More than half of hospital and health system executives say they don't have a successor ready in the event of their CEO's sudden departure, according to a survey from executive search firm Korn Ferry.
Is succession planning that big of a concern? Yes.
The survey comes as industry changes are making the CEO role increasingly critical, even as the executive workforce is aging.
Whereas in the past, community leaders typically oversaw individual hospitals and played more of an advisory role than a strategic one, today's leaders often serve as strategic leaders for multiple hospitals and numerous non-hospital sites of care, Alex Kacik reports for Modern Healthcare's "Transformation Hub."
"The industry has been tipped on its side and leadership planning hasn't necessarily kept up," said Christine Rivers, Korn Ferry senior client partner in its board and CEO services practice, adding, "There have been so many long-standing CEOs in health care, and many are aging out and retiring at the same time."
Most health systems don't have a CEO successor lined up
To assess hospitals' and health systems' readiness for departures of their top executives, Korn Ferry surveyed 164 hospital and health system executives on their succession plans.
Of the executives surveyed, 54% said they do not have a successor lined up to replace their CEO. Another 43% said they have not prepared an "effective" internal succession plan, while almost one third said they have no succession plan whatsoever, the survey found.
Further, two-thirds of respondents said they were more concerned about the age of their C-suite than they were five years ago—possibly due to the aging of the baby boomer generation (Kacik, "Transformation Hub," Modern Healthcare, 1/31).
Advisory Board's take
All organizations should aspire to have succession plans and seamless transitions when a key leader departs—either planned or unplanned. The challenge, however, is translating this aspiration into practice in health care, where 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 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 are three insights we've gathered about how to ensure success:
- 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.
To pinpoint which leaders are likely to have imminent departures and are in critical roles, view our succession intervention evaluation tool on page 10 here.
- 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 here.
- 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.
Another great way for organizations to build out their bench of successors is through our Advisory Board Fellowship. The fellowship provides leaders with the tools they need to reach the next level through an 18-month development program and the completion of a project for their organization. To find out more about the program, view our page here.
Next, learn how to choose the right leaders for tomorrow's game
Need to fill a new role on your team? Don't wait until it's too late. Use this infographic to help you build an effective succession planning process.