Succession Planning

SUCCESSION PLANNING ::

CEO Alert:

Four costly mistakes in healthcare succession planning and how to avoid them

Picture this: Your CNO submits a letter of resignation, effective immediately. Your current succession plan (that is, if you have one) did wonders for your Board, but it’s not as realistic as you may have thought, so you place an interim CNO to keep things running. Since your internal talent management practices are not effectively tied to your succession planning, you have no choice but to launch an external search for a replacement. The search takes longer than anticipated, and costs much more money and time than you planned for. Some of your key initiatives that were led by the CNO are now at risk and performance measures begin to drop…

Exaggerated scenario? Perhaps -but not far from what has happened to a number of healthcare organizations. The consequences of poor succession practices are obvious and can be painful. Following are four costly mistakes that commonly take place in the healthcare industry. Short prescriptions of how to avoid them are also given.

Mistake #1: You have no formal succession planning in place, and if you do, it’s not considered a strategic priority. According to a 2007 study by the Association for Healthcare Executives, less than 30% of hospital CEOs practice routine succession planning. So if you have no formal plans in place, you are not alone! Correcting this mistake is simple: Put a formal succession plan in place and make it a strategic priority.

Mistake #2: The succession plan covers only the CEO. By definition, all key positions in the ‘C’ Suite should be included in the formal succession plan.

Mistake #3: You evaluate internal candidates using tenure and experience as opposed to proven talent. The word ‘talent’ has many meanings attached to it. In this context, we define talent as proven, evidence-based performance. Whereas skill set-based succession planning can be useful, our research has shown that the odds of success improve dramatically when you use objective performance indicators to define talent and use it as a baseline for succession planning. It is also important to distinguish between departments that require a turnaround vs. departments that are functioning in a maintenance mode. Without a doubt, the struggling departments need a higher level of talent. If the people you assign to departments that need a turnaround have average talent, performance is not likely to improve.

Mistake #4: You treat succession planning as a static event as opposed to an ongoing process. Perhaps ten years ago, a static, long-term succession plan would work well. In today’s fast-paced, quickly-changing healthcare environment, with strategies, teams, and external conditions changing at a dizzying rate, rigid succession plans cannot be effective. The answer is to take a talent-on-demand approach, whereby you succession plan is flexible and is updated frequently.

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