2019 Child Care Sector Risks, Priorities & Outlook

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Episode 159 – How is your child care business doing relative to your peers? This year, HiMama partnered with Kris Murray from The Child Care Business Success Company on the report. This is the fourth consecutive year that labor is listed as the biggest organizational risk in the industry. We discuss the impact of leadership, culture, and how to have and live your core values.

Resources: 

• 2019 Child Care Benchmark Report
• The Child Care Success Company
• Child Care Rockstar Radio
• Child Care Success Summit 2019

Episode Transcript

Kris MURRAY:

Showing you care, listening, checking in, celebrating wins, doing core value shout-outs – those things are really going to drive your culture forward like nothing else.

Ron SPREEUWENBERG: 

Kris, welcome to the Preschool Podcast!

MURRAY:

Ron, I’m thrilled to be here. How are you?

SPREEUWENBERG: 

I’m doing super well and I’m super excited to have you on the show again. It’s been so long since we last had you and we talked a little bit about digital marketing and how childcare programs can use digital marketing to improve enrollment. Feels like so, so long ago. And so we’re excited to have you back this time to talk about the [2019 Child Care] Benchmark Survey that we’re partnering on with Kris Murray, who’s the president and founder of the Child Care Success Company.

Kris, thank you so much for joining us today. We have a lot to talk about. I know HiMama and myself and the whole team here, we’re very excited to be partnering with a Child Care Success Company on this report. And this is the fourth year that we’re doing their report and it just keeps getting better and better every year and certainly this partnership is making it that much stronger.

MURRAY:

Absolutely, we are excited to be part of this. My team and I are thrilled [and] can’t wait to get it in the hands of everybody in the industry. And Ron, you and I worked hard and with our teams looking at the survey questions and making sure that they were representative of where we wanted to take this study and make sure that we can get it in the hands of as many people in the industry as possible. And we did increase the response level. And I’m just really thrilled to be part of it; it’s fantastic.

SPREEUWENBERG: 

And the Benchmark Survey is going to be hitting the shelves very soon. So if you’re listening to the Podcast you’re getting a sneak peek and an early view on some of the key findings of the report. And today in particular with Kris we’re going to touch on staffing because that, again –for I believe the fourth year in a row – we’ve had labour and staffing as the top risk. And we’ll also talk about financials, a very important part of running your childcare organization.

MURRAY:

Yeah, absolutely.

SPREEUWENBERG: 

So Kris, let’s start off on the staffing piece. So, year over year we’re always hearing that attracting and retaining staff is a key challenge. Can you talk to us a little bit about your experience with your customers and the childcare organizations you work with on this issue, and a couple of the key data points from the Benchmark report and whether those resonate with your experience?

MURRAY:

Sure. So, we more than anything at this point – more than enrollment and marketing, which is where we started in our company, helping schools get fully enrolled – are spending the majority of our time helping people get their best teams in place – their A-teams in place – and working on their culture.

And no surprise that staffing was in the Benchmark study, is still a very big pain point for many schools that responded. 56.7% of the schools in the study said that they had too-little staff. Only 5% have too many and 39% had ideal, which actually, if you look at a big picture, it’s kind of cool that 39% still have the ideal number of staff, which means that usually in those instances we point right back to, “Do you have a healthy, strong, collaborative culture in your preschool?” Whereas teachers, even though they don’t make a lot of money, are happy in their jobs. They’re making a difference in the lives of kids.

And leadership is giving them everything that they need. They’re filling their buckets from a leadership and culture perspective. And then they’re working with each other in a collaborative way in the pre-school. So they have colleagues that they enjoy working with; they have fun in the workplace; they’re engaged.

And when you are getting faced with too-little staff – which many of the folks on the Benchmarks study, and our clients, are – you’ve got to work harder to do great hiring, look for A-players to hire and talk about your core values and talk about the fun things that you do in your school to engage your team and bring them up and invest in them with professional development and give them a great benefits package that they will be excited by.

