Marvin Mashner grows ACTS Retirement-Life Communities through the economic recession Featured

8:00pm EDT August 26, 2010

Marvin Mashner has had to deal with the same problems that a lot of businesses have faced over the past few years. ACTS Retirement-Life Communities Inc. faced its share of cutbacks and staff reductions as the economy has faltered.

“In our case, it has been dealing with the slowdown of the real estate market and the hit that many people took at the end of ’08 in the investment market,” says Mashner, the company’s president and CEO. “It affected our business, because when seniors move in, many of them use the proceeds from the sale of their residence as a basis for meeting the initial entry fees. So we have seen the aftermath of the recession.”

Mashner and his leadership team have met the challenge by streamlining the organization to fall in line with revenue volume and seeking out growth opportunities that fall in line with the mission and vision of ACTS, which generated $301 million in 2009 operating revenue.

“Our staff has done a great job of recognizing that they will have these issues, then coming up with a financial action plan, resulting in a revised budget and an improvement in overall results,” Mashner says. “Simply put, we’ve scaled down the operation to what the current volumes are.”

Positioning ACTS for growth in a down economy has taken vigilant communication from Mashner and his management team, a willingness to adhere to the company’s governing principles and the ability to make the most of the attractive growth opportunities that the company’s leaders find along the way.

“A lot of it is to just be prudent and appropriately use resources,” he says. “Recognize the fact that other resources are limited and also determine what actions should be taken using available reserves. The whole management team needs to be involved. It can’t just be one person. Everyone has to understand the plan and be able to convey it.”

Shore up your communication

Paring costs to fall in line with revenue can often mean cutting jobs, whether through buyouts, attrition or, least desirably, layoffs. ACTS has been no exception. In communities with dropping census numbers, management has needed to cut office staff, housekeeping, culinary staff and even some executive positions. As Mashner has led his company through cutbacks, the lessons of good communication have been reinforced to him.

In short, you need to communicate the reasoning behind your decision quickly, and then continue communicating repeatedly. You won’t be able to change the reality that some people are losing their jobs, but you will at least be able to keep your staff informed.

Mashner says no communication can have more damaging effects than bad news. Bad news can hurt morale in the short term, but keeping employees in the dark can hurt your credibility as a leader in the long run and, in turn, hurt employees’ confidence in the organization.

“It is important to develop an appropriate means of communicating with your staff,” Mashner says. “Tell them why the action was necessary and whether you anticipate any other types of similar action will need to be taken.

“That is what we did. We put together a letter explaining what was going on and sent a copy to our residents and a copy to our staff, so that everyone would understand what the effect is. As a result, when you tell them what it is, you take away the uncertainty about whether another shoe is going to drop. What you don’t want is for people to start believing, ‘I can’t do this because I’m going to lose my job.’ You want them to know that you looked at the volumes, looked at what was really needed, and that’s how you make the changes.”

You might be concerned about the negative reaction you will get when broadcasting negative news, but if you can phrase it in a sympathetic fashion, disclose as much information as you can, and show your employees that you are working to make the company healthier both financially and culturally, you stand a much better chance of obtaining buy-in from your employees and getting them to see the situation from management’s point of view.

“Identify the economic circumstances you are facing and, as a result, the actions you’ve needed to take to keep operating effectively, many of which we don’t like and regret having to do, but you emphasize that you have to maintain the business’ status and stability and ability to meet obligations both now and in the future,” he says. “With that in mind, on the letters we sent out from the corporate functions, our key managers would add further information and provide explanations.”

Take steps toward growth

Even when your company isn’t necessarily in growth mode, you can still take steps to position the business for growth so that when the right opportunity comes along, you will be able to capitalize on it.

Maintaining financial flexibility and employee confidence was integral to ACTS’ recent expansion with Peninsula United Methodist Homes, in which the company formed an affiliation with another retirement community management company, bringing four new communities under the ACTS umbrella and allowing ACTS to expand into Delaware and Maryland in the process.

