Category Archives: Severance

What is a blind reference?

Some people naively think that the only reference checking that is done is with the references given by a candidate or to a head hunter.   Executives recruiting for talent will peruse your CV looking for places where you and they might have common acquaintances.  They will also look for places that some of their friends and professional contacts might have insights.  When these links are found which is most of the time for an experienced recruiter or hiring executive, you are about to become the victim of a blind reference.

A ‘blind reference’ is an investigation into your past by a hiring executive that you know nothing about.

I do not put a lot of faith in  references provided by a candidate although I have had candidates give me references that were not very complimentary of them.  If you are going to give a reference, at least have an idea about what they are likely to say about you.  No one that has any sense is going to intentionally give a bad reference on a candidate to a stranger.  I also disregard reference letters.  No one is going to write a letter that states the candidate is bad.  On occasion, I will write a reference letter for someone as a personal favor but I aways counsel them that reference letters in my opinion are a total waste of time.  The only time I pay any attention to a reference letter is if I know the author.

Because of political correctness and the cold legal realities associated with references these days, the best you are going to get from formal references in most cases is that the candidate was hired on one date and departed on another date.  The most you are likely to learn is that the candidate actually did work for the firm you are contacting for the stated period of time.  They will rarely tell you anything more because references are subjective by nature in most cases.  Subjective references that cause a candidate to be ruled out of a search can become a liability for the person that gave the reference.  This is one of the reasons that blind reference checking has grown in my opinion.

If I get a reference call on a candidate being evaluated by someone I do not know, I refer the call to HR where I know what they are going to be told.  Even if the reference call comes from a friend,  I know the candidate and I know them to be bad, usually instead of giving a bad reference, I will usually refer my friend to HR where they will get the standard, canned response.  The hiring manager gets the message.  If a friend encounters me refusing to give a reference, they get the message.

The more frequent call that I get is from a decision maker that is checking references that are not on the candidate’s list.  These are the calls that are dangerous for candidates because they are blind to the candidate; hence a blind reference call.  The candidate will never know in most cases they were vetted through a blind source.  This is one of the many reasons why it is so important to keep up your networking and to not burn bridges unnecessarily.  If you left a place under questionable circumstances, you need to have a good explanatory story and you need to be forthcoming and transparent.  Of course a blind reference is not necessarily a bad thing.  Under the right conditions, it can propel you to the front of the line.  I received a blind reference call on a candidate I happened to be considering at the same time.  I told the blind reference caller that they could dispense with their questions because my reference will be very simple, “If you do not hire her, I will.”  I had worked with this candidate before and she is outstanding.  She was going to end up with a gig regardless of how the reference checking worked out in this case.

When I get a blind call from someone I know and trust, they are going to learn the whole story.  The reason is that I know I can call them to have the favor returned at some point in the future.  If the candidate departed under less than ideal circumstances or told a story that I know to not be true, I will give the reference to HR as stated above.  This usually surprises the decision maker that hoped to get something from me.  The fact that I refuse to provide a reference for someone that the decision maker knows I know well usually tells them enough, especially when I put off multiple requests for help.   About the third time I refuse to provide any information, the recruiting executive gets the message.  If you are going to engage in this activity, you have to be absolutely certain that your confidence will be protected.  This is the main reason that I resist giving references to head hunters unless I know them personally because it is hard to be certain your confidentiality will be protected.

When you are looking for a job, who will the hiring decision maker call?  What will they be told by people you used to work around?  Time after time, I have received blind reference calls.  Often, these calls are about someone that has done little if anything to endear themselves to me or to even keep in touch.  People like this generally do not return calls, ask of an acquaintance while offering nothing of value i.e., they do not engage in networking, they do not accept meetings or referrals, they do not attend or participate in industry related networking or continuing education activities such as ACHE or HFMA.  I wonder what these people expect I am going to say about them?  And of course, all of this is above and beyond anything I might know about their acumen, experience or capabilities.   I would rather not receive these calls in the first place but I do not control who calls me.

I do not know what it is about some people.  In one case, I reached out to an executive that I thought might benefit from my insight about handling executive turnover in his organization.  He humored me then never called me back in spite of the fact that I specifically requested a call regarding a wealth of information that I volunteered.  I never heard from him and I do not expect to hear from him because his failure to take my advice was at least partially responsible for his own firing a couple of months later.  A few weeks ago, I got a blind reference call.  The guy was seeking employment with a consulting firm and I knew the hiring executive very well.  What do you think happened?

