Executive turnover in healthcare is not new. Nearly all issues of Becker’s Hospital Review report on executive moves and departures. The American College of Healthcare Executives (ACHE) has tracked hospital CEO turnover for many years, reporting a rate of 16% in 2021 — a persisting trend that’s ranged from 13% to 20% since the early 80s. Though other C-suite roles may have experienced slightly lower turnover rates, the “Great Resignation,” aging Boomer executives, mergers and acquisitions, all add up to a perfect storm affecting all executive positions.
Also, not new to healthcare, is one powerful antidote or protective measure against the fallout of high turnover: succession planning. While most healthcare leaders know and understand the concept of succession planning, studies show nearly 70% of all succession management plans fail at the implementation stage. Leaders have an intent to do it, but don’t.
On the flip side, when succession planning is successfully implemented, research shows organizations reap significant benefits, including: ‘
- Ensuring the retention and advancement of the best talent in the organization
- Identifying potential successors so they may be groomed for top leadership ahead of time
- Limiting disruption in the organization when unplanned turnover occurs
- Building your competitive advantage and outperforming competitors
It’s interesting to note that among S&P Fortune 500 companies, 63% of newly appointed CFOs are promoted internally as a result of succession planning. If market leaders find the practice beneficial, why isn’t it practiced more widely?
In an error of cost containment and financial struggles, leadership development activities tend to move down on the priority list, with costly consequences. It becomes a paradox to know that succession planning can save an organization money, yet no money is allocated to the strategy.
In reality, organizations that invest in leadership development, mentoring, and executive coaching are a step ahead in their succession planning and in their overall retention plan. Calling it a “mission critical” responsibility, the American Hospital Association (AHA) suggests the return on investment (ROI) of succession planning takes into account the costs of recruitment, onboarding, turnover, and leadership development with how well individuals are performing in their new positions.
Ensuring a consistent and effective leadership at the top should be a priority for healthcare organizations, the AHA argues: “Comprehensive succession planning is a significant part of [your] leadership responsibility.”
Can you afford not to invest in succession planning?
Debra Harrison was the Chief Nursing Officer for Mayo Clinic in Jacksonville, Florida from 2006-2016. She retired in May 2016 and joined MEDI as an Executive Coach in early 2017.
Gina Schneider leads business development and operations for MEDI Leadership.