February 15, 2021

Succession Planning as a Competitive Advantage

Leadership Development

Reading Time: 3 minutes

Market-leading healthcare organizations have one thing in common: succession planning.

And yet, few healthcare leaders engage in it. What gives?

One study, published by the Frontiers of Health Services Management, argues that although succession planning seems like a logical and essential exercise, few leaders understand the complexities and requirements of a successful plan.

Leader transitions = high-risk decisions

Why bother with succession planning at all?

“The clearest answer is that leadership really matters. Organizations either thrive or don’t because of the quality of their leadership,” writes Nancy Schlichting, former CEO of Henry Ford Health System and author of the above study.

Nancy adds that leadership transitions are high-risk situations for healthcare organizations, and new leaders often fail to appreciate all dimensions of their responsibilities. That’s especially true for external hires who “do not understand the culture, strategic realities, and capacity of an organization to make necessary change,” she writes.

By contrast, well-planned internal successions tend to be far more successful than external hires in most situations.

Succession planning as insurance

More than plugging holes when a leader leaves the organization, effective succession planning protects organizations from severe disruption and underperformance, including subpar patient care and shrinking reimbursement, reports HealthLeaders.

Succession planning also helps you keep employees engaged, retain top talent and groom them for leadership ahead of time so they make fewer mistakes and “hit the ground running” on Day 1.

Altogether, these are massive competitive advantages impacting patient experiences and outcomes.

One hospital plans for its outgoing CEO

Some time ago, two of our MEDI coaches helped an organization plan for a vacant CEO slot.

The current CEO had just notified the board of his intention to retire in 24 months — a timeline that allowed the board to plan for a smooth transition. The organization had an excellent internal candidate but needed time to prepare him for the CEO role.

Guided by our coaches, the board used the following process to ensure the right CEO was selected in a timely manner with the support of all stakeholders.

  • The board created a transition committee, composed of key stakeholders. The committee was tasked with developing and overseeing the succession process from start to finish.
  • Though the committee gave preference to a qualified internal candidate, its priority was to find the right person, even if it required an outside search.
  • A competency-based job description was developed with input from the board, medical staff and executive team.
  • A timetable was defined, published and followed. The process also called for the internal candidate to be vetted within 12 months.
  • The internal candidate was assigned the position of VP of Strategy and asked to lead the development of a new strategic plan for the organization. The organization assigned MEDI executive coaches to help him prepare for the possible transition into the CEO role.
  • The current CEO provided guidance and counsel to the internal candidate. He also provided a written evaluation of the candidate to the transition committee.
  • MEDI executive coaches evaluated the internal candidate against the new CEO job description.
  • The full board was included in the final interview and decision-making.

In the end, the internal candidate earned the job and the succession plan paid great dividends for the organization.

Three key elements drove the successful outcome:

  • Structured process
  • Transition role for the internal candidate
  • Executive coaching for the internal candidate
Broadening succession planning beyond C-suite roles

It’s important to note your organization will benefit most from succession planning if you broaden it beyond the C-suite to include other key leadership roles. A structured annual leadership talent review will help you better understand the current state of leadership across business units as well as anticipated future leadership needs, vulnerabilities and opportunities.

This annual exercise helps you identify potential successors and their level of readiness for additional or new responsibilities.  Armed with this insight, you can target individual development activities and match leaders with the right opportunities (e.g. new roles, projects, committees, initiatives). In addition to building your organization’s leadership capacity, you’ll be able to identify themes regarding broader leadership development needs.

A strong succession plan will save your organization money and help accelerate results — if you manage it effectively.

Need to pick our coaches’ brains? We’re happy to answer questions and share what’s worked (or not) for organizations like yours. We’ll help you clarify next steps, whether or not we end up working together.

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About the author

Kathy Gibala

Kathy Gibala is a sought-after executive leadership coach with more than 25 years of healthcare industry experience and over 15 years as a coach. She is honored to serve as a trusted partner and change catalyst to healthcare executives across the US to raise the bar on their leadership, build high-performing teams, and accelerate transformative change. Kathy incorporates neuroscience-based coaching techniques to help healthcare leaders expand their impact and reach their fullest potential.

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