an electronic medical record-keeping system? About 20% raised their hands. I would suggest that before you invest in any of these other toys, you better have the fundamental systems in place, like an electronic medical record-keeping system. You need it today. [Another executive made a recent comment at a conference]: You cannot operate in today’s world without these fundamental systems. Med management and record keeping are primary tech tools that you need to run your business effectively. The industry hasn’t done a good job of getting the basics in place.
Do you think we’re past the “everybody needs Wi-Fi” discussion?
Yes, it’s mandatory.
Even recently, commercial-grade Wi-Fi was not standard in some communities.
Exactly. Today’s residents are much more tech savvy than people give them credit for. They want to communicate with their families. They want to see their grandchildren and great-grandchildren. They’re using devices that we use every day to make that happen. That’s where you can put technology right away to improve your customer experience in the community.
Tell me about how you got into senior living.
I had been working with a company called General Growth Properties for about 15 years. The founder of our company, Classic Residence by Hyatt, was Penny Pritzker, daughter of one of the founders of the Hyatt hotel chain. She started the company in 1987 and by 2000, the company had grown enough that she decided it was time to hire somebody to lead and pay day-to-day attention to the business. A recruiter contacted me, and I was somewhat surprised because didn’t know anything about the senior living business. The recruiter convinced me to take the interview.
I told Penny at the time, “I’m very flattered that you’d like to talk to me, but I really don’t know anything about this business, so I’m a little curious why you decided to bring me in.’ She said, ‘I don’t really care if you know anything about the business. What I need is an enterprise manager and somebody who knows development. We’re growing the company and we’re building new communities. That’s a big part of the business. We’ll teach you the operating side of the business, and if you’re smart enough you’ll learn.’ That was a little bit of a gauntlet thrown on the table. I became very, very intrigued. We hit it off famously together.
Why were you intrigued?
I had been in commercial real estate for so many years and this seemed like a much more socially significant kind of business. And who needs another mall? I wasn’t looking for a career change, but it seemed like a great opportunity. As I learned more about the business I became more and more excited about it.
Did Penny Pritzker have to sell you on it?
A little bit. She also introduced me to Kevin Poorman, who was the vice chairman of the company, so I got a chance to know him, and a little background on the company.
What’d you think the first time you saw the communities?
It’s not what I expected. They were nice. Penny’s vision was to bring hospitality into senior living. When I say not expected, what I saw from my own family experience was a more institutional kind [of setting]. Of course these communities were much nicer. I also met with the executive staff so I could get a sense of who they were and make my own assessment of their skill sets. That gave me more information. She made an offer and I got on board.
It was a little bit like drinking from a fire hose when I started, but we visited every community together and I had a 90-day plan. I talked to residents and I talked to employees, whether it be laundry, kitchen staff, or executive management. I learned some really important things through those visits. You learn about the culture of the company. I had two questions that I’d ask everyone that I could on the employee side. One was: Why did you come to work for this company? There was an extreme sense of pride across the board about coming to work for this company, and a lot of reputation and value in the Hyatt name. The other question was: What do you like most about your job? Again, almost unanimously across the board, it was: “I feel like I’m making a difference in somebody’s life.” You’ve got to bottle that. It just underscores how personal this business really is. It’s really about delivering service and care. You can build really nice communities, you can build great places, but at the end of the day, what you’re really selling is the service and care you’re providing your residents. A lot of that is delivered through employees. I consider myself a very strong people person and a team builder, so I liked what I saw in terms of raw material to be able to come into a company and have that kind of asset there, and be able to learn and start incorporating some programs to really grow and become better. My motto was I don’t care about being the biggest, I just want to be the best. I want to be the best operator in the business and that’s what we focus on.
I don’t care about being the biggest, I just want to be the best. I want to be the best operator in the business and that’s what we focus on.
When did you guys abandon the Hyatt name?
It was 2009.
When did you take over?
