What happens following CEO turnover?

Abstract:  This article looks into the collateral damage that occurs with predictable probability following the turnover of a healthcare CEO position.  Multiple sources claim that healthcare CEO turnover is the highest of any industry.

On 18 December 2014, an article written by Tamara Rosin was published by Becker’s Review about CEO turnover.  You can see the article here:  beckershospitalreview.com/hospit…

There is excellent discussion following this article about the sorry quality of some of the people in healthcare leadership positions and allegations of questionable practices related to severance agreements.  There are plenty of situations where severance packages are a very good idea and I generally recommend them.  I will address this topic in a future blog.

There is also debate regarding the statistical validity of Ms. Rosin’s analysis.  Setting all of that aside, one fact is clear; there is a LOT OF CEO turnover in healthcare.  This is not the first time I am aware of  Challenger, Gray & Christmas  (CGC) publishing information about Healthcare turnover.  Writing for FierceHealthare News on 28 FEB 2012 Karen Cheung-Larivee cited CGC while asserting that healthcare turnover was the highest of all industries.  Healthcare CEO turnover higher than other industries – FierceHealthcare

To me the salient question is not so much about what industry has the greatest degree of turnover but what happens within an organization when leadership turnover occurs?  The answer according to research conducted by Amir Khaliq Perceptions of Hosptial CEOs About the effects of CEO turnover is that the rest of the C-Suite would be well advised to start hanging paper.

Dr. Khaliq’s research demonstrated higher rates of turnover among all of the rest of the C-Suite following CEO turnover than the CEO turnover rate itself.  The only exception was the CIO.  The rates of turnover were calculated based upon the probability that the incumbent executive would still be in the organization a year following CEO turnover.

Title of Position turning over Probability
AVP, Assistant Administrator 77%
CMO 77%
COO 52%
CFO 42%
CHRO 37%
CNO 26%
CIO 14%

From a career planning standpoint, the moral of this story is that you probably have a lot less control of your future than you believe.  In fact, the probability that you might be leaving the organization during a regime change has a lot less to do with the length and quality of your service than it does with the prerogative of a new CEO to select his own team; a situation that seems to be occurring a lot more than is publicized.  I have generally found this phenomena to be true among my friends and acquaintances.  Think back a little.  What is your observation of what has happened in organizations you are familiar with when the CEO goes?

It is a sad but clearly well-proven fact that the closer you get to the front office of an organization, the more your future livelihood depends upon what happens to the CEO than your contribution(s) to the organization.  Moreover, a new CEO is going to be oblivious to your ‘value’ to the organization, perceived or otherwise.  Their self-centered objective will be to assemble what they believe will be a winning team as fast as possible.  They know their own life expectancy as a CEO is generally three years or less and the faster they move to get what they believe will be a higher performing team in place, the better.  This reinforces that old adage that no one will ever take as good care of you as you will (or should) take care of yourself.

Higher ranking executives in healthcare organizations should be prepared for disruption, career transition, and relocation.  This is one of the ways they can actually end up advancing their career.  The learning from all of this is to not get enamored with your current organization.  All you have to do is to look around and see how the organization has treated executives forced into transition before to see how you can expect to be treated.  There is no evidence to suggest otherwise unless it is codified in an employment (severance) agreement.  Your best course of action is to never stop personal and professional development to maintain as many options as possible on an ongoing basis and to ease your transition when it occurs.

Please feel free to contact me to discuss any questions or observations you might have about these blogs or interim executive services in general.  As the only practicing Interim Executive that has done a dissertation on Interim Executive Services in healthcare in the US, I might have an idea or two you would find value in.  I can also help with career transitions or career planning.

If you would like to discuss any of this content or ask questions, I may be reached at ras2@me.com. I look forward to engaging in productive discussion with anyone that is a practicing interim executive or a decision-maker with experience engaging interim executives in healthcare.


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