Author: Jim Rice
Boards and executive leadership need to anticipate and be well prepared to manage extensive levels of executive leadership turnover within the C-suite in the coming five years.
The pressures driving such turnover include at least these:
- Aging of senior leadership at CEO, CFO and CNO positions
- Influx of new leaders into the C-suite, such as CIO, and such varied chief officer positions for: Transformation, Population Health, Marketing and Experience Management and the list goes on
- Growing stress from rapidly changing industry calls for peak performance from regulators, payers, the general public, donors and frontline staff
- Calls for more diverse leadership teams for continuity and wisdom across gender, generations, ethnic and cultural perspectives
- Complexity of building and nurturing community health partnership with strange new collaborators
- Speed of change stimulated by artificial intelligence and big data analysis intertwined with huge investments in IT and process improvement imperatives
- Complexity and rate of consolidations leading to larger and duplicated executive teams
It is challenging enough for a board and leadership team to deal with the retirement or departure of a CEO, but today the senior leadership ranks can be rocked by two or three leaving at roughly the same time, or the new CEO being open for a change in her/his key team members.
Succession planning is no longer a relaxed process for a single executive, team or group. Succession, transition or continuity planning must now be the state-of-the-art for fast moving health systems. The disruption and continuity distractions in C-suites must now be planned and administered in a collective manner for the entire team.
The board should expect the CEO to have and share insights into an up-to-date Executive Leadership Continuity Plan that describes plans and replacement contingency plans for each position, and the strategies to ensure a balanced and stable executive team at the top of the organization.
Board and executive leaders should explore how prepared they are to review and enhance their work in five strategic arenas:
- Update organizational charts: Executive team organizational designs must be visualized in a manner that clarify current spans of control, reporting relationships and capacity for ever increasing performance gains not just at the top C-suite level, but deep into the middle manager ranks. Updating the current design to the future parameters of the competency mapping below is also essential to organizational agility, resilience and performance.
- Competency mapping of C-suite capabilities to meet the organization’s strategic challenges and plans. The board should expect that the CEO causes a “Leadership Model” to be developed and maintained that starts with the organization’s strategic and financial plan and moves into philosophies and design for executive leadership at all levels of the organization. The organizational chart needs to consider spans of control; agility to respond to the changing market and performance dynamics of the organization; and the evolving pressures for organizational performance, innovation and vitality. Competencies needed for each position and team should be identified and continuously refreshed to meet strategic opportunities and threats.
- Leader transition and development plans for each executive and the team as whole. CEOs need to be encouraged by their boards to develop and continuously update/maintain a database on all leaders from C-suite to middle managers. This set of individualized profiles should address at least these insights: position description, spans of control, history of leadership work, age, demographic features, leadership style dimensions, retirement plans, performance and development priorities, as well as long range personal and professional plans for change and advancement.
- Competency development investments: To retain good executives and encourage great team alignment and strategic focus, strong health systems invest in “Leadership Academies” that nurture the continuous growth and development of the competencies of each leader and the team as a unified whole. Too often boards assume that, because they hired a superior CEO, she or he will remain at the top of their game forever without further support and growth. Because of the above pressures, this is no longer a wise strategy. To attract and retain A-level leaders, boards need to establish budget line items that fuel the pipeline of talented executives at all levels of the organization, from board to bedside. These leadership development initiatives can be done from within, but also may involve retained relationships with area colleges, universities and executive coaching organizations.
- Retained succession support advisors: To stay well-informed of effective ways to recruit, compensate, onboard and develop executives of health systems, some systems are building a long-range relationship with experienced executive search and recruitment organizations. These retainer relationships balance the cost-effectiveness and speed of response for the ebb and flow of C-suite leadership changes. The adviser gets to know the plans, culture and competency needs of the health system; disruptions and discontinuity of leader changes are minimized; and the probability of strategic fit for incoming leaders is enhanced.
We encourage a healthy review, conversation and debate about this roadmap to develop stronger leadership teams. Involve board, executive human resource and medical staff leaders in these conversations.
Contact Gallagher for expert consultation on succession planning to support your overall organizational wellbeing. Call (800) 821-8481.
1. See: https://www.forbes.com/sites/nicolefisher/2015/03/20/3-surprising-hospital-leadership-trends/#6d3faf0a716a