“It started out with this other organization that was smaller and had a problem and came to us asking if we’d be interested in helping them. As we looked into the issue of developing a new community, that specific issue didn’t attract us,” Mashner says. “We didn’t think it was workable. But as the talks [with Peninsula] progressed, we started to talk about affiliating with the entire group.

“That led to significant discussions, and as a result, these four communities came into our family. So our overall size grew, and we achieved additional volume efficiencies that benefitted our ability to acquire supplies for ourselves and the organization that we were affiliating with.”

To position yourself to make the most of what growth opportunities do come your way in a slow economy, you need to have a thorough understanding of what your business does and what you want your business to be moving forward.

At ACTS, Mashner and his leadership team sat down and defined how they wanted the business to grow and, by extension, what made for a good growth opportunity.

“You need to understand your organization and what the philosophy is,” Mashner says. “We were financially sound, with revenues over $300 million and assets now in excess of $1 billion. But we said that if we had an affiliation opportunity, we’d formalize a set of criteria that the opportunity would need to provide to us if we were going to move on it. For instance, it had to be located in a contiguous geographic area to our existing footprint. Most importantly, it had to be a community with a similar mission and purpose to ours.

“That is how you find opportunities that are going to strengthen the organization. You want to make sure that whatever action you take will benefit not just your organization but the new affiliate.”

To know what you are as an organization, you need to build a management team that has a great deal of experience with your organization — a team that can identify what it is you do well as a business and identify growth opportunities that can help you leverage and strengthen that position.

Once you have formed the right management team, you need to have an ongoing dialogue over how to position the company for growth. You need to come to a consensus on what criteria are the most important on which to base decisions and perform due diligence as a team when an opportunity presents itself.

“Knowing the philosophy of the organization is the first step, and that comes back to having a management team that is familiar with the organization, who have been with the organization for a period of time, who share and endorse the mission,” Mashner says. “Then you talk about what opportunities are presented and the criteria you want to emphasize. That is where you look at anything that is presented and whether it fits with your overall corporate mission. Does it fit geographically? Can you define what the effect will be on your financial operations? Ultimately, you need to be able to evaluate any growth opportunity in that way.”

Maintain support for growth

If you find a growth opportunity that makes sense for your company in spite of the lagging economy and you are able to capitalize on it, you need to make sure the seeds you planted grow. You need to maintain financial backing for the opportunity and continue to support the people attached to the project, even after the initial flurry of expansion activity dies down.

If you’re merging with or acquiring a company, watering the seeds means bringing the people from the acquired company on board as quickly as possible and giving them the tools they need to succeed in their new environment.

“We do that in a number of ways,” Mashner says. “First, even before the formal affiliation, we provide them with opportunities to come visit our other operations and provide them opportunities to come talk to our peers within our overall structure. Shortly thereafter, when the affiliation becomes official, we have a scheduled management and leadership conference to go over key operating issues. We make sure the management of the new operations is a part of that. So they participate in it, see our overall senior management philosophy, meet more peers in the organization, and that is one way it is very positive.

“Within the staff level, we’ll have an orientation with our policies and procedures. We have a corporate university and training programs ranging from videos to on-site presentations to programs offered in conjunction with other institutions. It’s all part of setting up the system to show that you value your employees.”

You also need to identify the people in the organization who can help promote your mission. If you can find your example setters and make them visible to everyone, you can more effectively keep your mission and growth strategy in front of everyone.

Recruiting goes hand in hand with finding those types of people in your ranks. When you are looking for new talent, you need to make sure the job candidates you are after embrace your vision and strategy.

“It goes back to having a clear mission and vision, so that when you recruit people, you can tell them, ‘This is our mission and purpose as we see it,’ Mashner says. “And you have to find people who can endorse that and build on it. And as they’re part of the organization, you want to continually reiterate that. But the key issue is finding people who endorse that mission and purpose. If you’re a not-for-profit, faith-based organization, people should understand what your viewpoint is. If people don’t endorse your mission, it’s not going to really be effective to have them in the organization, because they’ll be pulling in another direction.”

How to reach: ACTS Retirement-Life Communities Inc., (215) 661-8330 or http://www.actsretirement.org/