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Nearly half of healthcare executives plan to leave their organizations within the next year, according to a recent survey. Such significant turnover puts healthcare organizations at risk for operational disruptions, instability, and overreliance on interim leadership — which means succession planning should be a crucial and ongoing topic of discussion.
Yet succession planning is often viewed as an academic exercise and rarely a priority until an actual leadership gap exists. For an understandable reason, too: There are always more immediate fires to address.
Impactful realities
The problem is that the reality of healthcare succession planning differs considerably from the “academics” of it. In reality, succession planning isn’t an exact science because no two healthcare organizations face the same challenges.
For instance, one report indicates that healthcare C-suite executives serve an average of 7.6 years before exiting their roles. That may be true statistically, but trying to put all hospitals and health systems into one bucket paints an inaccurate picture.
In financially secure health systems with sound operations, the CEO and other executives might spend decades in their roles. Stable, resource-rich systems are also more likely to have well-supported career ladders, training programs, and nurturing mechanisms to mentor people who want to assume leadership roles.
It’s the health systems facing difficult financial and operational challenges — which comprise the majority these days — that tend to experience rapid leadership churn. It’s not surprising, given the thin margins for error, lack of resources, and intense pressure that often accompany these leadership roles. At one such organization earlier this year, for example, all except one member of the C-suite team resigned within four months. Yet it’s these organizations that can benefit the most from strong, steady leadership transitions.
While there is no cookie-cutter formula, every health system can strengthen and prioritize succession planning by embedding it into daily operations. By taking an intentional approach to broadening the internal leadership pipeline, health systems can smooth inevitable leadership transitions and minimize the disruption caused by leadership gaps.
Intentional approach
The initial move toward building an effective succession plan is to abandon the common misconception that it’s merely an academic “project” or task. Indeed, the term “succession plan” itself is a misnomer, as the vast majority of healthcare C-suite transitions are rarely planned far in advance.
Instead, one of the best ways to foster long-term organizational resilience is to create a proactive and systematic approach to identifying and developing future leaders. In other words, succession planning must become an inherent, organic part of the fabric and culture of the organization. Rather than viewing it as a standalone process, it should be embraced as a leadership philosophy.
The goal should be to recruit individuals who align with the organization’s mission, possess the innate ability and desire to grow others, and are disciplined and intentional in their methods. Leaders must actively recognize individuals’ potential, challenge and support capabilities, and continually question, “Would this person be a good contributor to our future leadership team?” This kind of supportive and structured environment enables organizations to identify individuals’ capabilities before transition situations arise and equip them to step up.
That means succession planning should not begin in the C-suite, but in the organization-wide recruiting process.
The board of directors’ job is to select the CEO. The CEO’s job is to choose other C-suite members. Directors and managers are accountable for building their own teams. At each level, future-looking talent should be solicited.
During CEO recruitment, for instance, board members typically inquire about candidates’ past experiences and how they would address the organization’s immediate needs. Candidates are seldom asked probing questions about how their leadership style contributes to preparing future leaders. To remedy this, boards should ask potential candidates questions such as:
How do you develop people?
How do you present people with challenging opportunities?
How do you nurture people when they fail?
How do you ensure people have opportunities to grow and advance in an organization over time?
CEOs are tasked with managing both immediate challenges and future needs. So, a robust conversation about leadership development should be as much a part of CEO selection as how they’ll address immediate needs. Such discussions allow board members to verify a candidate’s forward vision and leadership style — both of which tend to be innate, unchangeable qualities.
Practical tips
If succession planning works best when it’s an organic part of an organization’s leadership style, the question becomes: How does that become reality? Strategies must be authentic to each organization, of course, but here are three tips to bring an organic outlook to fruition:
Nurture people at all levels of the organization. Encourage a management style that looks deep into the organization — perhaps two or more layers down from the C-suite — to identify potential leaders and contributors. That means being aware of the capabilities that upper-middle managers, middle managers, and others bring to the table. Challenge them with projects or situations in a way that they can be supported and ultimately succeed. Consistently developing internal talent gives organizations the ability to seamlessly transition people into leadership roles when necessary. Although this isn’t a quick-fix solution, it is the most pragmatic approach to succession planning — especially in organizations that don’t have the resources to create duplicate/shadow positions or sophisticated career ladder programs. After all, creating a supportive culture is free.
Carve out dedicated review and discussion time. One of the biggest barriers to successful succession planning is simply the lack of proactive conversation about it. So, consider putting the topic on the board’s agenda and/or C-suite meetings on a standing basis. Be aware, however, that doing so requires executives to extract themselves from the daily demands of running a healthcare organization long enough to prioritize talent identification and nurturing. While this approach requires an initial investment of time, executives who implement it successfully often expand their resource pool and gradually reduce daily chaos as a result.
Be disciplined in the interview process. Be sure to thoroughly explore how potential C-suite (and other) candidates cultivate both direct and indirect reports. Anyone recruiting talent should ask questions much like those the board should ask potential CEO candidates. This might include queries such as:
How do you manage in [a specific] situation?
How do you challenge and grow people who aren’t your direct reports?
Start from within
Strengthening leadership pipelines through mentorship and strategic talent cultivation is essential for continuity. Even better: It’s pragmatic. It requires only a few resources, namely time and intentionality.
Over time, individuals who are identified as potential leaders and supported in their growth tend to become ingrained in their organizations. A culture that prioritizes esprit de corps and a learning environment is a place where people want to be. They often feel valued beyond their compensation, and consequently, their retention rate is better.
Most importantly, this approach enables people to step into leadership roles even when the occasion arises suddenly. Thus, healthcare organizations that embed a succession planning philosophy into the very fabric of their culture will not only enhance stability but also safeguard patient care, operational efficiency, and financial sustainability during times of transition.
Photo: nevarpp, Getty Images
Duane Fitch, CPA, MBA, FACHE, is a Partner and national healthcare management consulting leader at Plante Moran. He works with healthcare providers, payers, and consulting organizations to help them develop and surpass their strategic, financial, and operational objectives. Specializing in acute care hospitals, critical access hospitals, and physician practices, he assists healthcare providers striving to improve their operating performance while maintaining focus on delivering their mission to the communities that they serve.
Duane has a bachelor’s degree in accountancy from Northern Illinois University and an M.B.A. from the Keller Graduate School of Management in Chicago.
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