2000. Early on, Penny and I talked about rebranding the company. Why? A couple of reasons. Classic Residence by Hyatt, Courtyard by Marriott — sounds like a hotel. In fact, we had customers calling our communities wanting to book a room. I would tell my staff, go ahead and book it but tell them they’re going to be here for awhile! Then in some markets where we were building a brand new, high-end CCRC, and we had an older existing rental community, people would go visit the [older] community and they’d see it wasn’t the quality level they were expecting — so there was a disconnect there. It became clear to us that we needed to rebrand our flagship product at the very least. We worked on that several times, but when Hyatt decided to go public, that accelerated the need then to rebrand the organization.
But without the Hyatt name, were you losing that brand recognition?
That’s one of the big concerns we had. The rebranding process was very interesting.
I started to do some research, and started to talk to people in the academic community who had done white papers and studies on companies that had rebranded or changed their names. I actually got some really good advice. Then somebody clued me to Sergio Zyman—he was the former chief marketing officer for Coke.
So you went to a big hitter?
He was the real deal. So I called him, and he answered the phone. I figured I had a 45-second elevator speech to really grab his attention. I explained who we were, what we wanted to do, and he listened. I could tell he was interested because he started to ask more and more questions. He was intrigued.
He said “Look, this sounds fascinating. I would love to work with you, but I can’t. I just sold my consulting firm and I have a two year block out, I can’t do anything for anybody. But if you fly me to Chicago first class and you put me up in the Park Hyatt, I’ll spend an afternoon with you for free.” That’s how interested he was.
We learned some really important things throughout that discussion. The most important thing he underscored was: “I guarantee you that you don’t know your customer as well as you think you do. You need to do research on your customer in order to discover more. You’ll validate things that you already know, but you’re going to discover some things that are really important and that’s going to inform your discussion of how you reposition the company with a new brand.”
So we took his advice. We put together a team. We did the research. One of the things we were most concerned about was losing the Hyatt name. But only 6% of our customers said they moved in because of the Hyatt name. We thought it would probably be 80%. What we learned was that the reputation of our operations was much more important, and that’s locationally driven.
If our customers are satisfied, they refer friends and family. About 35% to 40% of our business, depending on the market, comes from our residents. If we keep our residents happy, then we’ll get referrals and that will help drive our business. How do you keep your residents happy? You have to have happy employees. The whole focus on our business for excellence in operations was on the people who work for the company, and creating an engaged and empowered workforce.
When we started to go through the brand change process, the larger employee base didn’t really have much knowledge of it. We didn’t keep it top-secret or anything, but we didn’t broadcast it. We recognized that when we were ready, we were going to need to educate them for the obvious reason that they were going to have to interface with our residents but we also wanted to assure them about all of the things we’re strong at, and the things that you love about this company aren’t going to change — all we’re doing is positioning for the future, and it’s a way to help us cut a path for a better position, a longer-term position in this industry. So that’s the process. You’re going to ask me how we came up with the name.
It’s only taken me two or three years to finally figure out how to say it.
More from the Leadership Series
There was some confusion. Sergio said: “Don’t worry about the name. Just put it out of your mind. Get through all of this other information that you need to help you think about what your company’s position is.” What we learned, the reason people move into our communities and the reason they refer them to other people, is that we represent life at that stage of life. Most senior living companies have ‘retirement’ in their name, and a lot have “senior” in their names. In our research, we asked what do you think of the word “senior”? What do you think of the word “retirement”? They don’t like it. They really don’t. In fact, if you look up the word “retirement” in the dictionary, one of the first definitions is “to go away.”
It’s a sad thought. We’re not about “going away,” we’re about living life to the fullest at this stage of your life. If and when you need care, we’ve got that, too. You’re moving into our community for the rest of your life.So our core values: Integrity, because we’re entrusted to take care of our customers and their family. Compassion: “I feel like I’m doing something to improve someone’s life or make somebody’s life better every day.” You’ve got to love people if you want to be in this business. If you’re not a people person, senior living is not the place to be. Getting old is not always easy every day. People may wake up and not feel good one day, and you have to be patient and compassionate with your customer. They appreciate that they’re treated with respect and dignity. And finally, excellence, getting back to why people came to work for the company in the first place. It was a way to capture and kind of retain what the employees told us was important to them. It’s really an excellent company — you’re working with one of the best. That’s how we began to communicate with everybody about who we were.
