Recruiting: Five Questions for CEOs

Posted on May 6, 2013 by John G. Self

“At most companies, people spend 2 percent of their time recruiting and 75 percent managing their recruiting mistakes.” – Richard Fairbank, CEO at Capital One, Forbes Magazine, April 2013.

Over the next five to seven years, as the healthcare industry faces a tsunami of change/transformation, an organization’s success or failure will turn on the quality of their employees and flawless execution.

CEOs who get caught up with big picture strategy options – Accountable Care Organizations, patient-centered medical homes, mergers, and acquisitions – at the expense of talent acquisition, development and retention do so at their own peril. In fact, you could make the case that an organization that fails to find, train and retain the best available talent – the “A” candidates – runs the risk of significant losses and, ultimately, business failure.

Here are five critical questions CEOs should consider to avoid career destroying mistakes:

Own the recruiting process – The great CEOs in modern business history will say that a big part of their success is driven by their focus on people – finding, recruiting, developing and retaining the best employees. How much time do you spend on recruiting/talent acquisition and training – 50 to 70 percent of your time?
Know your recruiting brand – Healthcare providers cannot attract and retain the best talent if their reputational brand stinks. How do potential employees see you in the market? Are the top candidates lining up to work for your business? What is your turnover rate? How many EEOC complaints are pending? Do your recruiters treat candidates with respect? Do they communicate effectively? Do you tolerate bad behavior from key executives and clinical leaders because of their perceived importance? What are you doing to ensure your brand says and means “employer of choice”?
How does your internal recruiting team perform? – Did you terminate your relationship with external recruiters because you wanted to improve the quality of the candidates, or to cut costs? Most CEOs will say “yes” to both questions. The fact is that many get stuck focusing on costs, as evidenced by onerous performance metrics that penalize recruiters who take too long to find the best talent. Metrics are important, but the real measure of successful recruiting is in the number of “A” candidates you interview and hire. Are your recruiters “A” quality or are they nice people content with filling job orders?
Do you have a best-of-breed management succession plan at the manager/director level as well as the C-suite? – While there is enormous reluctance among many healthcare executives to engage in succession planning in the executive office, one of the other threats is management turnover at the Department Director or Manager level. This is where success or failure is achieved – managing the day-to-day operations. Executives who fail to acknowledge this immutable truth will be career limited sooner than later. Are you really prepared for management and executive turnover with an up to date plan?
Do you have a sense of urgency? – Change is coming. When the full effects of reform hit, will you have the best people in place? If you wait, it will be too late. Finding the top talent requires a sense of urgency and a highly competitive spirit. If your competitors are smart, they are already sizing up your top performers. When you are recruiting an “A” candidate, you must instill a sense of urgency with the recruiting team. Do you allow endless meetings and scheduling conflicts to delay your recruiting process? What is more important, finding top talent or attending another unrelated meeting at which nothing is decided?

The Touchy Subject of Succession Planning

Posted on April 29, 2013 by John G. Self

One of the toughest decisions a long serving CEO has to make is when to leave the organization – to retire or take on another career challenge.

“Go out on top” is the ideal goal but more than a few executives, for a variety of reasons – financial concerns, unfulfilled business plans, no apparent successor, family preference, or unchecked ego – stay too long and, in the end, damage their reputation, their legacy and sometimes the very fabric of the organization they have worked hard to serve. Or more ominously, a sudden death or catastrophic illness or injury to the CEO can result in devastating consequences for the organization as the result of a vacuum in leadership.

This is particularly a challenging time for hospital CEO transitions, given the enormous pressures of ongoing reductions in reimbursement and the unpredictable consequences of the Affordable Care Act. Executive turnover is on the rise as CEOs struggle and sometimes fail to adapt to the realities of a new operating environment and as more and more Baby Boomers retire. Both the leadership dismissals and the retirements are fueling the escalating turnover which could peak at 20 to 24 percent nationally within seven years.