So those are just a few things that we’re working with our clients to really help them with overall staff retention, motivation and engagement. But it definitely comes out in the study that in today’s… I call it a “labour war”. I mean, we’re in a labour crisis of epic proportions in the United States and in many other countries.

And so when you get this tight of a labour market where jobs are plentiful and applicants are not you, the owner, have to step your game up. You have to work harder to recruit, have fun with recruitment ads online, have your core values in there, have your vision and mission in there and then drive your culture all the way home throughout your organization every day and really, really, really work on your leadership skills. And so that’s what we do inside of the [Child Care Success] Academy. But yeah, you definitely see that coming out as a pain point in the study.

SPREEUWENBERG: 

Let’s talk about the one thing you mentioned there, really quickly, around the job descriptions that are online. That’s something I always find companies struggle with because they all kind of read the same and they’re kind of boring. And you mentioned to make them that fun. Can you touch on that a little bit more?

MURRAY:

Yeah, absolutely. So we really do work with people to rewrite their ads inside of the Academy.  I’ve done that before where I’ll do even a live rewrite for people because title… yes, you need to have “preschool teacher” in your title. But you can certainly refer to a signing bonus or you can refer to something fun as a subtitle to the job.

And you can put in the very beginning of the job description of your ad your… what sets you apart from other schools, what makes it fun to work there, that you’re looking for A-players who want to join a team of people that want to make a difference in the lives of children.

And then we always put our core values in our hiring ads as a company, which are, “fun, integrity, passion, outside-the-box,” and “impact”. And those core values speak to… so whatever your core values are, if you’re listening to the Podcast, you need to have those defined and talk about them a little bit. So what do each of those mean to you and to your organization? And then put them in your ad. And then that usually will really help the response rate to your recruitment ads. And then it’ll help you get the kind of candidates that you want that are the people that are going to be excited by those specific core values. They want to work in a place that’s represented that way.

So those are just a few tips to make your ads definitely less corporate, less boring, less formal and more to the millennial audience, more fun, more engaging. Put some fun little verbiage in there – instead of referring to benefits you can call it “perks”. Or how can juice up the language to make your person, your benefits more fun and more exciting? So those are just some quick tips.

SPREEUWENBERG: 

Yeah, good tips. And so speaking of “perks”, once we get the employees on board that we’re excited about and are a great fit for our culture, what are some of the things that we could do to keep them happy and engaged in the childcare working environment? Is there certain techniques. And I think the Benchmark report touches a bit on this, too.

MURRAY:

It does. So there’s a few listed in the Benchmark report, such as birthday celebrations and gifts and professional development. And I want to speak to professional development. So I think that doing one-on-one’s with every team member consistently… so having a regularly scheduled one-on-one’s with all your teachers so that they get 20 minutes to come in and they get some one-on-one time focused just on them to hear what they’re working on, what their specific challenges are and their achievements, things they’re proud of, what’s going well, celebrating wins and then working on their professional development during that one-on-one time.

And we have a little one-sheet template that we give people with the structure for how you would have that one-on-one discussion. And you can get a lot done in 15 or 20 minutes if you’re prepared and your employee’s prepared. And so it is a time commitment to do those one-on-ones, but great leaders are spending structured time that’s blocked on a calendar with each of their employees to give them that personal attention and have those personal conversations and manage them consistently. So that’s one thing, is if you’re not doing individually scheduled one-on-one’s with your team members that’s at the top of your list. And that’s professional development.

And it’s communication it’s checking and it’s showing you care. It’s taking the time to make sure they have all the resources that they need. And then any professional development that they have coming up in the next six weeks to three months of schedule then you’re organized, you’re prepared. You’re working with them on their professional development. They’re going to classes; they’re going to conferences; they’re reading books – maybe you do a book club with your teachers and you discuss it at a staff meeting.

And so you’re doing lots of engaging behaviors to help them stay motivated. And we find that those things that leaders are doing to shift culture are way more important, Ron, than raises. They’re way more important than pay. Yes, we would love to help you save money and pick up nickels in your school – and we’ll talk about financial next. You can pay your staff more. Yes, of course, we would love that. And many of our folks are.