Then when it came to the naming process, there’s 26 letters in the alphabet. We went through hundreds of names. All the good ones are taken. We fell upon one word that we really, really liked. The word was the latin word for life, which is “vitae.” Vitae was taken in a number of different ways, cosmetics to whatever. So we said, let’s just say Vi. Then a big argument should it be “V,” or “Vi,” or “Vee?” People wanted to say “Vy.” I had finally gotten comfortable with the notion that I don’t really care if somebody pronounces it wrong. Why? I went to one of my communities and one of my sales counselors was in the closing room and saw me through the glass and she invited me in. And I went in and met with this couple who were ready to sign a contract and move in and talk with them about their decision and so forth. They said, “Tell us about the name. How did you come up with Vi?” I told them, it’s about living life to the fullest at this stage of your life, and we’re going to help you do that. It’s about life. Not going away. Not going out to pasture. It’s about life. Oh! I get that. Our customers coming in after the name change, they got it. They actually loved it. It allows us to tell our story. Plus, think about it. Classic Residence by Hyatt, a mouthful. Vi? One syllable.
Let’s talk a little bit about technology and trends. We’re starting to see data and signs of real occupancy pressures. How do you think operators can disrupt that?
I think it depends on what sector of the industry you’re talking about. In the CCRC business, we follow similar patterns as the rest of the business. Independent living rental, assisted living, memory care. But our turnover is much less — it’s about 10% per year, whereas in a rental community, it might be 25%. In an assisted living community it could be upwards of 50% per year. For our business specifically, talking about Vi, nobody’s going to build another community right across the street from us. Once you’re established in a marketplace, and you’re doing a really good job, you have a bit of a franchise, and it becomes a barrier to entry for other competition. The pressures that we, over the years, have felt on occupancy, are largely related to the housing market because most people who move into our communities want to sell their home to finance the entry fee.
In this market, it’s different from the pressures the broader industry is feeling, having to do with market saturation, price competition…
The recession was rough for CCRCs.
In the recession we got hit hard, and hit first because we’re a more discretionary product versus a need-driven product.
With CCRCs like The Admiral and The Clare, in Chicago, which faced strong pressures during the recession, that must have been like ground zero. What was it like going through that?
Our community in Glenview, which is just north of Chicago, weathered the recession pretty well. We didn’t take nearly the occupancy hit that some of our other markets did. Largely because the housing market never got overheated, so it didn’t correct as much. It did correct, but we were able to come to the price point in the market and maintain a pretty strong occupancy position. The Clare is a very different situation. It was the first high rise community built in urban Chicago. We actually looked at that site and evaluated it and began to ask questions like: Where is the customer really going to come from? First blush, you think they’re probably going to be coming from the pricey, high-rise condos that are in the downtown area or Gold Coast and so forth. We decided to do some research, and when we interviewed potential customers they said: You know, this really sounds cool, but why do I need to move? I have everything, I can have dry cleaning delivered to my door, I can have housekeeping. I have all kinds of food options, and care, Northwestern [Memorial Hospital] is right across the street. Why do I need to move to your place to do that? Part of it is understanding the product and what we really do, but it began to underscore that we probably aren’t going to pull as many people out of the condos as we thought. We determined through the research that we would lose 30% of the market coming from street level homes because they just didn’t want to move to a high rise. They’d rather move to Glenview.
Vi looked at it?
We were very serious about it. Now The Clare got built, and they sold it very well but unfortunately they opened in 2008, right in the teeth of the financial meltdown. They experienced a lot of the same kind of pressures that we did in other markets. We had two communities open in 2008 that were 85% sold. We opened the doors and we only moved in 15% of those deposits. It was tough. The Clare had a very similar experience. They had some of the same kind of coincidental economic market pressure when they opened the doors of that community. It was a little bit different game. It was a not-for-profit, and they had tax exempt financing; they traded the bonds down and then eventually went through bankruptcy and the community was sold for a quarter on the dollar.
CCRCs seem to be getting hot again.
Ours are doing extremely well. Portfolio-wide, we are over 91% occupied today. Six of our communities are over 95% occupied.
How did Vi weather the recession?
We tracked occupancy through the whole recession period. If you look at NIC’s data and map it against ours, we had a spread of probably about 100-150 basis points positive to NIC, to the industry, in CCRCs. Except that the very bottom where we were exactly the same, at 87%.
