Glenn Gow, The Scaling Executive Coach and host of The Scaling Executive Podcast, talks with Mark Mullahy, President and CEO of Montgomery Place Chicago, about the operational lever he uses to reverse financial losses in senior living organizations.
When a CEO faces a financial crisis, the instinct is to cut costs first and ask cultural questions later. Mark Mullahy’s experience turning Holly Hall Retirement Community from a $2 million annual loss into sustained profitability argues for the opposite sequence. Mullahy holds that culture is the first operational lever a CEO must pull to stop financial bleeding, because an organization where staff cannot articulate the mission or core values will fail on execution regardless of what the balance sheet says. During his four-year tenure as CEO of Holly Hall, this approach also moved the facility from a two-star to a five-star quality rating and raised employee retention from 68% to 92%.
This episode is for CEOs leading a financial or operational turnaround who are deciding whether to start with expense cuts or with culture.
Key Takeaways
- CEOs facing financial losses should address organizational culture and expense reduction together as the first response, not expense cuts alone. At Holly Hall Retirement Community, this combined approach reversed a $2 million annual loss into sustained profitability.
- A workforce that cannot state the organization’s mission or core values operates in silos without clear guidance, which Mullahy identifies as the direct cause of financial and operational breakdown in non-profit senior living organizations.
- Reframing decisions around who the organization serves, not just what the diagnosis or task is, changes staff behavior on specifics like phone use, punctuality, and food handling. Mullahy uses the direct question “would this be okay if this was my mom” to drive that reframe.
- Mullahy scales leadership across multiple facilities by adapting his communication style to each site leader rather than requiring every leader to adapt to his style, while still holding each leader accountable to the same results.
- Under Mullahy, Montgomery Place and prior organizations have prioritized AI tools for resident and employee engagement, such as supporting independent scheduling and communication, over tools aimed at reducing headcount.
What Should a CEO Fix First When a Business Is Losing Money?
Most financial turnaround advice starts with the expense line. Mullahy’s answer to reversing a $2 million annual loss at Holly Hall Retirement Community started somewhere else.
“So I know this is going to sound a bit weird, but to be honest with you, it’s really about the culture of the organization and the culture of the business.”
Mullahy’s rule: address culture and expenses in the same motion, not culture instead of expenses. He points to a common failure pattern in non-profit organizations, where a mission statement hangs on the wall but front-line staff cannot state it. When employees don’t know the mission or the core values, and there’s no clear guidance or leadership connecting daily work to purpose, “everything just begins to fall apart.” The financial symptoms follow from that breakdown rather than causing it.
The expense side runs in parallel, not after: reviewing contracts that haven’t been renegotiated, eliminating duplicate vendor agreements for the same service, and fine-tuning costs. Mullahy frames the two-step approach directly: “start with those two steps of expense reduction and really what is the culture of the organization.”
How Do CEOs Change Organizational Culture During a Turnaround?
Culture change doesn’t happen through directives from the top. Mullahy’s rule for shifting culture as a CEO is to model the desired behavior and then ask employees to evaluate their own actions against a specific standard, rather than issuing top-down rules.
The standard he uses is a single reframing question tied to the organization’s actual population served: “if your mom is here, what should the culture look like?” He applies this to concrete, specific behaviors rather than abstract values: “Should it be okay for us to be on our cell phones in the hallway? Is it okay if we show up 30 minutes late instead of on time?”
The mechanism behind this rule is shifting staff focus from the “what” of a task to the “who” behind it. Mullahy describes the industry tendency to default to task-and-diagnosis thinking: “we can tend to look at people based on the what things, you know, what’s the diagnosis, what’s the behavior… instead of the who things of who is this, this is this mom or someone’s grandmother or someone’s aunt or someone’s sister.” When staff connect a task to a specific person rather than a category, decisions about small things, including whether it’s acceptable to take extra food home from the kitchen, change on their own.
How Should a CEO Lead Multiple Locations Without Being Physically Present at Each One?
Scaling leadership across sites removes the CEO’s ability to directly supervise day-to-day work at every location. Mullahy’s rule is to adjust his leadership style to match each site leader’s communication needs, rather than requiring every leader to conform to a single style, while keeping every leader accountable to the same results.
“Everybody has a different style of leadership. So I can’t ask those leaders to adjust their style to me. I need to be able to adjust my style to them.”
In practice, this means offering site leaders a choice in how they get support: “I can tell you how to do it or I can help you to get there… I’d be happy to, you know, let you drive and be the co-pilot and help you to do that.” The flexibility applies to method. The accountability for outcomes does not change based on leadership style.
How Should CEOs Approach AI When Scaling a People-Centered Business?