But we also think it’s non-monetary motivation techniques: showing you care, listening, checking in, celebrating wins, doing core value shout-outs. When you have a staff meeting, if you have a team member that’s displaying a specific core value, tell that story. So, “Mary displayed integrity because she had a really great, honest conversation with this parents and this is what she did. And so we’re giving her core value shout out on integrity and we’re giving her a gift card” in front of all of her peers, that type of thing. And those things are really going to drive your culture forward like nothing else.

SPREEUWENBERG: 

Yeah, they’re so big. And I think there’s quite a few studies and surveys out there that say just that, that – especially with millennials who are looking for a good fit, culturally – that is more important to them than how much money they make. And this is something that we’ve talked about on the Podcast before and I’ve talked about with you and it’s just so important to focus on that. People want to be heard, like you said, and just even having those regular one-on-ones is so, so important.

MURRAY:

 Yeah, it really is. And I want to say two other quick things about our industry that people don’t talk about a lot. So one thing is, structurally the way a pre-school is typically brick-and-mortar laid out with walking down a hallway and then classrooms on each side. It’s very siloed and it’s a workplace versus an office. Yes, people are in cubicles or they might be in offices. But they can come out and engage with each other and go to meetings and there’s more of a collaborative environment in different types of businesses.

In a preschool, because we’re all siloed in classrooms and it’s ratio-specific and it’s very structured that way, it’s difficult. It naturally does not lend itself to collaboration because we’re all siloed off in our classrooms. So you have to figure out ways to bring people together, whether it’s electronically – getting them to use chat or getting them to use tools like FLAC – or engaging together in different ways electronically where they can chitchat, of course not while they’re watching the children.

But ways that… so we have some leaders who are doing Zoom calls at night with their teachers. They get on a training call, they’re in their pajamas, they have a pajama party, they wear slippers and they come on together electronically. They get their beverage of choice, they’re all at home, their kids are at home, their husbands and wives and whatever. But they’re doing collaboration calls maybe for a half hour at night or a quick training. And so that’s one way to use technology to get everybody together and do team building.

And then the other thing is self-care. And people don’t talk a lot about self-care in our industry. But you’ve got to take care of your teachers and help give them healthy ways to improve self-care because a lot of times preschool teachers don’t take care of themselves because they’re somebody taking care of everybody else.

So I want to talk about more of this in the future, but I just wanted to mention that helping staff take care of each other and take care of themselves I think will also keep them motivated, give them ways to go outside at lunch and take a group walk, get outside, go to nature, do things with the kids where you’re going to parks, or do a smoothie day where it’s all healthy. And it doesn’t always have to be “healthy” but I just think we need to also take care of ourselves and each other because I think in our industry we tend to struggle with that. So I just wanted to mention those two things.

SPREEUWENBERG: 

Absolutely. And yeah, the physical environment point is quite insightful as well. I never thought about that because I can just poke my head out of my office and over a couple sips of coffee chat with folks. But yeah, you just can’t step out of your classroom, right? It makes it that much more important.

So further on staffing and team being so important, one thing we looked at in the Benchmark report is financials. And we see that labour costs or staff costs are about two-thirds of the overall revenue of a childcare program. And in your experience, Kris, does this resonate with what you see? Is it good? Is it not good? What should we be striving for here?

MURRAY:

So we define in this study – and this is how we often define it when I’m working with my clients – that labour costs, as we categorize them in the study, include payroll, payroll tax, training and benefits. So everything that you’re spending towards labour and supporting of labour and professional development is grouped in. And doing the math, it’s 66% of revenue on average, according to the study.

Those costs are a little high. I would like to see it… we try to drive it down for our clients and keep it in the 53% to 56% range. So it depends on the other costs in your organization. How much are you spending on equipment and food versus how much are you spending on facility costs – rent, lease, maintenance etc. And those three buckets primarily are going to drive then your profit margin. And I would like to see profit margins in the 15% to 18%, driving towards 20%. So it makes it pretty tough, Ron, to get to a 15% to 18% to 20% profit margin overall, if you’re spending 66% on labour.

