The most important responsibility a governing board has — whether it is for a large corporation or small, rural community hospital — is the selection of a CEO. The obstacles to achieving success are significant regardless of the size of the enterprise.
For the governing board of a rural community hospital, the challenges are exacerbated by a lack of expertise and resources. Trying to do the best they can on the cheap is a risky approach given that a miss-hire, in the best of circumstances, will cost the organization 100 to 200 times the outgoing CEO’s salary, according to several studies.
We touched on this issue in the second half of Wednesday’s podcast in which I outlined three concepts boards should adopt in their next CEO search.
In today’s post, I want to build on my recommendations to governing boards.
Avoid going it alone. Unless you have significant recruiting experience on the board, I recommend that board members seek outside guidance. This does not mean hiring some big-name search firm, most of which have very little experience in rural community hospitals. For some hospitals a search fee of $45,000 to $70,000 or more, depending on the CEO’s base salary plus expenses, is simply out of the question. However, there are lower cost alternatives. Some firms, like ours, will unbundle their search package and construct a cost-effective approach. This could include guidance on candidate screening, giving the hospital access to a firm’s background investigators, providing support in conducting reference interviews and even assisting with onboarding and team building programs. Onboarding is perhaps the single biggest deterrent to a short, disastrous CEO tenure.
Take the time it takes. The search process is time consuming. It is not a one-meeting-and-done process. Interviewing a candidate for an hour once or twice is simply not sufficient to ensure that you have the right qualified candidate. In such a short frame of time, it is unlikely you will get a real sense of the candidate’s style in handling certain situations. We recommend at least two site visits before a selection is made.
Pay attention to style and culture. Two of the most common problems leading to a job divorce is that the new CEO and the Board are at odds over leadership style and/or the vision for the organization’s future. If you hire a candidate, regardless of his or her prior success, who is from the this is the way I’ve always done it school of leadership and who thinks everyone else should adapt to their style, things will not end well and the organization will suffer mightily.
Don’t believe everything you hear. As a general rule, a candidate’s references are going to be good. Not always, but most of the time you can bet the farm on that premise. That is why you must use the interview to dig up opportunities for secondary references – those names of physicians, board members, employees or community leaders in cities where they previously worked. Develop reference questions that focus on a candidate’s stated accomplishments. Not only do you want to find out how they achieved a specific goal, but you need to ask about specific metrics. There is an important rule to remember in conducting reference interviews: if you don’t ask, the reference will probably not tell.
Onboarding is critical. Finding the right candidate is closely akin to finding the right spouse so it is not surprising that there is a collation between the nation’s divorce and CEO turnover rate — both in the 40 to 50 percent range. Enlightened larger organizations use a program called onboarding to mitigate the risks that a candidate will not be successful. The formal definition of onboarding is the action or process of integrating a new employee into an organization or familiarizing a new customer or client with one’s products or services. Onboarding should be formalized but it does not have to be expensive. With the help of your search advisor you can create an internal program or you can engage a firm to help plan to transition.
Here is a hint: If you hired the right candidate, they will welcome this approach to the transition. If you get pushback with a phrase like “I have done this many times. I do not need that kind of help,” then it is time to begin worrying whether you hired the right qualified CEO.
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© 2017 John Gregory Self
Leadership has never been an easy career pursuit but with today’s dynamic economy the challenges of being an effective leader are particularly acute, especially in those industries that are experiencing dramatic transformation with their business models. Healthcare, the news business, publishing and retail, for example, are all facing daunting challenges. Did you know that the US has lost more jobs in the retail industry than the whole of the coal industry? In the news business, where digital platforms have disrupted traditional advertising revenue and content distribution models, thousands of journalists have been laid off and hundreds of newspapers, including my former employer, The Houston Post, were driven from the market. In radio broadcasting, once a focal point for creating communities of similar interests, there are fewer live announcers, especially in smaller communities. Local disc jockeys and announcers are being replaced with programming computers that provide music, public affairs shows and weather information at lower costs than the old radio production model.
Every day, the Amazon delivery teams bring in dozens of packages to my building in Dallas. Several times a day they deliver everything from books and small appliances, to laundry detergent and paper towels and even items for the food pantry, all merchandise we once only bought at a retail store.
In healthcare, as reform realigns economic incentives, patients are being moved away from traditional acute care facilities — the big box hospitals — to more appropriate, less costly settings for diagnostic evaluation or even definitive care. This shift in care management will only escalate as controlling this nation’s enormous spend on healthcare services becomes an economic necessity.
These pressures on rural and community hospitals which are an essential part of the nation’s healthcare delivery structure, can be more intense, necessitating an acceleration in the pace of change to ensure survival.
Not only are these changes impacting the healthcare business model, but they also pose threats to those executives who are not sensitive to how these changes will impact their leadership style. Some executives talk about change but continue to operate as if change has no bearing on how they lead and communicate with their teams.
The truth is that executives rarely think about how they communicate. It is an automatic, something they do instinctively based on years of experience. In my years of interviewing executives, it is rare to find someone who has taken the time to create a communication structure and a plan.
While this may seem counterintuitive, leaders in smaller organizations like rural and community hospitals must be more adept than their colleagues who toil in larger corporate structures in metropolitan areas. They have to do so much more with less, and, typically, they have to do it faster.
One of the core competencies of leadership is communication; senior leaders must be excellent communicators.
Communication is about sharing information but it is also about seeking clarification when there are questions that are unanswered or when the situation is unclear.