We tracked all of this information and looked at what we needed to do we to manage our way through that crisis. We reduced prices, we put concessions in place, we met the market. So we were selling for less, but we were still refunding at high contract rates because a lot of our in-place contracts are 90% refund contracts. We introduced a 0% refund contract, we introduced a 50% refund contract, and we reduced prices. We were taking in less cash, but we still made money. We made all of our repayment obligations for the higher-priced contracts through that whole period. That was our stress test. I feel very bullish about this business as a result. I don’t lose sleep about any of that stuff anymore.
Are you using the technology to help in terms of business processes?
Absolutely. I’ll give you two examples. One is recruiting. We have an entire website devoted to job opportunities and careers at Vi. It’s not like a job-posting kind of thing; it’s much more rich than that. On our website, there’s a tab that talks about the culture of the company, what we’re about. It helps people understand who we really are and what kind of job environment they can expect at Vi. The response has been overwhelming. We find now that we’ve got a lot more applications coming in. On the other side of that, we’ve had to beef up how we screen those applications. It’s been a very important tool for us in recruiting. Finding good people and keeping good people is a big deal in the industry right now.
We’ve also invested a lot of money to build a proprietary system to integrate with our customer relationship management system, so that we can track all contact we have had with a prospect through the selling process. It takes several visits for someone to make a decision to move in with us. There’s a little bit of an education process. In the past, direct mail was one primary medium we were using. Or we’d have FSIs (free-standing inserts in newspapers and magazines) and things like that. We’ve enriched our website significantly so that whole experience is much more informative to people, and that’s helped a lot in generating leads for our business.
What about from the care standpoint? What technology are you guys using?
We have electronic medical record keeping, electronic med management, and they’ve been integral to help develop and improve our care experience. All of our care plans are done electronically; there’s very little handwriting. We have devices in the care center that caregivers have available to them. They are moveable, use Wi-Fi and they are HIPAA-compliant. If you’ve had a good hospital experience recently, a lot of them have that same kind of equipment where the caregiver is right there, enters the information while they’re doing the work in real time. The quality of the care improves because you’re not missing things, you’re not having to record things more than once or translate them into another environment.
As an executive, does all this data help you do your job better?
It gives me management tools. We’ve built a business intelligence platform. One of the frustrations in this industry is there is no one tech solution to run your business. We use JD Edwards for our financial enterprise system, and we have other business information tools that we use. You need to extract information out of those and be able to display it and present it in a way that’s intelligent, so you can have management tools to help you run your business better.
What’s on your executive dashboard?
One example is our sales and occupancy report. Every morning a report is generated, seven days a week, 365 days a year. It shows me, by community, my census in the independent living, assisted living, memory care and skilled.
Do you break it out on the aggregate?
We look at it separately and summarized at the community level. I also have the ability to see how many move-outs we have scheduled, how many move-ins we have scheduled, how many sales by community.
We’ve been talking about data, and one of the things we’re seeing is this personalized approach to each resident. Do you see that as the future of senior living?
In this industry, you have turnover rates that are probably in the 45%-to-50% annual range. Our turnover rate this last year was 23%. We’ve been in the 20% range for several years now. Of that turnover, half of it is involuntary — other words, those are people who should go work somewhere else. So the other half, the voluntary turnover, is really at 10% or 11%, so it’s very low. How do we do it? We spend a lot of time and money on training and developing for our employees. In fact, we use technology to distribute a lot of those training programs. We have found over the years that that makes the environment sticky for our employees. They feel like they have more tools to do their jobs, and as a result, they’re more engaged, they’re more empowered, and they’re doing a better job.
Our residents feel that, too. If your employees are engaged and empowered to do their jobs, your residents are going to be more satisfied. Our employees become like extended family members to our residents. Our residents can come in and sit in the dining room, and our staff knows what kind of cocktail they want, they know how they want their steak prepared.
If your employees are engaged and empowered to do their jobs, your residents are going to be more satisfied.