Now, I will say one thing that’s going on in our economy – and I’m not sure how much it is globally – but certainly lately in the United States our minimum wage increases. In some states – and they’ve even talked about federally raising it – the Democrats are trying to get it raised substantially. And people are panicking in the United States about a potential minimum wage increase across the board that’s going to put some childcare centres out of business.

So that’s a huge risk that could be coming down the pike. And people who are running schools just need to be really on top of their nickels and dimes. What I see with our clients is that when we talk about these buckets, like I said, all the time with where should you be with your labour… if you’re at 66% I want to see you take an action to try to look at, How can you drive those costs down? Where are those costs sitting? Are they sitting in costs of hiring because you have high turnover and low retention? Or is it just a fact that you need to also increase tuition pricing?

 So we can speak to that, too. But the revenue side of the coin is, if your labour is sitting at 66% can you pick up nickels on the revenue side? Do you have 10% enrollment that you can drive forward? When’s the last time you did a price increase? So your labour costs will come down if you can increase revenue overall.

So you have to kind of look at that math – and hopefully I’m not confusing people as I’m talking through these numbers, and the study will lay it out for folks – but I’d love to see you be in that 53% to 56% and bring it down from 66%.

SPREEUWENBERG: 

Yeah, and of course this is something we’ve touched on in the Podcast previously in other episodes, but why [this is] so important is you cannot provide quality childcare unless you’re running a sustainable operation. And so you mentioned if there’s a wage increase some childcare owners might have to shut down and go out of business. And that’s obviously not going to be helpful to those families that rely on that childcare. And we actually had that happen here in Ontario recently with a pretty large minimum wage increase and it certainly did affect a lot of small business owners, including childcare business owners.

MURRAY:

And so that relates to pricing in the study, Ron, which is… and the percentage of people that are planning to do a price increase. And I just want folks to know that it is best practice to do an annual price increase. And we do provide people with a guidance and a letter template for how to do that without fear that you’re going to lose clients. And of course you need to make sure that you’re providing high-quality care and trying to drive towards excellent customer service and making sure that parents are super happy and all of those touch points.

Using HiMama for parent communication and making sure that parents feel well communicated to, that’s a huge, huge, huge deal. So when you have happy parents and you’re doing great communication and great customer service you can easily raise your prices annually. Most of our clients are raising 3% to 5% per year, which is kind of a cost-of-living increase. And you’re passing the costs of increased employment costs and minimum wage hikes on to your customer.

And yes, it is a huge concern that we have affordable care for parents. So of course this is a huge concern, but it’s tough. It’s, like, how do we pay teachers enough, still have a viable business, still make a profit margin that we can pay ourselves for being the owner of the school and working so hard and facing the risk that we do – as we deserve a paycheck, also –and then facing all of these other potential risks like minimum wage increases?

So you have to really… I recommend doing annual price increases. And the study indicates that people are planning to do that and have a process for doing that. And most of our clients do it effectively every year without any pain. They don’t lose clients and it’s kind of an expected thing.

And also you should be charging an annual re-registration fee so that you can cover the time that it takes to register everybody in your systems and manage those systems. And most of those fees are a $75 to $150 annual registration fee for families.

SPREEUWENBERG: 

Yeah, good points. So we have to charge for to cover costs. And I think even in my own experience whenever somebody tells me – and is very clear their communication to say – “Okay, every year there’s going to be X % increase in the fees,” as long as it’s clear up front. What you don’t want to be is surprised. But if you know it’s coming right you plan for that.

MURRAY:

Exactly.

SPREEUWENBERG: 

Cool. We are quickly running out of time – this always happens. The last thing I just wanted to touch on from the Benchmark report: We’ve talked about a lot of the things that are so challenging in childcare – it’s so difficult from a staffing perspective, culture perspective, financial perspective. But let’s talk about what people said about outlook.

MURRAY:

Yeah, so this is one of my favorite parts of this study because I am a very optimistic person. And so it was wonderful to see that 89% of the respondents in this study have a positive or strongly positive outlook for the coming year. And they are…. that’s about stable from last year. So it was just a one point uptick in optimism. 9% were neutral and only 1 % negative.

