Spreading a Culture Sunrise likes to develop its own communities and incorporate its senior-friendly interior trademarks, such as soft residential lighting and short corridors with seating and chair rails along the way. And while Sunrise communities are distinct, its staff is what has ultimately set it apart, according to Sunrise executives. The staff is especially important in the care-intensive senior living business, where employees interact with frail and sometimes sick seniors. The company also is heavily regulated by states, which monitor assisted living facilities, and local jurisdictions, which have health and sanitary rules governing the kitchens and food preparation.
Sunrise’s key to providing the necessary care for seniors and staying within regulations has been incorporating a culture where the resident is in the center, exactly as it was when the company was a two-person operation 22 years ago. But as the company expands, this is a continuing battle. As it hires more employees and brings them on through acquisition, it wants them to understand the importance of care giving and making resident satisfaction the center of all of its efforts. “The one thing that keeps me awake at night is losing our culture,” Paul says. “Terry and I visit all of our communities and make sure the values we started with are institutionalized deep into the company and that as we grow, we don’t lose them.”
But, regardless of how many visits the Klaassens make, Sunrise must hire service-oriented employees for its culture to spread. “The key to our long-term success is hiring very passionate and qualified individuals who want to do work that matters and work with seniors,” says Tiffany Tomasso, president of the management services division for Sunrise. “This is a 24-hour, 7-day-per-week job. If you aren’t inspired to do this work, it is probably the wrong thing for you.”
This commitment extends up the chain the top 12 members of Sunrise’s management team, which have an average eight and one-half years of service with the company. The Klaassens and a number of outsiders think the senior team has been the key to the company’s success since it went public in 1996. “They have high quality management in an industry that has some pitfalls,” says Garrett Nagle, president of Garrett Nagle and Co., an investment firm in Boston that lists Sunrise among its largest holdings. “The management has a passion for the business and the executive staff is first-rate and very stock conscious.”
In the mid-1990s, the Sunrise executive staff faced a major decision about what course the company would take. It had 30 successful senior living communities but wanted to expand further. With each new development costing about $10 million to build, the company needed money – and lots of it – to fuel further growth. Senior living companies were getting into the public markets at the time, but the Klaassens and their senior team were apprehensive, fearing that their mission would become diluted if Sunrise sold its stock. After first deciding to use private money, the management team eventually changed its mind.
In June 1996, Sunrise made its initial $150 million public offering. The company went in with a conservative strategy that focused on growing its core areas and not making promises to investors that it could not fulfill. While other assisted living companies floundered as they made promises they could not fulfill, Sunrise flourished, using the money from that offering and another $150 million offering to fuel its development.
How did these companies fail in light of Sunrise’s success? There were two major problems: they were primarily real estate companies that knew little about how to run senior housing, and they had no existing facilities to generate revenue, forcing them to capitalize their start-up costs and carry a heavier debt burden, according to Nagle.
