While the turnover rate among hospital chief executives has been in the double digits for years, in 2013 it hit 20 percent, the highest it's been since the American College of Healthcare Executives began tracking it in 1981. As we know, health care is in a tumultuous time of change, a challenge that may be encouraging some of the turnover while at the same time demanding stability for organizations positioning themselves for future success.
The implications of CEO turnover for boards are significant. A successful leadership transition requires both a succession plan and an onboarding program for the new leader.
More Than Orientation
A hospital CEO's departure can slow or halt critical activities like strategic planning, development of new partnerships and affiliations, or implementation of other major initiatives. Meanwhile, competitors may take advantage of a gap in leadership to lure away medical staff, key employees and patients. Additionally, if the new CEO fails to meet expectations or isn't happy, there are costs associated with a failed hire. An onboarding program can help to mitigate these risks. In a report for the nonpartisan, nonprofit Partnership for Public Service, Booz Allen Hamilton cited research demonstrating that an effective onboarding program can improve early performance, increase an individual's engagement in the organization and its culture, increase retention and accelerate time to productivity.
An onboarding program for a new CEO should not be confused with orientation for new hires. Unlike an orientation program, onboarding is a process that spans the first critical months or even first year of the new leader's tenure with the organization. It's a strategic process that is uniquely designed to speed up the successful integration of a new executive into the organization. The process provides the unique knowledge, insights and introductions that will help a new CEO to more quickly understand the organizational culture, establish critical relationships, and become effective in his or her new position. In short, onboarding sets the stage for leadership success.
The Board's Role
Helping the new CEO to get a running start should be a critical success factor in the board's fulfillment of its hiring responsibilities. The first step is to ensure that a written onboarding plan is in the CEO succession plan. Engaging the current CEO in planning for eventual succession, transition and onboarding can help to smooth the road ahead not only for the incoming CEO, but for the organization as a whole. The plan should clarify roles and responsibilities for the outgoing, interim and succeeding CEOs, as well as outline the board's duties in the transition.
Having a plan is just the beginning. Once the new CEO arrives, the real onboarding work begins. One of the program's main objectives is to give the new CEO an understanding of organizational culture and support in navigating the first year. An official board introduction of the CEO to the organization and the community will set the stage for acceptance and support of the new leader.
The next step is introducing the CEO to internal and external stakeholders and influential colleagues. Trustees should offer insights to alliances and networks, both formal and unwritten, contributing history and putting relationships into context that help to build the CEO's cultural knowledge bank.
Consider hiring a transition coach. Many hospitals and systems consider it a good investment to bring on an external transition coach to assist new CEOs, boards and organizations to make successful transitions to new leadership. CEOs also find it helpful to have someone to call on who can offer honest, objective and constructive feedback and perspective. Identifying a board member or a member of the executive team who can help to deepen the CEO's early knowledge of the organization's environment, challenges and opportunities also will prove to be a valuable asset to the new leader.
Foundation of Trust
Smart boards understand that clear, continuous communication is essential to their relationship with the CEO and achievement of the strategic results they want. This is never truer than during a transition in leadership, when the board and CEO must establish the foundation for a trusting working relationship. While each entity may believe it has a clear understanding of the other's expectations, frequent open discussions between the board and CEO throughout the year helps to ensure all are on the same page.
Perceptive boards will stay attuned to the CEO, asking if the organization is meeting the new leader's expectations and what barriers or challenges are getting in the way of progress as well as what support, consultation or direction the CEO needs from them. There should be no surprises for either the board or the CEO when it's time to hold the CEO's annual evaluation and performance review.
Actions to Take Now
1 Examine your chief executive succession plan.
Does it stop with the hiring of the new CEO or extend to include transition and onboarding plans? If you don't have a written succession plan, develop one.
2 Evaluate your plans for CEO transition and onboarding.
Are they clearly written and comprehensive? Do they include well-defined roles and responsibilities for outgoing, interim and succeeding CEOs? Are the board's responsibilities for onboarding the succeeding CEO clearly identified?
3 Talk to your CEO.
Have a candid conversation with your CEO about future succession plans, transition and onboarding needs if you haven't done so in the past year. — C.F. and N.M.
Essential Program Elements
A comprehensive onboarding program should:
- provide a map to the organization's culture, including navigational support from the board
- identify key stakeholders and influential internal and external colleagues, and provide for introductions to be made on behalf of the new CEO
- identify formal and informal networks the CEO will need to establish
- identify one or more individuals (such as an external coach, board member or other executive) who can offer honest, objective, constructive feedback and perspective, as well as knowledge and information
- ensure frequent communication between the board and CEO to align expectations and performance goals and support the CEO's acclimation to the organization — C.F. and N.M.