This kind of thing does not have to happen to you.  If you are smart, you will get serious about networking and building as many positive relationships as you can.  Many of these relationships come from active participation in associations, alliances and industry peer groups.  You should volunteer your time to give yourself exposure to people that you might need for a job some day and in the process help them develop a positive impression of  you.

There is a saying that there are three kinds of people;  Those that make things happen, those that watch things happen and those that wonder what happened.  You never know when someone is going to make a call to someone that you might not even know; about you – a blind reference.  When that occurs, what will the results of that call be?  If you or someone you know is having difficulty getting a job and their qualifications appear competitive, they may be the victim of blind reference checking which puts them in the category of wondering what happened.

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 that might be valuable to you.  I can also help with career transitions or career planning.

The easiest way to keep abreast of this blog is to become a follower.  You will be notified of all updates as they occur.  To become a follower, just click the “Following” link that usually appears as a bubble near the bottom this web page.

There is a comment section at the bottom of each blog page.  Please provide input and feedback that will help me to improve the quality of this work.

This is original work.  This material is copyrighted by me with reproduction prohibited without prior permission.  I note and  provide links to supporting documentation for non-original material.

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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Are you afraid?

Fear – Feeling of anxiety, frightening thought, reverence or worry.  Synonyms include terror, dread, anxiety, horror, distress, fright, panic, alarm, trepidation and apprehension according to the dictionary.

My wife is the strongest and bravest person I know.  Like many women, she had a fibroid tumor.  The tumor was causing increasing hemorrhaging every month.  She barely recovered from the prior month when the cycle would start again and each was worse than the last.  Like so many women, she could not bring herself to face surgery.  In addition to not wanting to scar her perfect, beautiful body, she like most of the rest of us was horrified of the operating room.  Her fear was such that she was practically willing to die rather than submit herself voluntarily to surgery.  Nothing I said or did had any effect on Jo Ann.  She was not going to have surgery as long as she could cling to the hope that the natural process of menopause might ultimately solve her problem.

One morning, I awoke around 5 AM to find Jo Ann gone from our bed.  She was not in the bathroom.  As I got up to see where she was, I found her; on the floor beside our bed in the middle of a large pool of blood.  I was horrified, I thought she was dead.

A few hours later, Jo Ann found herself at Northside Hospital in Atlanta under the care of Dr. Benedict Benigo, Jr., one of the nation’s best gynecological oncology surgeons.  She was told that there was no alternative to surgery as she received blood to strengthen her for what was to come.

The family was allowed to accompany Jo Ann to the pre-OP holding area.  The anxiety of anticipation was building by the minute nearly past the point that a human can bear.  There were prayers and hugs but nothing seemed to be having much effect.  Then Dr. Benigo came to her bedside and what happened next changed my life forever.  He took her hand.  She was trembling with fear.  He asked her if she was afraid.  With a heartbreaking voice that was cracking, she told Dr. Begnio that she was so scared that she did not think she could bear what was coming.  Looking gently into her eyes and squeezing her hand, Dr. Begnio said with confidence and empathy I cannot adequately describe, “I am not afraid.”  He went on to say that he had done this procedure hundreds of times and that everything was going to be OK.

There is no drug that that could have had the effect of his simple, empathetic words, “I am not afraid.”

The surgery was successful, a benign tumor the size of a cantaloupe was removed and Jo Ann recovered to be more vibrant and vivacious than she had been in years.  I emerged from the experience with a totally different view of my work in hospitals.

Years ago, I made a conscious, career and lifestyle choice to go into Interim Executive Services.  I had no idea what I was getting myself into, how I would be changed and what a wild, crazy and fulfilling experience my life would become.  Since then, I became so enamored with my work that I went back to school to obtain a doctorate degree in healthcare administration focused on evidence based leadership. My dissertation, the only one of its type is on Interim Executive Services.

A transition is a scary experience in a healthcare organization.  A senior executive leaves on short notice, then another, then another.  The nightmare this induces seems to go on and on.  I know of cases where multiple leaders left concurrently and I worked in a situation where nine executives departed on the same day.  What is happening?  Why is it happening?  Who is behind the events?  Who is next?  When will it stop?  What is the organization trying to accomplish?  The fear this produces can paralyze an organization.