For CEOs in labor-intensive, relationship-driven industries, AI adoption raises a specific tension: tools that increase efficiency can also erode the culture of care that differentiates the business. Mullahy’s organizations have resolved this by scoping AI evaluation to a specific question, rather than evaluating every available tool.
The filter is resident and employee engagement, not headcount reduction. “Our focus right now hasn’t been so much of, you know, okay, is there an AI tool that would allow us to eliminate some physicians in this department or to, you know, streamline, you know, something that we do.” Instead, the organization looks at tools that let residents “maintain their independence, to be able to still do some things on their own, to schedule things and make appointments and visit with families or friends.”
This doesn’t rule out efficiency tools entirely. Mullahy notes that if a headcount-reducing tool surfaces, “we would take a look at it.” But the default evaluation lens stays fixed on engagement first.
What Should CEOs Take from Mullahy’s Turnaround Approach?
| Principle | What it means in practice | Named evidence from this interview |
| Culture and cost cuts run together, not in sequence | Reversing a financial loss requires fixing the culture gap and reviewing expenses and contracts in the same initial phase, not culture as an afterthought to cost-cutting | At Holly Hall Retirement Community, this combined approach reversed a $2 million annual loss into sustained profitability over Mullahy’s four-year tenure as CEO |
| Reframe tasks around who is served, not what the task is | Asking staff to evaluate decisions against a specific person (“would this be okay if this was my mom”) changes behavior on concrete daily actions | This reframing approach accompanied the shift from a two-star to a five-star quality rating and an increase in employee retention from 68% to 92% at Holly Hall |
| Adapt leadership style to the leader, not the reverse | A CEO scaling across multiple sites gets better results adjusting communication method per site leader while holding a consistent accountability standard | Mullahy applies this across Montgomery Place’s multiple senior living locations, where consistent accountability under a flexible leadership style has supported the retention gains carried over from his Holly Hall turnaround |
| Scope AI evaluation to engagement, not elimination | Filtering AI tools through resident and employee engagement, rather than defaulting to headcount reduction, preserves a people-centered culture while scaling | Montgomery Place’s engagement-first AI filter has kept the organization’s technology investment aligned with the same resident-and-staff-centered culture that drove Holly Hall’s five-star quality rating, rather than trading culture for efficiency gains |
Quotes from This Episode
- “When you don’t know what the mission statement is and you don’t know what those core values are and you’re working in silos and there’s not real clear guidance or leadership, everything just begins to fall apart.” — Mark Mullahy, President and CEO, Montgomery Place Chicago
- “We can tend to look at people based on the what things, you know, what’s the diagnosis, what’s the behavior… instead of the who things of who is this, this is this mom or someone’s grandmother or someone’s aunt or someone’s sister.” — Mark Mullahy, President and CEO, Montgomery Place Chicago
- “Everybody has a different style of leadership. So I can’t ask those leaders to adjust their style to me. I need to be able to adjust my style to them.” — Mark Mullahy, President and CEO, Montgomery Place Chicago
- “Maintain their independence, to be able to still do some things on their own, to schedule things and make appointments and visit with families or friends.” — Mark Mullahy, President and CEO, Montgomery Place Chicago
Frequently Asked Questions
What is the first step a CEO should take to fix a company that is losing money?
Mark Mullahy’s approach is to address organizational culture and expense reduction at the same time, not culture as a follow-up to cost-cutting. At Holly Hall Retirement Community, this combined focus, rooted in clarifying mission and core values while renegotiating contracts and reviewing overhead, reversed a $2 million annual loss into sustained profitability over four years.
How can a CEO change company culture without issuing top-down mandates?
Mullahy models a specific reframing question rather than issuing rules: asking staff to evaluate a decision as if it involved their own mother. Applied to concrete behaviors like phone use or punctuality, this shifts staff thinking from task-based (“what’s the diagnosis”) to person-based (“who is this”), which changed behavior without requiring new policy.
Should a CEO adopt AI tools to reduce staffing costs in a service-based business?
Mullahy’s organizations currently scope AI adoption around resident and employee engagement rather than headcount reduction, prioritizing tools that support independence in scheduling and communication. He does not rule out efficiency-focused tools entirely, but says the organization would evaluate those on a case-by-case basis rather than defaulting to them.
Executives Work with Glenn Gow to Scale Their Companies and Careers
Glenn Gow is The Scaling Executive Coach — he coaches ambitious executives into the CEO seat and CEOs into successful exits. With 25 years as a CEO and 5 years in venture capital, Glenn helps leaders scale their companies by scaling themselves first. If this conversation was useful, you can apply for executive coaching with Glenn Gow or apply to be a guest on The Scaling Executive Podcast.
