Healthcare Leadership White Paper Series

10 Questions for Comprehensive Succession Planning
By Kathy M. Noland, PhD

If you haven’t yet begun succession planning within your healthcare organization, you’re not alone. In fact, 70% of hospital chief executives say there’s no succession planning within their facilities, while more than 50% of system CEOs report that it isn’t done on a system level, according to a report published by the American College of Healthcare Executives.1 However, with nearly 75% of healthcare CEOs planning to retire in the next 10 years and 60% of chief nursing officers anticipating changing jobs in the next four years, succession planning isn’t something hospitals can keep on the back burner. There is never a better time to begin succession planning than right now. Here are a few thought provoking questions to help lay the foundation for an effective succession planning process that will ensure outstanding performance at all levels of your organization, provide management strength and continuity, plus enrich and fill your leadership pipeline.

2. Why should my organization have a succession plan?
The overall health of your organization will be better maintained with a well-planned, well-executed succession plan in place. But if you’re not convinced, consider these sobering statistics; according to a Salary.com survey, 62% of mid-managers said they could be in the job market within three months. According to Hospitals & Health Networks magazine, the average cost of replacing one leader with an external candidate, at minimum, is approximately $50,000 — a cost that could reach as high as $1.5 million for a CEO. The better question is how can your organization afford not to have a succession plan in place?

3. What is the most important factor in building a strong framework of support for a succession plan?
A succession plan simply will not succeed without the support of the organization’s board of directors. A formal decree from the board will demonstrate to all employees that this is not a “flavor-of-the-month” initiative but a permanent fixture within the organization and an excellent opportunity to learn and grow in their careers.

1. What is succession planning?
Succession planning is a documented plan for management succession at all levels of the organization. It creates a road map for the future talent of your organization and defines how you will go about developing that talent. It also demonstrates a willingness to invest in your employees and their future success.

1

“Succession Planning Practices & Outcomes in U.S. Hospital Systems: Final Report.” American College of Healthcare Executives, August 2007.

877.802.4593 | www.BESmith.com

10 Questions for Comprehensive Succession Planning
4. What is the best way to gain the board of directors’ buy-in?
Perform a baseline assessment (also a necessary first step in any succession plan), which identifies the strengths and gaps within your organization and helps determine actions to address both current and future needs. Share the results with your board, and demonstrate how succession planning will enable your organization to invest in employees’ talents while maintaining your competitive edge.

8. Will succession planning fit into my organizational culture?
Make succession planning fit the tone of your organization. If your culture is formal, the succession plan’s attributes should mirror that type of culture and vice versa with a more informal approach. Ensure your succession plan is practical, easy to communicate and understand, and is ever-present in performance appraisals and other organizational initiatives. Weave succession planning into the fabric of your organizational culture, operating tactics and strategic plan.

5. How do I gain buy-in from associates and the management team?
You need to demonstrate to all levels of staff that succession planning is the organization’s investment in their long-term success by providing them with the necessary tools and support to take their careers to the next level. Additionally, this provides employees with the skills and competencies to perform to the best of their ability in their current positions, thus benefiting both employees and the organization. Done correctly, succession planning is a win/win for everyone.

9. How do I keep the momentum going once I begin?
Succession planning must be integrated into job descriptions, employee evaluations, and departmental goals and objectives. Employees need to understand and trust that the activities surrounding succession planning are not “extra work” or a “special project” but are vital components of their daily work life and position responsibilities. In addition, regular succession planning reports and updates should be given in team meetings, organizational presentations and at board meetings so that everyone stays focused and remains accountable for keeping the initiative moving in a positive direction.

6. What are some common pitfalls?
Some of the most common pitfalls include: • Delegating full responsibility to human resources • Focusing only on the senior team • Replacing people, rather than developing them • Not updating succession plans regularly • Calling recruiters too late • Allowing friendships to cloud your judgment • Making assumptions • Relying solely on an incumbent’s perspective

10. How do I know when succession planning is working?
At its best, succession planning is a win/win for both the organization and its employees. Associate turnover, patient satisfaction and quality outcomes all stand to improve as succession planning is further integrated into your organization. And while less measurable, increased employee morale and organizational loyalty, teamwork, and shared vision can have a tremendous impact on the organization’s overall health and momentum. Perhaps most valuable, you will gain a competitive advantage with a steady, strong workforce to carry you into an uncertain healthcare future. While you can’t control all the factors of healthcare reform, Medicare and Medicaid reimbursement, or the ever-increasing healthcare needs of the aging population, you can adapt and overcome these uncertainties with a prepared, resilient workforce — and a well-planned, well-executed succession plan is the best way to achieve that. The end result is a healthy organization with continuity of leadership and employees who are excited about and committed to the future, your organization and their careers.

7. When is it necessary to go outside the organization to fill a position instead of going with an internal candidate?
There are times when rapid or far-reaching change is required and no internal candidates fit the bill. You may need a person with certain skills, new thinking or more varied experiences, and that’s the time to reach out to a recruiting expert to help round out and strengthen your workforce. A best-practice search consultant will expand your search horizon exponentially while providing objectivity, a wide range of potential solutions and valuable time for your team to focus on the other issues at hand.

B. E. Smith: Integrated Healthcare Leadership Solutions
Founded in 1978, B. E. Smith is a full-service leadership solutions firm for healthcare providers. B. E. Smith’s comprehensive suite of services includes Interim Leadership, Permanent Executive Placements and Consulting Solutions. No matter where your succession planning strategy stands today, B. E. Smith is ready to help your organization ensure that you’re taking advantage of all opportunities to identify and develop your highest performers. For more information, visit www.BESmith.com or call 877.802.4593.
© 2011 B. E. Smith, Inc.

Kathy Noland, RN, PhD, is a vice president of
senior executive search at B. E. Smith. She has expertise in working with boards of directors to lead organizations through mergers, restructures, and financial turn-arounds. Dr. Noland is also effective in executive team mentoring, development and succession planning, and has a proven track record in recruitment/retention of chief executives, vice presidents, and academic leaders.
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