As an Interim Executive, I do not have a ‘job’ in the traditional sense in the organization.  My role in a transition is to stabilize the situation and help the organization to move forward through assessment, recruitment and on-boarding of new leadership.  I have addressed transitions in my previous blogs.  I have talked about the opportunities they create.  I have addressed the question of what  the leaders in the organization should be doing.  I have addressed the process and course of executive transitions.

In this article, I want to discuss fear.  Fear is a natural reaction to a perceived threat that is not fully understood.  It is a natural human instinct that can have a favorable effect.  I have learned that I am at my best in an environment where there is fear and uncertainty.  Why?  Because I AM NOT AFRAID.  Sometimes, I might be one of a very few or possibly the only member of the leadership team that is not afraid.  Why?  Because I have nothing to lose in the transition.  I am not rooted in the town and I come into an organization as others are exiting.  Actually, I do have some fear.  Voluntary Boards of Directors and most senior executives have little or no experience with transitions.  My fear is based on concern that I will not reach the requirement of need for leadership created by the transition event and the Board’s hope that I can lead a healing of the organization and make it better.  I have seen Interim Executives fail and that is a bigger disappointment to a Board than the event that precipitated the need for the Interim Executive in the first place.  I am human too.  I have a larger fear of failure than most people know or that I let on most of the time.  I am just not afraid of losing a ‘job.’

I endeavor to bring calm and order to a chaotic situation because I have nothing to lose.  I have but one objective and that is to help the organization get through the transition and on with its life, hopefully better for the experience.  I have found my calling.  Most executives have only one or two organizational transition events in which they are a leader during the course of their career.  I have been through a number of these events.

The ability to manage fear separates mediocre leaders from excellent leaders.   When an event precipitates fear, the Executives that are capable of leading the organization to the next level quickly distinguish themselves from those that cannot.  I discussed a situation that created absolute horror for the participants in a previous article.  It is an amazing phenomena to see the behavior of executives in an organization during a transition.  The difference between those that are paralyzed with fear and those that see and are striving for the opportunity created is palpable.  Some people rise to a challenge while others are frozen when the environment starts demanding more.  Some people relish change and opportunity while others mourn what used to be.  Some people need structure and predictability.  When structure and predictability are disrupted or eliminated, they panic and seize up.  Unfortunately, all too often this places them on the bus that is headed for the transition destination.  Interestingly, this phenomena is not the fault of the organization.  The transition may be induced by the organization but it has no control over how people will react.  The people react as they will forcing the organization to make adjustments because the Board will see to it that service to patients and fulfillment of the mission will continue in spite of personnel turnover.

It is easy for me to to tell you to not be afraid.  I can say from having experience in transitions and having been through more than one as a ‘victim,’ it is not fun.  ‘Still and yet,’ we must press on.  We are charged to make every aspect of our organization better.  It is being demanded by the environment and the patients we serve.  Fear is good.  It gets the adrenaline going.

An interesting aspect of combat is that there is no way to predict how humans will react in a combat situation.  The big he-man is reduced to a blithering idiot frozen in place sobbing for his mother while the meekest of the group steps up and says, “I have had enough of this,” as they demonstrate super-human courage and leadership.  Similarly, organizations cannot predict who their best leaders will be during a transition.  Some people are energized and come to life in an unstable situation and others hunker down.  Excellent leaders make themselves known when the chips are down and their leadership counts.  A moron can run something when it is in good shape and the environment is stable.  The essence of leadership is manifested and tested when it matters.

What kind of leader are you?  You have to acknowledge that fear is normal.  Everyone has fear.  Get over it.  Get up and get going.  Inspire those that are looking to you for clues as to how they should be responding.  If you have fear for your job, the best way to lose it is to fail to step up when the organization needs your leadership.  Fail in this situation and you have voted yourself off the island.  An administrative assistant once told me that the only leader the organization had ever had that was worth a hoot was the CEO that did not need the job, did not want the job and did not care whether the organization kept him or not.  His singular focus was to make the place better and he was comfortable doing the right thing for the organization without regard to his job and letting the chips fall where they would.