Over the last five years, I have watched this scenario play out several times. As each case unfolded, I had to question how the “what’s best for the organization” consideration factored in to all of the drama. In three of the cases, the publicity that was generated, in effect, put the hospital into play. One board found themselves fielding offers from several investor-owned corporations and two regional not-for-profit health systems, creating an enormous distraction throughout the organization at a time when the senior team should have been focusing on reducing costs and shoring up market share.

These messy transitions occur in all industries but healthcare seems more prone than most These transition train wrecks can negatively impact the operations of the hospital and the reputation of the CEO, marginalizing his or her positive accomplishments.

Why is healthcare more susceptible to these types of untidy leadership transitions?

Because healthcare executives have an aversion – a deep resistance – to even discuss succession planning. In some cases, CEOs like to cite a litany of the bad things that can happen when you start planning for a successor. Chief among those, although rarely mentioned, is that CEOs do not want to develop a plan that might make it easier for governing boards to get rid of them when they disagree, which happens now and again. Non-confrontational boards, of which there is an abundance in the not-for-profit healthcare segment, are reluctant to force the issue and the subject falls off the table.

I personally experienced the wrath of a successful, but tough CEO in East Texas. I mentioned succession planning. Before I could explain that I was actually referring to the importance of planning for mid-management turnover, a particular vulnerability for many hospitals, he erupted as he was so famous for doing. The ferocity and suddenness of his explosion startled me. It turns out that he thought I wanted him to engage in planning for his own departure and he was having none of that. As his rant gained steam and volume, I thought of two things: how will this affect the searches I was currently conducting for his organization and, if he threw me out of the window as he threatened to do, would my injuries be covered under my high deductible health plan or would it be considered a worker’s compensation event.

Stand-alone hospitals and small health systems are particularly vulnerable to messy transitions. That hospital boards would let something as critical as succession planning fall through the cracks is ironic given how much narrative is devoted in their annual reports and regular press releases to its critical role in a community’s economic well being.

In this new environment, hospitals and their boards can ill afford to put off, or ignore, this essential governance responsibility.

Happier Customers At No Cost

Posted on April 22, 2013 by John G. Self

How many of us LOVE to sit on a cramped airplane for 30 to 40 minutes or more, either at the gate or in a seemingly endless line of planes for takeoff, without any explanation from the crew regarding the reason for the delay, how many planes are ahead of you, or how much longer you will be delayed? This is especially the case when you are wedged in on a regional jet which is best described as a sewer tube with two jet engines mounted on the rear.

Why an airline pilot, supposedly a professional who has as much at stake in customer satisfaction scores as anyone else at the airline, would leave everyone in the dark is baffling.

It is also crummy, unacceptable customer service. The problem is that poor communications with passengers – their customers — is more common than the airlines will admit.

Now, here is the really interesting part: if your airline and its regional affiliates are currently at, or near the bottom of the customer satisfaction list, assuaging customer frustration with better communication is something that can be accomplished without costing anyone a dime. Imagine that, improved service — happier customers — at no cost? But then this is an industry that has shortened their seat belt length so that even people with 38 to 40 inch waistlines can barely buckle up. Really? Really? Is it really worth the few pennies saved on material per belt at the cost of uncomfortable and irritated passengers?

Lest you think I am being unfair to the airlines – and they richly deserve the criticism – my industry, healthcare, has more than its fair share of customer service/poor communication warts, which in the case of hospitals and doctors can lead to unnecessary lawsuits or worse, like a short sighted desire by an airline to trim costs with little regard for customer comfort, a loss of consumer confidence and business.

There is a common theme at play here: poor communication, and in some cases, arrogance.

To adapt an old saying — ignorance (read: poor communication) gets you in trouble. Arrogance keeps you there.

Customer satisfaction, like quality, once it is lost is difficult and expensive to regain.

By the way, when the first officer finally communicated with us regarding our new, delayed estimated time of arrival, it would have been nice if she could have gotten the verb tenses correct.