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CEO SUCCESSION PLANNING

CEO SUCCESSION PLANNING . Presented at the “Leading Wisely, Leading Well” Retreat Alderbrook Resort & Spa May 22, 2007 Presented by Phil Sandifer, FACHE The Lakes Group, LLC. Introduction . WHO HAS A FORMAL (OR INFORMAL) PLAN FOR THEIR SUCCESSOR? WHO KNOWS ABOUT IT?

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CEO SUCCESSION PLANNING

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  1. CEO SUCCESSION PLANNING Presented at the “Leading Wisely, Leading Well” Retreat Alderbrook Resort & Spa May 22, 2007 Presented by Phil Sandifer, FACHE The Lakes Group, LLC

  2. Introduction • WHO HAS A FORMAL (OR INFORMAL) PLAN FOR THEIR SUCCESSOR? WHO KNOWS ABOUT IT? • WHOSE BOARD HAS A CEO SUCCESSION PLAN (THAT YOU KNOW ABOUT?)

  3. ACHE STUDY“CEO Succession Planning in Freestanding U.S. Hospitals: Final Study”October 27, 2004 (Full Report Available on ACHE Website) Study revealed: • 21% of hospitals ‘routinely’ develop C-Suite leadership succession; 17% of these have identified a CEO successor • Hospitals with a median of >130 staffed beds most likely to develop succession planning programs • Hospitals with median of <61 staffed beds rarely do succession planning

  4. Hospital CEO Longevity and National Rate of Turnover • 41% of hospitals’ have had 1 CEO for 5 years • 22% have had 3-4 CEO’s over 5 years “The Impact of CEO Turnover in U.S. Hospitals: ACHE Final Report, Spring 2005”: Khaliq & Thompson • National turnover rate 2006: 15%; 2005: 14%; 2004: 16% • Washington State (2006) rated 16th at 12% turnover; Oregon 9th @ 10%; California 29th @16%; Highest was #1 Delaware @ 40% “Hospital CEO Turnover 1981-2006, Research Publications for ACHE”

  5. Observations from an Interim CEO: Hospital Environment Upon ArrivalHospital Sizes 15-120 Beds • Hospital CEO’s had departed 10-20+days prior to arrival • Irregardless of the reason for CEO departure, I found: • Perceived (or real) communications breakdown in specific areas-internal and external stakeholders • Halt/slowdown of short term strategic and tactical planning • Communication issues led to negative perceptions toward the leadership team (to include the Board) • Key leadership (C-Suite) vacancies compromised operational/strategic accountability

  6. Transition vs. Change • Change is “external” • Transition is “internal” • “Normal” Turnover, e.g. no succession planning can have negative impacts similar to the previous slide

  7. Why Succession Planning for the CEO and Key Leadership is Not the “Norm” in U.S. Hospitals • Why do you think our Hospital Districts don’t do succession planning?

  8. Future Board Development of Succession Planning(CEO Alert) • “Big Business” boards are encouraged to plan 4 years ahead • “Practical Governance” by Tyler and Biggs encourages hospital boards to: • Confirm succession planning is being done by adding to the CEO’s Performance Evaluation • Board to approve ‘successor’ and succession plan • Board to ensure that future Board leadership supports plan

  9. Final Thoughts?Questions? • Think about how your Board would react to your offer to develop a ‘Succession Plan’--Any comments? • Think about how you would respond if one of your Board members reads about the Board role in succession planning in a trade publication or it is a conference topic-any comments? • Questions?

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