One of my favorite quotes is from Dr. Claire Lewicki (Nicole Kidman) in the movie Days of Thunder.  If you have not seen that movie, it is full of excellent principles for living and leading in organizations.  Substitute the word fear for control and see what you think. “Control is an illusion, you infantile egomaniac. Nobody knows what’s gonna happen next: not on a freeway, not in an airplane, not inside our own bodies and certainly not on a racetrack with 40 other infantile egomaniacs.”

“The only thing we have to fear is fear itself,” – FDR

“Letting sleeping dogs lie is for fear of the dogs.” – A friend

“The Lord is with me, I cannot be afraid.  What can man do to me?” – The Bible

“Do one thing every day that scares you.” – Eleanor Rosevelt

Google the words “Fear Quotes.”  That will keep you busy for a while.  There are thousands of concepts for you to contemplate and mediate upon.

Fear is a natural and normal reaction to instability and the unknown.  In order to be a successful leader, you must master this emotion and harness its energy to focus your efforts into being a better and more effective leader.

What is your mantra?  Mine is that, I AM NOT AFRAID.

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 that might be valuable to you.  I can also help with career transitions or career planning.
The easiest way to keep abreast of this blog is to become a follower.  You will be notified of all updates as they occur.  To become a follower, just click the “Following” link in the menu bar at the top of this web page.
This is original work.  This material is copyrighted by me with reproduction prohibited without prior permission.  I note and  provide links to supporting documentation for non-original material.

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.

What should you look for in an interim executive agreement?

Sometimes in the heat of dealing with a crisis, the decision maker is so focused on getting someone into a vacant position that they jump on the first deal they can get done.  In other cases, because of a referral, they take the deal offered at face value.  In my post titled “Types of interim executives and types of clients” I discuss the various types of interim executives and the organizations they serve.  I discuss the importance of matching the skills, experience and sophistication of the interim and their client as a means of achieving maximum value from the engagement.  There are a number of ways to make sure you get the best from your interim engagement.  This process starts with the contract.  Following are some of the considerations that are key to getting the best for your organization from an interim engagement.  The principles I am going to outline here are not only applicable for an interim engagement but they are useful in other contracting situations.

Rate:  Not only is the rate or fee associated with an interim important, the structure is equally important.  Structures can range from monthly to hourly and anything in between. While a monthly rate insulates the hosptial from excessive hours, it can also result in the hosptial paying for time it did not get.  If there is going to be a structure other than hourly, you should request a time sheet from the interim to support the billing.  If you are not going to be watching your interim’s time, you should have someone in your charge performing this function.  I do not advise putting interims on your timekeeping system because there may be an issue down the line regarding their status as an independent contractor.  The fact that you are doing timekeeping for interims on your system makes them look more like employees.  As far as fees are concerned, you should expect to pay between $75 per hour for a high level clerical position like an accountant or analyst to over $300 per hour for a C suite interim.  When you are converting hourly fees to monthly rates, remember there are 4.33 weeks in a month.

While I am on the topic of rate, I should take time to emphasize the importance of getting the most from an interim engagement.  Too many decision makers focus only on the rate while ignoring the potential for an interim to deliver many multiples of their cost.  I will address the reasons that interims are more expensive than employees in a future blog.  Instead of obsessing over the rate, give consideration to what you need to get accomplished and what that would be worth to your organization.  Do not forget to consider the risk you may incur from not having appropriate skill in a critical role during an unstable transitional situation.

Retainer:  Increasingly, I am seeing interim firms ask for a retainer.  They will ask for a lump sum payment representing thirty or more days of fee in advance.  The purpose of a retainer is to insulate the interim firm from credit risk associated with doing busines with you.   Unless you are in or expect to be in a bankruptcy proceeding, this is ridiculous.   All this does is make you the interim firm’s bank.  You are furnishing them an interest free line of credit.  If they are concerned about your ability or willingness to pay, you should question how interested they really are in becoming one of your business partners.  I have worked with an attorney that is of the opinion that a voluntary hospital may not have the legal ability to make a loan to a private enterprise and that is what you are doing when you pre-pay expenses.

Payment terms:  Interim firms will try to get their fees paid in advance.  The typical request is fees in advance and expenses in arrears.  Paying for services advance is almost as bad as providing a retainer.  You do not pay your employees in advance.  You should not be paying your interims in advance.  There is no reason to front expenses for services that have not been delivered.  If the interim has to go for any reason, you will have a settlement to negotiate.  If you find yourself in a dispute, you can always improve your leverage by withholding payment in the event of a breach of your agreement.