So I find a fascinating, Ron, that with all of the risks, the challenges, the governmental stresses and things that are going on with regulation, that people who are running schools are still very, very, very positive about the future even though it’s hard to find and retain staff. And of course there are stresses about things that people say on social media, and we help with all of those things. But even so people are very, very, very optimistic in our industry. And so I love that that; it makes me super happy.

SPREEUWENBERG: 

Awesome. And tell us a little bit more about the Child Care Success Company before we wrap things up. I know you do an amazing conference every year. Tell us a bit about your work if our listeners want to get in touch with you to learn more or chat about your services.

MURRAY:

Sure, thank you so much. So we recently rebranded. We had a 10-year anniversary on June 1st from when I founded the company a decade ago. And we have a team of 15 now and we have five coaches on the team. And we provide coaching, training and implementation services for our clients inside the Child Care Success Academy.

And so we rebranded from… the name of our actual company was the Child Care Marketing Solutions Company. And we’ve just gone to “Child Care Success Company” because we’re not just doing marketing and enrollment for folks, which is where we started, is really helping you guys get fully enrolled and helping you track your enrollment and pick up the money off the table with regards to getting fully enrolled.

But now, as we’ve talked about today, staffing and leadership and culture are really at the top of the conversation, Ron. And then also help people with operations systems, technology, processes to make sure that they have all of those touch points in place that they can run their company and scale. So really it’s helping people scale up to then multiple sites, expansion and extending their brand to multiple locations in their market or even across markets.

So it’s been super fun to be doing this work for a decade and I’m just so very, very blessed to have helped and touched thousands and thousands of teachers leaders and then hundreds of thousands of children. And we’re driving towards… our mission is to impact a million kids on the planet. And we’re about three quarters of the way there. And so we’re going to have to… once we reach a million we’ll celebrate and then we’re going to celebrate or something.

So that’s what we do, we help leaders and owners be better business people, stronger people, and more confident. We work a lot on mindset and help them feel more confident about running their businesses and being a leader for their people and having a great life. A lot of it is also celebrating wins in their personal lives. So we touch all those things in the Child Care Success Academy. And I’m just very, very, very blessed to do this work and have a great team. And I’m so thrilled to be part of this study. It’s been fantastic.

SPREEUWENBERG: 

Awesome, and I love the focus on the human element, too, just the self-care piece. And you’ve got to be happy as an owner-director-operator of a childcare program yourself. And the growth mindset, I love all that. And I can just say, too, for everyone listening to the Podcast that I’ve known Kris for a number of years and she truly is a thought leader and she has a lot of depth in terms of her knowledge on childcare and how to be successful in running your childcare program. So if you have not had any learnings or listen to any of the content or read any of that content from Kris or her team you should check it out. Kris, if there is a website people can go to what would that be?

MURRAY:

Sure, so two ways to get started: I would say if you want to attend the conference, we do a big, annual conference. Ron and his team will be there – HiMama – and it’s called the Child Care Success Summit. So I would invite people to get their tickets. We’re quickly selling out and we’re going to be in Orlando this year in October, Ron, October 10th to the 12^th. And that’s at www.ChildCareSuccessSummit.com. So that’s a great way just to get started and meet hundreds of other people. There’ll be eight hundred people in the audience and amazing speakers like Ron Clark. So just check that out.

And then my podcast, too. So this is a great podcast – I think the top two podcasts in the industry are this one and mine. Mine is Child Care Rock Star Radio, which you’ll hear from dozens of business owners and then thought leaders Ron [Spreeuwenberg] is on that podcast and lots of other experts in the industry. Child Care Rock Star Radio, so you can look that up on your podcast button.

SPREEUWENBERG: 

Wonderful. And if you want to get a copy of this year’s Benchmark report you can go to www.HiMama.com/Benchmark. Kris, always, always a pleasure to chat with you. Thank you so much for joining us on the Preschool Podcast.

MURRAY:

Ron, it’s been a pleasure. Thank you so much and I appreciate it.