For home care leaders, determining the wages of salespeople, caregivers and other contributors is a major undertaking. It is part art, part science, and hard to perfect.
At the Home Care Association of America’s (HCAOA) annual conference last month, providers offered a peak behind the curtain on how those determinations take place.
Hillendale Home Care CEO Jesse Walters, A Long Term Companion (ALTC) Vice President Brett Ringold and Michelle Cone – SVP of training and brand programs at HomeWell Care Services – all offered up different perspectives on how they approach compensation.
“What we can do to try to attract the workforce to the home care industry is something that we all carry on our shoulders, and it’s important for us to come together in industry settings such as this and share with one another,” Cone said during a panel discussion. “What we normally see is very ill-defined processes, right? … And we want to be process-driven.”
Based in Burkburnett, Texas, HomeWell is a home care franchise with over 80 locations across the U.S.
HomeWell reevaluates caregiver compensation two or three times per year, according to Cone. Ringold said ALTC reviews compensation “at least annually,” but that that process changes based on circumstance. For instance, during COVID-19, those reviews came quarterly in some cases.
Walters said once per year is the “bare minimum,” too, but that “triggering events” can always change that.
“We look at the compensation strategy as a holistic strategy,” Ringold said. “Yes, what you pay per hour, you have to make sure that you’re competitive. But, for us, it’s total compensation, it’s a robust benefits package, affordable and comprehensive health insurance, a great menu of supplemental insurances, very advanced PTO and sick time paid time off. We also use overtime as part of our compensation strategy as well, because our caregivers love to work a lot of overtime.”
ALTC is a home care provider based in Jenkintown, Pennsylvania.
Ringold added that him and his team vigorously look over home care industry reports to make sure their offers are in line – or above – industry standards.
But part of the process is also taking into account what’s going on at the local market level.
“There’s such an opportunity for us to improve our processes and our touch points, and it’s not always pay related, but you do absolutely need to make sure that you’re not underpaying based on your local market,” Cone said. “That’s the first thing we need to solve for.”
Walters also added that a greater understanding of the local market can help in negotiating with applicants. He mentioned that an applicant may suggest they’re getting paid $30 or more per hour at a nearby agency, but his team’s market research knows that’s likely not true.
“If I have a new staffing manager or new recruiter coming on board with the team, part of their training and development is understanding the market,” Walters said.
Based in Walnut Creek, California, Hillendale provides home care services in Northern California.
In regards to the aforementioned “triggering events” that may cause Hillendale to look at compensation more than once in a year, those are often numbers based.
For instance, if Hillendale is not hiring 25 caregivers in a month, Walters knows him and his team should take a closer look at what’s happening.
“That’s usually it, I’m looking for signs that something’s slowing down, or something’s changing,” he said.
And, although the local market may change from month to month or year to year, Cone emphasized that strategies should be set with a long-term view in mind.
“Design your comp structure with the end in mind,” she said. “What is going to lead to the desired goal for your organization? And I think, again, pay is going to be incredibly important. I think we have to look outside of the obvious, though, which is just, ‘If I pay you more, you’re going to stay with me.’”
Caregiver compensation is generally directly tied to billing rates in home care. The client is charged about double what it takes to pay the caregiver per hour.
But as both have risen over the past few years, home care provider leaders have started to consider how that business model could be altered in the future.
“If I have like 60, 70, 80 core clients that want to age in place for a long time, I’m looking at those clients, and I’m looking at those caregivers, and the average length of stay,” Walters said. “Historically, for us, it’s been like six to eight months. And it’s 50% margin. But what if in the future, it’s 18 months, 24 months at 40% margins? If I’m able to build alignment on what I want and what the caregiver wants, can I pay those people much better to maintain clients on a long-term basis? Does that change the unit economics in our business?”
Those are the sorts of questions providers are going to have to begin asking themselves. Home care isn’t getting cheaper, and hiring caregivers isn’t getting easier.
The sales side
Some of the questions Walters asks himself as he’s going through his compensation strategy are: What do I want at my most selfish? What does the salesperson want at their most selfish? What does the caregiver want at their most selfish?
“I try to find where people are at their most selfish,” he said. “If I can get them to tell me where they are at their most selfish and that aligns or intersects with where I am at my most selfish, then I hire that person.”
That strategy is particularly applicable for salespeople. They may want to be in home care, but caregivers are less likely than salespeople to be motivated strictly by compensation.
Leaders taking the time to talk to their workers about what they want, though, is generally always productive.
“As somebody who has shed plenty of tears in this business, I want my team to cry in the shower once per quarter,” Walters said. “I want them to show back up on Monday and figure out how they can do better.”
There are, indeed, ebbs and flows in the home care business.
That’s true for compensation and revenue, too. One thing that Ringold cautioned against was being unthoughtful about handing out raises.
“If you’re not giving out performance-based [bonuses or raises], I highly recommend you put together a strategy,” he said. “But there’s only one direction, it’s only going to go up. You can never have pay go up and then decide next quarter to take it back down. That’s never going to work. So, you have to be really thoughtful about how you’re going to approach performance-based pay.”
Companies featured in this article:
A Long Term Companion, Hillendale Home Care, HomeWell Care Services