Severance / Notice:  This is one of my favorites.  An interim firm will tell you that you have to engage their resource for a minimum of anywhere between 60 and 120 days or more.  I have a couple of questions for you.  Are you in a right to work state?  Do you generally give non-executive employees or executive employees for that matter severance?  Why would you give an interim a better deal than you give your employees?  Once I had a CEO that had just come into the organization I was serving ask me what my deal was.  I answered that my ‘deal’ was to “serve at his will and pleasure. ” When he incrediously asked what the hell that meant, I told him that I was available to him as long as he saw value in my work and if he reached the point that I was not providing value in his opinion,  I was out of there.  I went on to explain that he would soon learn that he had more than his fair share of problems in this organization and I did not intend to become one of them.  If your interim needs the protection of severance or a notice deal to feel comfortable working in your organization, you have to ask yourself whether you have the right interim.  This is one of the things you pay a premium rate for.  I am comfortable working without a safety net.  I have actually refused time committed contracts once explaining to a bewildered CEO that I did not need that type of commitment; I am OK with being the easiest person in the organization to get rid of.   I am happy to earn my privilege of being in an organization on a day to day basis.  In every case things have worked out and I have ended up staying longer than either of us initially anticipated.  All of this being said, while my contract has a termination without cause provision,  I do ask for a courtesy notice of two weeks or more at the end of the engagement under ‘normal’ conditions.  This is for my convenience only and I would not require my client to observe or pay me pursuant to this clause if things were not going well.  So far, none of this has ever happened to me and if I am a decision maker on an engagement, I will not accept this term in a contract.  Local employees generally do not like interims all that much to start with.  I am not going to be party to giving myself or other interims a better deal than I have or a better deal than the organization’s employees get.

Termination / Replacement:   A transition situation that requires an interim is unstable by definition.  Sometimes the match is not right.  Sometimes the interim does not fulfill your expectations.  You should have an agreement that gives you the ability to request that an interim be replaced or terminated without cause or notice.  An interim producing value will never have a problem.  The more common problem for an interim that is producing value is getting out of the engagement as clients are reluctant to release interims that are creating significant improvement in the organization.  The organization should have the flexibility to terminate an interim arrangement without notice in the event the interim takes inappropriate action or gets involved in something  that would be a termination offense for an employee.

Jurisdiction:  Fortunately, I have never been involved in a disputed interim services contract.  However, I have knowledge of disputes over interim agreements and other types of contracts.  Most vendors will ask for legal venue in their home state.  They typically take the position that this term is not negotiable.  The question you have to ask yourself is that if you end up in a dispute, do you want to bear the cost of going across the country and hiring local counsel to resolve the problem in the vendor’s home town?  If they want to take money out of your town, they should be prepared to settle any dispute in your town.  I have not seen a vendor refuse local jurisdiction if the alternative is that they do not get the business.

Contact structure:   In my opinion, the most efficient way to structure an interim agreement is through a master contract / statement of work structure (SOW).  The master contract sets out the entire relationship except for the particulars about the interim resource(s).  Then SOWs are added or deleted from the master agreement as engagements occur during the course of the business relationship.  The concept is to make the engagement of interims through the same firm more efficient, especially if your organization has a rigorous review of contracts and documents.  One thing I have learned is that even if there is no intent to add interims at the beginning of an engagement, as a transition progresses, more skill often becomes necessary.  Adding a single page SOW to a master agreement is an easy way to facilitate getting additional resources on the job quickly and efficiently.

There is a potential problem with SOWs.  I encountered a situation with a firm I previously trusted that was trying to change the terms of their master agreement via a SOW.  This was going to create a situation where different interims from the same firm were going to have different engagement terms.  They introduced terms into a SOW that were different from the master agreement that were totally unrelated to the specific interim resource I needed.  To make matters worse, they threatened to cancel the interim’s travel plans if the SOW was not executed before the interim’s imminently scheduled airport departure.  For the first time in my career, I found myself negotiating an agreement under duress on a Sunday morning with a hostile firm that was trying to change the deal mid-course via the SOW.  Of course, all of this was blamed on bureaucrats in their nameless, faceless legal department.  I demanded and I am still waiting for the decision maker responsible for this fiasco to meet with me face to face to explain why this firm engaged in this activity and what they expected to gain.  Needless to say, I will not say that I will not use this firm again but I will exhaust all other alternatives before I ever use or recommend this disingenuous enterprise in the future.  The volume of my use of interims from this firm has declined significantly and will eventually reach zero.  There was nothing illegal about this.  However, a business partner that endeavors to change a deal without proactively telling you what they want to accomplish and why is not your friend. 

