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April 1, 2022

The 'Great Resignation' could be coming for your C-suite

Daily Briefing

    Throughout the "Great Resignation," millions of Americans have quit their jobs—a trend that has also applied to C-suite level executives who have left their positions after experiencing burnout from rising challenges amid the Covid-19 pandemic.

    Ensure seamless leadership transitions

    Why C-suite executives are leaving their positions

    Over the past two years, workers at every level have experienced a variety of challenges, leading to widespread burnout and resignations across multiple industries—and C-suite executives were no exception. After trying to maintain work-life balance while juggling pandemic-related challenges, executives around the country have left their positions at increasingly high rates, NBC News reports.

    According to Julia Pollak, chief economist at ZipRecruiter, several factors are driving people to quit these high-level jobs. "It's many factors — the burnout, the pandemic, the school closures, the need to take stock of life," she said. "It's a whole wide range of shocks."

    A monthly tracker from executive outplacement firm Challenger, Gray & Christmas reported that 106 CEOs left their positions in December 2021. In addition, the firm noted that October's 142 CEO departures marked the second-highest month for CEO departures on record. Overall, the number of departing CEOs during the fourth quarter of 2021 was up 16% on a year-over-year basis.

    Human resources experts say these figures did not come as a surprise. In fact, data suggested that high-level corporate executives have been struggling with many of the same challenges as their employees, including the added strain of the pandemic.

    "The job of a C-level executive is you're burning the midnight oil. You add Covid into that and it feels like you're doing twice the work for half the payout. You can't get in front of the fires that pop up," said Miles Crawford, former CEO for a staffing company, who left his position in June 2021 when the company was being sold.

    "We didn't realize that CEOs are employees, as well," said Johnny Taylor, Jr., president and CEO of the Society for Human Resource Management. "We talk about employees having experienced 'Covid clarity.' That happened with us, as well, over the last two years. You're under intense pressure and you just say, 'Do I need this?' There is no more work-life balance, especially for CEOs."

    Throughout the pandemic, C-suite executives have faced enormous pressure to pilot operations during an unprecedented global public health crisis, while projecting confidence and stability to their often anxious, overwhelmed employees.

    "There was no playbook for how to handle this situation, so the challenge was we couldn't look to the past to find any precedent to follow," said Olin Hyde, who stepped down as CEO last year from the company he founded in 2013.

    Health care CEO departures are on the rise

    The number of departing hospital CEOs has risen amid the "Great Resignation."

    For instance, a Challenger, Gray & Christmas report found that 12 hospital CEOs left their roles in January 2022—double the number of CEO departures from the same month a year earlier. Since mid-February, at least eight additional hospital CEOs have stepped down from their positions.

    According to Becker's Hospital Review, 43 hospital CEOs resigned during 2021.

    While some hospital and health system CEOs have left their positions to retire, many have transitioned into C-suite roles with other organizations.

    On March 8, Jason Barrett resigned as president and CEO of Flagler Health+ after serving in the role since May 2018. According to Flagler, Barrett "made the decision to resign from the organization to pursue other opportunities." 

    In addition, Scott Wester stepped down as president and CEO of Our Lady of the Lake Regional Medical Center for a new executive position with Franciscan Missionaries of Our Lady Health System. Likewise, Singing River Health System CEO Lee Bond left his role to pursue other opportunities.

    However, others have not provided specific reasons for their departures. (Jensik, Becker's Hospital Review, 12/20/2021; Ellison, Becker's Hospital Review, 3/30; Ellison, Becker's Hospital Review, 3/17; White, NBC News, 1/19)

     

    Advisory Board's take

    How to plan for leadership transitions

    Kate Vonderhaar JohnsonBy Kate Vonderhaar Johnson, Managing Director

    All organizations should aspire to have succession plans and seamless transitions when a key leader departs—either planned or unplanned. Without a disciplined succession planning process, health systems face two risks: First, they may fail to meet strategic priorities because critical positions are vacant. Second, they may select future leaders who look or think much like the current leadership team—and who aren't necessarily the leaders needed for future success.

    There is a unique challenge to succession planning with health care: Tightening margins can make it hard to replicate the highly resource-intensive succession management programs found elsewhere in corporate America.

    We understand that the practice can be daunting, but we promise it won't be as daunting as it was for Waystar Royco in HBO's Succession. After interviewing dozens of hospitals and health systems around the country, we've found that succession planning is much more "doable" than often assumed. Here's what we learned.

    3 insights to ensure strong executive succession planning

    1. It's okay to start small. If you're starting from scratch, it's okay to start small and prove ROI through a small number of seamless transitions. But don't decide who to plan for based on title alone. While the CEO is obviously important—and under planned for according to this report—that doesn't mean that you should decide based on title alone. Many organizations overlook critical roles below the executive ranks like the director of surgery—whose vacancy would immediately impact day-to-day operations.

    2. Don't just rely on supervisors or performance reviews to identify top talent. At many organizations, performance review ratings are so inflated that it's hard to identify which staff are truly "top talent." At the same time, supervisors often don't know the specific knowledge and experiences that advanced roles need, and they typically don't have the time necessary to ensure that their high-potential staff have the chance to practice these next-level skills.

    To find the top future leaders, senior leaders first need to intentionally identify the behaviors and traits that characterize high potential. They then need to embed these traits into the standardized performance review process (through quantified goals and explicit criteria) or directly screen reported top performers for leadership potential. To get a variety of tools to help you identify these traits, and help managers create development opportunities around them, see the tools in steps two and three in our Succession Management Implementation Guide.

    1. Create onboarding plans for internal promotions to critical roles. Many organizations assume that, if the successor comes internally, they'll be able to hit the ground running without the transition support given to an external hire. As a result, many well-groomed leaders face a lengthy ramp-up period or, worse, fail entirely.

    To help ensure seamless transitions, HR leaders should create a personalized onboarding plan for the new leader that incorporates key objectives and activities from their direct manager. They should also interview the new leader's direct reports to gather information on team dynamics and staff expectations, aggregate these findings, and present them anonymously to the leader upon their start date. Finally, they should track new leaders to see how they're acclimating to the role, by conducting a series of feedback interviews with leaders across their first six months. For the tools to help with these tasks, view the supporting resources in step four here.

    For more information on the common challenges we see in the succession planning process and all of the tools you need to overcome them, make sure to download our Succession Management Implementation Guide. And check out our research on seamless leadership transitions to learn eight key insights about succession planning, drawn from conversations with HR executives, to help your executive team and board build a strong, diverse leadership bench ready to meet current and future challenges.

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