In the care environment, it’s highly personal as well. One of the challenges with memory care today is there are a lot of people who approach it with a one-size-fits-all approach. It’s not that way. Dementia-related disease manifests itself in individuals in many different ways. Everybody talks about Alzheimer’s, and Alzheimer’s only makes up 25% of dementia-related diseases. Diagnosing the individual’s condition when they come into that environment helps you develop a much more personalized care plan, and a better life experience for them in that environment.
What’s your definition of leadership?
First of all you need to have a vision, and you don’t create the vision in a vacuum. It needs to be a collaborative approach. A good leader is able to communicate effectively to articulate and reinforce not only the vision, but how it works and how it feels in a way that people can understand and consume. A good leader also should be highly emotionally intelligent. You need to be able to not only communicate, but allow people to know how you feel and how invested you are versus telling them and trying to let them figure it out. Again, it’s a very personal business and I think you need a more personal approach from a leadership standpoint, like the people who are actually delivering the service every day. You have to listen and create an environment that’s okay for people to say “This is wrong” or “Something is wrong.” The day that people stop bringing their problems to you is the day you stop being a leader (Colin Powell).
During your senior housing career what was the biggest challenge you faced?
The recession was big. It was a confluence of events that significantly impacted our business. We became experts in the housing market, let me put it that way. We started tracking housing prices, and days on market, and volume by market in each of our markets very, very closely, because it informed us how to meet the pricing changes that we needed to make in each market.
There was a lot of points where we were in uncharted waters. Nobody in our generation had ever seen anything like this recession.
What’s the biggest risk you’ve taken in your career?
It was a risk to make this job change.
This job change was a great opportunity to be able to lead an enterprise and work with a first-class kind of organization. But there was a pretty steep learning curve. I recognized that going in, and I think I prepared myself well enough to minimize that risk.
What’s the best piece of advice you’ve gotten in your career?
Especially early in your career, when you’re developing your skills, talents and beginning to understand them, you’ve got to be self-aware. Know what your strengths are and know what your weaknesses are, because then you can work on those weaknesses and you can leverage off your strengths.
What’s your biggest weakness?
I have a pretty strong sense of opinion when I see an issue, and I’m quick to come to a conclusion about it and I’m usually pretty right but I came to realize that when you have an organization that has to tackle a big problem, you have to bring other people into the process and allow them to be part of it so that they can be part of the solution.
Who would you consider to be a mentor?
Certainly my father was a big influence on me. He was a real professional business person, and he lived and breathed it. Going back to when I was a kid, he was constantly reciting quotes from Dale Carnegie. Some of it eventually sticks and you listen to it and he turns out to be a pretty smart guy.
What was your favorite thing he recited?
He was in the insurance business, and selling was a big part of what he did. It goes something like this: 75% of sales people quit after their first call, then 85% quit after the second call. Then you fast forward and 95% of the business is done by people who made five calls or more. In other words, it’s about persistence and creating opportunities.
Another one is about listening: 70% of communication is nonverbal; 23% is the tone of your voice; and 7% is the actual words.
What’s the biggest challenge the industry faces?
Workforce development. I see it as an emerging and continuing issue for our industry.
How have you done so well with reducing turnover? Are you paying more competitively?
It’s a combination of things. Pay is not the reason people leave, because usually if they hire on with you, you’re offering them a wage or salary that’s acceptable enough for them to come to work for you. The number-one reason they leave is because they don’t get along with their manager or they don’t have respect for their manager or they don’t feel respected. It’s the environment. So we put a lot of training and development into our managers and leaders.
Employee satisfaction is very important to us. We survey our entire employee group every other year, as we do our residents, and we learn a lot from those surveys that helps us do a better job.
Benefits are very important, and by industry standards we have an upper-tier kind of program, but a lot of service workers are working a couple jobs. If you have a decent benefits program for their family, you become the primary job and that helps you become sticky.
Finally, communication. Every employee that comes to work for our company will receive orientation, and the first person they’re going to hear from is me. We do it through technology, with videos, but they get to hear firsthand what I think is important. I’m reinforcing their decision to come and work for our company, and tell them what it’s going to be like, and if they don’t feel that experience then we know. We’re setting the expectation that they should have when they come into the organization. I’ve found that that works very well.
You make it seem relatively simple.
It’s straightforward but it’s hard to do.