Today I want to share my four pillars of effective leadership communication:
First, be strategic. You must always be thinking ahead. Leaders and managers cannot afford to take anything for granted. You cannot delay because the pace of change can, and probably will, overwhelm your ability to respond, especially if you have a habit of kicking the can down the road for a more convenient time to share information. To be an effective strategic communicator you must anticipate and understand how events will affect your team and those with whom you must collaborate. If this is not a natural ability you must plan in advance.
Second, you must maintain ongoing communications. In a fast-moving environment there is always the risk of management assumption — one or more of the parties in the project chain assume certain facts or make the wrong calculations based on inaccurate or poorly communicated information. Regularly scheduled communication updates with your superior and direct reports are critical, especially in times of intense activity — the roll out of a new service line, the change in a major vendor, or changes that produce a significant increase in activity.
Third, follow-up is essential. In mission critical scenarios, confirming the details of a meeting and the decisions made, especially highlighting action items that must be addressed, can sometimes make the difference between success or a mess. Even if it is a quick email, this can ensure that faulty assumptions are avoided and that action items are addressed in a timely manner.
And finally, be structured. Create a communications process and style that is consistent with a highly reliable leadership model. Your superior, your peers and direct reports will value that consistency. Always have an agenda with the goal of advancing the ball. Everyone hates meetings to discuss what happened in the last meeting. Afterwards, distribute the minutes of the meeting with action items and accountability specifically spelled out. In the end, effectively communicating information with clearly performance expectations is a bedrock of success.
One of the most important jobs of a governing board — whether it is a large corporation in a major metropolitan area or a small rural community hospital — is selecting a Chief Executive Officer. While finding the right fit for a CEO to lead a complex, multi-site enterprise is no small order, I believe the challenges facing board members overseeing a rural community hospital are much more daunting.
Big corporations compensate their members for their time. They are supported with staff resources to help them discharge their duties. Governing boards in smaller enterprises do not have that luxury. Most volunteer their time. They have full-time jobs and there are limited support resources available to guide them through the process.
There is a significant risk in hiring a new leader. If you are a board member looking at statistical success rates across all industrial sectors, at large and small companies, there is a stunning number that has remained about the same for the past 2o years: 40 percent of new executive hires usually leave within 18 months. The cost associated with that level of leadership turnover is staggering. Most studies conclude that the cost for a miss-hire or an early resignation, ranges between 100 and 200 times the executive’s annual salary. For a small business that is a terrible financial hit. In my 20 years of leading executive searches I have seen once successful community hospitals closing because of one poor hiring choice combined with an astounding reluctance by the board to admit they made an error, all evidence to the contrary.
So here are three concepts board members should consider when faced with making their most important decision:
References. There must a minimum of four — one or two former superior (bosses), a peer, and a subordinate. These individuals must be able to speak to the candidates’ performance at previous employers. Be sure to ask questions about the performance claims made by each candidate. Today, fabricating academic and professional credentials is a rarity. Exaggerating successes is much more common. In other words, follow President Ronald Reagan’s advice: trust but verify.
When deciding which firm to hire, ask about their process including how much time the recruiting who will be leading the search will spend on site, getting to know the board, the staff and community stakeholders. That is a function that cannot be done on the telephone or videoconference call. If the recruiter is reluctant to invest the time, they will not be able to understand your organization’s culture and that could very well lead to a very expensive miss-hire.
If you are a board member and would like additional information on the CEO search process, email me at firstname.lastname@example.org.
That’s it for this week. Next week we will look the important role a comprehensive onboarding program plays in reducing costly turnover.
© 2017 John Gregory Self
“I am really not any good when it comes to selling myself.”
That is one of the most common admissions I hear when helping candidates prepare for their job search. Candidates with interesting backgrounds and obvious skills struggle to deliver answers that are focused, on point, and have relevant examples of their success.
Some executives believe their performance should sell itself in a job interview and they refuse to consider the alternative. Others associate selling their accomplishments with bragging, a trait they grew up believing was an unseemly character flaw.
In a recent coaching session, a dynamic individual with an unusual and interesting background spent more time talking about where she had worked and almost no time speaking in the language of “this is what I have accomplished.” She was anxious to return to the active workforce but seemed unable to distill down the process to a basic winning formula:
Experience + Relevant Accomplishments = Value
That candidates need to effectively communicate their value by answering questions with specific examples of their successes is an accepted concept, but there continues to be a huge gap for far too many of them between what they know intellectually and what they do when the interview actually begins.
In researching an article on onboarding that I am preparing for a national trade publication, I found an old post in Forbes Magazine from an acquaintance, George Bradt, Chairman of PrimeGenesis, a global executive coaching and onboarding advisory firm, that may help candidates put the whole idea of selling themselves into a different context. Mr. Bradt believes that there are three, and only three, “true questions” in a job interview:
Perhaps candidates who get bogged down in the whole notion of “selling themselves” should hit the pause button in their interview preparation and think carefully about how they would ace those three root questions. Of course the phrase “interview preparation” assumes candidates actually spend time preparing/rehearsing for their interviews. Comments from other recruiters, and my own experiences, show that interview prep is either not done, or is so off the mark as to make it valueless.
Bradt, the father of onboarding and a former front line manager for several Fortune 500 companies, offers these ideas on how to improve your interview performance. Even if the person who is conducting the interview hasn’t been properly trained, “take charge in a way that makes them feel good about themselves and what they uncover about you.” His straight-forward advice, issues we have previously discussed here, is built around three points: Think, Answer and Bridge.
© 2017 John Gregory Self