Strategies to Ensure Deliberate, Positive, and Successful Leadership Transitions (Part 2/3)
This three-part series examines the ripple effects caused when key staff and leaders leave organizations, and how these organizations can mitigate adverse impacts caused during such transitions or avoiding them altogether. As Jim Collins stated in his best-selling book, Good To Great, “People are not your most important asset. The right people are.” Part Two of this series looks at the effective use of and rationale for interim leadership.
As healthcare organizations have weathered the greatest pandemic facing the world in more than 100 years, they are faced with more new and unprecedented challenges. Workforce shortages, supply limitations and inflation top the list, while maintaining staff engagement, high quality outcomes and financial sustainability are the long-term constants. To make matters worse, both key staff and leaders are leaving organizations at a record pace. The question now is, what can one of the 49% of hospitals do that has no succession plan, and loses a leader or key staff? The best thing to do is not be hasty, desperate, or emotional. As the statistics show, change happens. It happens quite often. And, it is happening with greater frequency. To keep leadership turnover from becoming an increasingly recurring theme, securing an independent (external), experienced interim leader may be warranted.
While sliding over an internal person to serve as an interim leader seems logical, especially in a department or division leadership role, as he or she already knows the organization and can start immediately, doing so can create a vacuum of responsibilities. By shuffling resources around to fill a void, new voids are created. An organization becomes, in essence, a “sliding tile puzzle,” where internal resources are constantly moved around to cover open positions. No matter how hard one tries, there is always an open spot in the puzzle. In other cases, where one resource assumes two roles (their current role and the open position), even if for a short term, a dilution of responsibilities occurs. As a result, performances may suffer. This is especially true for people who assume new responsibilities for which they were not prepared. While an organization may no longer have a void, they now have one person performing jobs previously justified as needing two persons. Either an organization was overstaffed prior to a leader’s departure, or is understaffed after a leader’s departure. Furthermore, as 25% of hospital CEO searches can take more than six months, and director and divisional roles seeking a person with five-years’ experience can take at least that long or even longer, having internal people in dual roles, especially roles for which they may be unprepared, can stress even the best of leaders and organizations.
Although an organization may believe it is saving money by utilizing internal resources in interim roles, the Society of Human Resources Management estimates a change in CEO costs an organization six to nine months’ salary, primarily from loss of productivity of staff. Other studies show the cost to be considerably more, and not just for executives. Recruiting and training new employees, including managers and directors, are expensive organizational processes, as employee recruitment and training costs can be 200% of an employee’s salary, thereby impacting the profitability of hospitals and increasing patients’ health care costs. Factors affecting this turnover and related costs include work environment, such as leadership and management. For example, in the case of nurses, research has revealed that management issues, low morale, the amount of time spent on non-nursing tasks, and workload all play a role in turnover, which may explain why turnover rates are even greater for Assistant Nurse Managers and Nurse Managers than they are for Directors of Nursing and Chief Nursing Officers. It can be argued that leadership sets this culture and environment. Changes in leadership do not always ensure a more positive outcome, especially when leaders come and go often, which is why working through a defined process, using an external interim leader, can drive a shorter yet more productive and positive outcome. After all, when not done properly, if an organization or department was not losing money before a transition, it could very well be losing money by the time a new leader starts, perhaps permanently.
To be most effective, external interim leaders assume all responsibilities of the permanent leaders whose roles they are temporarily filling. They use the same job descriptions, and have the same authority for hiring, firing, contracting, spending, compliance, quality, etc., as the leaders they are succeeding. By doing so, it allows the organization to operate as it would in ordinary times, with behavioral and performance expectations. As times of transition can also be times of political challenge, an external interim leader can often address both behavioral and performance issues more objectively than internal leaders assuming interim roles, as external interim leaders have neither baggage nor fear of future fallout, which can be the case when an internal person returns to their original role or is put in the leadership role permanently. This objectivity also yields benefits to the governance of an organization, whether it is a board or corporate-structured, as assessing, reporting and addressing issues is a key responsibility of an interim leader. Otherwise, unseen problems that may have contributed to the original leadership departure may continue to contribute to more turnover, regardless of level in the organization.
Perhaps the most significant role an external, experienced interim leader can bring to an organization is a calming presence during uncertain times. Assuming they have done this before, elsewhere, external interim leaders will have the necessary experience to guide boards and staff through leadership changes. Leaving an organization in a better place than it was in when the transition started is not an unrealistic expectation, which is why having the authority to function effectively in an interim role is critical.
It should be noted that, if there is an internal candidate for the permanent position, it is often tempting to place such a person in an interim role. The rationale for this is to “let them carve their teeth,” or to have them “test drive” the role. This can be costly if the candidate is one of the 83% of people not ready for the permanent role. Instead, it is appropriate for the internal candidate to be vetted for the position through the exact same process as external candidates, ensuring the strongest candidate is selected rather than having a process succumb to the pressures of convenience.
Whether or not an executive search firm is used, under certain circumstances it may very well make sense to have the external interim leader facilitate or chair an internal search committee for the permanent candidate. Based on the interim leader’s objective assessment of the position, needs of the organization and skill sets, specific candidate qualifications can be identified and sought through the search. If using an outside search firm, these specific attributes being sought by the organization can be communicated to the firm so that it has a most solid idea of what to look for. Even though the interim leader may have only been in the role a short while, he or she can provide an “insider’s perspective” of the role, as well as ensure others’ perspectives on the search committee are being recognized. The interim leader can also be the point person for any internal resources needed, including Human Resources, which may require some coordination for application processes, vetting requirements, background checks, skills and personality assessments, salary surveys and logistics for site visits by candidates.
The permanent leader recruitment process should take between 90 and 120 days and needs to stay a top priority for the organization. While not wanting to be hasty, there is no reason this process should be prolonged, keeping in mind the longer the transition, the more costly it is to the organization. Having the external, interim leader as the point person for the recruitment process ensures this recruitment stays a top priority, and that the organization is responsive and deliberate in each step it takes to find and secure its next leader. That does not mean an organization should take short cuts or compromise its search efforts. Even in communities that feel they are at a disadvantage (remotely located, small town, high leadership turnover in the past, politics), the right candidate is out there. If that candidate is not found after screening and bringing a round of candidates, at least three, in for on-site interviews, review the job description, salary/benefits package and attributes the search committee is seeking in candidates, make any necessary adjustments, and repeat the process; the right candidate will be found.
In Part Three of this series, the use of a “warm hand-off” between the interim leader and the permanent leader will be examined. Through a short-term post-transition strategic/work plan of 12 to 18 months, critical issues can avoid falling through the cracks, thus ensuring the greatest chances for the success of the new permanent leader.