Is You Health System Board Ready for CEO Succession Planning?

Photo by Brusk Dede

Originally Posted On: Is You Health System Board Ready for CEO Succession Planning? (tldgroupinc.com)

A funny thing is happening among senior leadership teams in health systems (and other sectors as well). More and more clients are telling us that multiple members of their senior leadership teams, starting with the CEO on down, could retire if they wanted to. Then they are quick to say “But of course, no one has any immediate plans to retire,–and that’s a good thing because we really don’t have any real successors.” That statement is often followed by some nervous laughter, and maybe someone muttering “We really need to do something about a succession plan.” Then it’s usually onto the next subject.

My reaction is far from amusement. I never cease to be amazed at how both Boards and clients underestimate the time and work involved to engage in meaningful and comprehensive succession planning. Far too many still act like it’s merely a matter of sitting in a room and making a list of who will replace who when the time comes. In and of itself, that can be a sobering exercise when someone asks about potential successors for C-Suite executives. A light bulb goes off more often than you would think when people realize that there’s insufficient bench strength to replace the successors they identify.

This is a complicated problem with lots of variables swirling around, and pretty high stakes. Boards would do well to require CEOs and their teams to start the succession planning process well in advance of an expected retirement. Here are some of the thorny issues to be dealt with:

• Are there in fact potential internal successors for the CEO and other C-Suite executives? If so, in addition to the passage of time, what has to happen to get them ready to step into the more senior role? (Think: DEVELOPMENT!) What resources can help accelerate the development process? (Think: Stretch assignments with heavy feedback, executive coaching, mentoring, individual development plans)
• How are the requirements for the job different today than what they were when the incumbent moved into the role, and how might they be even more different out into the future? (THINK: Success Profiles, starting with the CEO)
• If there are no logical internal successors, what is the external marketplace like? Would it be a good idea to bring someone in early so there is overlap, and an escape hatch if the external hire isn’t the right fit? (THINK: Hire a COO with the expectation that the person will be ready when the CEO retires)
• What’s the contingency plan when the unexpected happens? (THINK: Designated interim replacements)
• What needs to happen to strengthen the bench deeper into the organization? (THINK: Identification of and disproportionate investment in developing high potentials, regular talent reviews, accountability for development, executive coaching, stretch assignments, mentoring)

In many health systems, talent is one of only a few true differentiators. Boards must insist that succession planning is robust and results are measured, as well as requiring that the senior team move from simple “replacement planning” to true “succession readiness.” How would your clients stack up, and what can you do to drive this message home? We have the resources and expertise to help!