By James U. King III and Christine Mackey-Ross
“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” –Bill Gates
If there were ever a time to make serious plans for the development and transitioning of senior executives at children’s hospitals, it is now. Child health issues ranging from Medicaid reform and the Children’s Health Insurance Program (CHIP) to childhood obesity and pediatric research present major challenges. In addition, integrated care for child and family health will be a focal point in the transformation of the nation’s delivery system over the next ten years.
Meanwhile, an entire generation of child health leaders prepares to retire. Their successors will be the ones to preserve the mission, vision and values of children’s hospitals, as well as develop responsible public policy regarding child health and welfare. But it is not exactly clear where these future leaders will come from, and how they will be equipped to handle the challenges that will confront them. The next two to three years will be critical in this regard. What children’s hospitals do within this short window of time to develop their next generation of leaders will largely determine how successfully these organizations will handle change and continue to fulfill their evolving missions.
A lack of internal succession planning?
Have children’s hospital leaders done enough to get ready? Are the right people in place to fill the vacancies left by soon-to-be departing CEOs? Probably not, according to results of a recent, targeted research study conducted by Witt/Kieffer, designed to gauge the sentiment of these executives on their most pressing challenges. Of the 19 child health CEOs contacted, only two-thirds (67 percent) say their organizations have a succession plan in place today.
There appears to be a mismatch between what these sitting CEOs would like to happen and what is actually going on in terms of identifying talent ready for the C-suite. Among potential successors to their role, 79 percent of CEO respondents consider the Chief Operating Officer a possible candidate, 29 percent consider the Chief Medical Officer and only 14 percent think the Chief Nursing Officer might be up to the task.
Sixty-two (62) percent of respondents say the COO is the internal candidate most likely to ascend to the CEO chair. However, while all succession plans reported by respondents call for internal executives to be considered as part of a national search, only 64 percent say their organizations have a development plan in place for the CEO “heir apparent.” Ideally, this figure would be close to 100 percent.
Furthermore, based on the CEOs’ own experience, 73 percent note that they came to their own role from outside, not inside the organization. And fewer than half (47 percent) of sitting children’s hospital CEOs today were CEOs prior to their current position. Only one-third (33 percent) indicate their immediate prior role was COO. This begs the question of where and when senior operations leaders are developing the right skills needed to step into the CEO role.
An external vs. internal focus
To answer the question, it is important to understand what differentiates a CEO from a COO or other leader with operational responsibilities. The difference, first and foremost, is focus. CEOs have an external focus; they are forward-thinking, looking out to the horizon to anticipate needs and develop strategy that fulfills the organization’s mission and vision. CEOs appreciate what motivates the many, varied constituencies they serve, focusing all the while on board and community relations and keeping an eye on financial targets. CEOs have a direct hand in philanthropy and therefore organizational sustainability.
Senior operations leaders, on the other hand, have much more of an internal focus. With full spectrum accountability for day-to-day operations, COOs implement plans and programs to achieve operational goals. With attention to efficiency, quality, and cost savings, COOs keep their eye on operations metrics, team performance and human resources among other internal and support functions.
Most needed skill: board relations
The CEO position requires a confident leader with the ability to guide the board in developing a future vision for the organization and strategy to achieve the vision. Highly effective CEOs keep their boards’ attention on strategic, rather than operational issues by, for example, providing a clear picture of the competitive landscape or identifying potential targets for mergers and acquisitions.
“Board relations” is in fact the skill their COOs most need to develop to move into the CEO role, say survey respondents. Seventy-three (73) percent cite board relations first, followed by strategic planning, reported by slightly more than half or 53 percent.
Similarly, when asked about specific development plans that are in place for their COO, all CEO respondents (100 percent) say exposure to the board and stakeholders is imperative. Ninety-two (92) percent include mentoring in their COO development plans; 69 percent believe that “stretch assignments” are important. Nearly half or 46 percent encourage possible CEO-successors to broaden their knowledge base.
Proximity to the CEO sets the stage
Typically, the closer the relationship a senior leader has with the CEO – resulting in more exposure to the board and other stakeholders – the more likely his or her focus can move from internal to external.
All responding CEOs (100 percent) say their direct reports include COOs and CFOs and 93 percent indicate the chief medical officer (CMO) is a direct report. On the other hand, less than half (47 percent) of surveyed CEOs say the chief human resources officer reports to them and only one-third (33 percent) have either the chief nursing officer or chief information officer as direct reports.
Regardless of reporting relationships, professional development is a shared responsibility. COOs, CMOs, CNOs and other CEO-hopefuls should look for opportunities to cultivate relationships with key stakeholders, hone strategic thinking skills and learn all they can about high-performing governing boards. In addition to staying up-to-the-minute on trends in child health and welfare, internal candidates for children’s hospital CEO roles should serve on not-for-profit boards, participate in or lead fundraising for philanthropic organizations and stay connected with executive search consultants.
The more planning and effort children’s hospitals put into leadership development in the near term, the more profound the influence their CEO successors will have over the long term. While it might not be their most top-of-mind concern, developing the “next generation” is a critical responsibility for today’s children’s hospital leaders.
About the Authors
James “Jim” King III is a senior partner, chief quality officer, and the leader of Witt/Kieffer’s Children’s Hospitals practice. Based in Minneapolis, Jim brings over 20 years of healthcare leadership experience to the firm.
Christine Mackey-Ross, R.N., M.B.A is Managing Partner and Practice Leader, Physician Integration and Leadership, for Witt/Kieffer. She is based in St. Louis.