A Heartwarming Story of Hard-Nosed Business Success

I love the lemons-to-lemonade story I just learned about from Sun Health Senior Living.

The retirement community company based in Sun City, Arizona, recently turned a gloomy business scenario into a sunny one. And along the way, they reminded us all that there’s an alternative to layoffs that often works for everyone: creative strategy combined with investing in employees.

Here’s their story. Partly due to the tepid economy, Sun Health in 2010 was facing a decrease in occupancy at its three senior living communities. There also was the prospect of cuts to its 500-employee workforce, possibly in the form of layoffs.

Instead, it came up with a clever way to increase occupancy and therefore revenue. Through its Home Exchange Program, Sun Health offered to take over the responsibility of selling a senior citizen’s home so they could move into one of the company’s retirement communities. After assessing the home, the company would guarantee a floor price. If it sold at a higher price, the resident would get a piece of the upside.

Not only did Sun Health come up with novel plan, it decided to beef up its workforce. The company increased its marketing staff and also trained employees on the home exchange plan.

Guess what? It worked. Of 16 houses in the program, all but five sold within 90 days. And the company sold all the homes eventually.

Everybody won. Seniors avoided the burden of selling their homes on their own. Sun Health got those customers into its communities, where they started paying the monthly service fees that are the company’s lifeblood. Indeed, Sun Health has seen a 20 percent increase in sales since the program began in late 2010.

Employees benefited too. Sun Health avoided layoffs. In fact, it added workers and invested in training to execute the Home Exchange Program.

“We actually added staff to work us through this problem, which is almost counter intuitive to what you would think you would do,” says Sun Health spokesman Ken Reinstein.

Yes, cutting jobs during troubled times is standard operating procedure. It’s what Wall Street has often expected of publicly traded companies. Sometimes pink slips can’t be avoided.

But the data suggests the smart guys on Wall Street are penny-wise, pound-foolish to insist on deep staff cuts. Research indicates that downsizing generally does not lead to success.

There are risks to programs like the Sun Health home-buying effort. But firms generally seem to ignore the heavy risks involved in big layoffs—risks to morale, to productivity and to long-term growth.

I learned about Sun Health from their application to our 22^nd annual Optimas Awards program. The winners will be announced in the November edition of Workforce Management. Sun Health was not among the finalists.

But it shows how to do business in an all-win way, even in troubled times. Good companies like Sun Health tap their smarts and show faith in their workforce to turn the sour into the sweet.

Ed Frauenheim is senior editor at Workforce. Comment below or email efrauenheim@workforce.com.