As more baby boomers retire every day, hospitals are increasingly challenged to find new executive leaders. Without clear leadership succession plans, however, those tasked with replacing C-suite leadership might find themselves struggling to find the best match.
“More than ever, C-suite succession planning and more intentional focus on the professional development of new leaders is vital to organizational success,” said Deborah Bowen, FACHE, president/CEO of the American College of Healthcare Executives, in a report released in June.
Hospital CEO turnover nationally is 18 percent, where it has been for four straight years, according to a report by the American College of Healthcare Executives. In Texas, turnover is slightly higher at 19 percent.
Despite rapid turnover and a changing health care landscape, Gary Seaberg, vice president at executive search firm Tyler & Company, said roughly two-thirds of hospital organizations don’t have any type of succession plan in place. Moreover, he said, they don’t have a plan to onboard a new executive.
“Succession planning has to be an intentional process, much like planning for diversity within your organization,” said Chuck Stokes, RN, FACHE, president and CEO of Memorial Hermann. “It is imperative that key executive positions within health care systems have ‘executives in development’ or an intentional plan for external recruitment,” said Seaberg.
“Hospitals and health systems continue to evolve and reorganize to meet the demands of the new health care environment at the same time many CEOs are reaching retirement age, all of which may be contributing to CEO turnover.”
Filling key leadership positions is already challenging for hospitals given how uncertain the health care environment can be. “The future of medicine is ever-changing and some are finding they can stomach that and some can’t,” Seaberg said.
Succession in Action
Recent transitions in leadership at hospitals in Texas also could be representative of a coming generational shift in the workforce.
At Hendrick Health System, president and CEO Tim Lancaster recently announced his plan to retire in December. Lancaster is only the fourth president in Hendrick Health’s 96-year history.
“Leadership succession is not a matter of if, but of when,” said Scott Hibbs, a Hendrick Medical Center board of trustees member and chair of the search committee to replace Lancaster. “At Hendrick, specific goals and objectives for the CEO and key senior leadership are set each year to ensure that the hospital is well-positioned for succession.”
Hospital culture is a key factor to consider when putting leadership succession plans in place. Hibbs said cultural fit is more applicable to leaders than to staff since culture must be in the fabric of the institution, not the product of the current leadership. “Successful leadership succession builds on a solid, and often historic, culture,” Hibbs said. “It’s also important to communicate the culture to potential candidates during the search process, and to eliminate candidates that do not ‘fit’ the culture.”
Jennifer Stewart, managing director of research at The Advisory Board, said it is important not to stumble at the finish line when a hospital has invested in setting up someone to succeed in a leadership role and built up solid leadership pipelines. Often, she said, the board forgets about the transition into the C-suite and neglects to have on-boarding plans for new executives.
“What’s most important for folks to keep in mind is that shift into a C-suite role is difficult and they need support. There are things that the board, hospital leadership and human resources can do to make that transition successful.”
Minimizing Turnover After Transitions
Marion Karr, vice president of Tyler & Co, said eliminating or suppressing staff turnover after a leadership change is paramount to mitigate feelings of uncertainty.
“One reason folks leave when leadership changes is that the status quo and processes that they’ve worked under all of a sudden are called into question,” Karr said.
As new leaders start to implement new processes and policies, staff can be unsettled by what to them feels like shaky ground. To smooth out transitions, both for staff as well as incoming leaders, plans need to include new voices. This process starts with harvesting the voices and perceptions of the staff who have valuable insights on operations. Ensuring they have a voice in the transition in this way can provide the incoming leader key support while also settling uncertainty that comes with new leaders.
“One thing organizations can do after a leader is hired is immediately build opportunities to engage with their existing team to understand their depth of value, experience and motivation. On the organizational side, we have to create a culture where that type of engagement is encouraged,” said Karr.
The Board's Role
For hospital boards, the selection of a CEO is their most important task. “The board must be involved with and support the CEO’s efforts in identifying and developing the management team,” Hibbs said. “Typically, it’s the board’s personnel committee that takes on this responsibility.”
Since leadership changes often come with a degree of uncertainty, one way a board can serve hospitals is by showing support of the management team during a transition. Hibbs said this was critical for the two CEO leadership changes he experienced as a Hendrick trustee.
“The Hendrick board’s personnel committee took immediate steps to meet with the management team individually and as a group,” Hibbs said. “These meetings conveyed the board’s support for the management team and helped to minimize speculation and confusion,” Hibbs said.
To make a decision, their input must include key personnel to provide the perspective of those who manage day-to-day needs of the hospital. Hibbs added that the board also made sure to include input from the management team about the characteristics and needs desired in a successor. “This input from management provides an opportunity for them to be a part of, and not a casualty of, the change process,” Hibbs said.
While planning for succession is a benefit when given ample time, accounting for abrupt departures proves more challenging. The ripple effects of limited succession planning can create an unstable foundation for hospital culture to thrive and might put an added strain on leaders who pick up the slack.
Other transitions can be easier to prepare for. Stewart said that among anticipated hospital leadership transitions, retirements tend to be the easiest to absorb.
“In some ways retirements are the easiest leadership transitions to predict,” Stewart said. “Those planned retirements can let hospitals test drive their succession planning and see where they’re strong and where they have other opportunities.”
Steps to Successfully Navigate Transitions
Marion Karr said successful succession planning and candidate selection should center around what qualities and skill sets will be needed to lead hospitals into the future.
“Succession planning has to have a depth of focus not just on how to replace the person who is in the role currently, because a lot of times succession planning models look like this: ‘We’ve got a really good leader, how can we replicate them?’” Karr said.
“The problem is that doesn’t create a strategy around 'what does your future state look like?' or 'what is the vision of the organization?'”
“Whenever possible, have the management team engage on the front end to find a new leader,” Karr said, highlighting the need to ask staff to fill out an evaluation form after the interview process and follow up with additional questions and examination of their thoughts.
This additional engagement with staff potentially uncovers leaders from within the organization. It’s something Memorial Hermann Health System, Houston practices regularly. “When we identify leaders of high potential, we provide them with executive coaches and internal mentors to develop their skills,” said Stokes of Memorial Hermann. “We have provided 360-degree evaluations and external assessment programs to evaluate current and future potential for leaders.”