Exclusive agreement:  I have seen interim firms ask for exclusive arrangements.  There is potential synergy and possibly a small pricing advantage to using one firm for as many interim needs as possible.  That being said, it makes no sense for a decision maker to limit their options to only one firm when they may have widely varying needs.  For example, I have learned in the school of hard knocks that there are interim consulting firms and executive recruitment firms that specialize in one area or another; materials management for example.  Until I brought the resources of a ‘specialty’ firm to bear on a specific need, we were going nowhere in getting a resource into a key position.  If you enter an exclusive agreement and the firm you are using cannot fill your needs, then what?  Do not limit your options voluntarily .  .  .  ever.

Time period of an engagement:  Most interim agreements cover a defined period of time.  I have seen them as short as a month and as long as a year.  To me, the term of the agreement is not an issue if it can be extended or terminated on short notice without cause.  For example, you should be able to terminate a one year agreement upon reasonable notice if you find a permanent resource.

Standard terms and conditions:  As they say, the big words giveth, the small ones taketh away.  Most organizations have standard terms they require in every agreement.  Make sure all of your terms are in the agreement as you wish them.  Business partners will tell you that their contract is non-negotiable or that no one has ever asked them to make a change.  My advice is if you cannot get what you want in an agreement (as long as it is reasonable) move on.  Do not sign an agreement you have not read.  Do not sign an agreement that you do not understand every word, phrase and clause.  Do not sign an agreement that contains anything you do not like.  Just because the vendor is telling you that everyone else has signed the agreement or that it is their ‘standard’ contract, you should demand your right to get the agreement in a suitable form.  If the vendor will not accommodate this, tell them thanks and move on.

I should make a point here about contract language.  I have been reminded by a highly respected attorney mentor that if you find yourself in a court room arguing about the initial intent of the parties, your dispute may be settled by a jury of high school drop-outs.  If you want them to understand what you intended, you have a duty to insure that your contract is written in plain, simple, straight-forward English.

Teaching someone how to do contracting in a single blog is not going to happen.  My purpose in writing this is to sensitize decision makers to some of the considerations and traps in interim service agreements that work more to the advantage of the resource provider than the organization being served.  I find this distasteful but it has become a relatively standard practice.  You do not have to take the deal as offered and you should get terms that are fair not only to your organization but to the faithful employees in your employ that do their part to make things as they should be each and every day.

All of our interests would be served if we could collaborate to develop a contracting template for interim services.  I will be happy to compile and post a resource that contains the best of the suggestions that come from this effort.

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.
The easiest way to keep abreast of this blog is to become a follower.  You will be notified of all updates as they occur.  To become a follower, just click the “Following” link in the menu bar at the top of this web page.
This is original work.  I have not discovered content of this nature in my extensive dissertation research.  This material is copyrighted by me with reproduction prohibited without prior permission.  I always note and  provide links to supporting documentation for non-original material.

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.

The stages of an interim executive engagement

I have come to realize in my practice that an interim engagement follows a predictable pattern.  I have seen this happen time and again.  I understand the process that a decision maker goes through during the course of an interim engagement.  A majority of decision makers dealing with transitional situations have little or no experience with interim executives.  I asked about this as a part of my dissertation research.  A small proportion of my respondents (35.7%) reported having experience engaging and managing interim executives.  Another 33.6% of my respondents said they were knowledgeable about interim executive services but had not engaged an interim executive.  Similar to Elisabeth Kübler-Ross‘ five stages of grief, I have observed one organization after another going through a similar process during an executive transition.  The primary difference between organizations and decision makers is their exit point from this process. Some never get around to making a decision or decide to avoid the use of an interim.  In order of their occurrence, here are the stages of an interim engagement that I have experienced.

We do not need an interim – When faced with a transition situation, organizations employ a variety of strategies.  Some use internal resources, some leave the position open and others resort to consultants.  In a future blog, I will address the difference between an interim executive and a consultant.  Organizations will frequently initially resist the fees associated with engaging an interim executive.  They will search for any possible alternative to engaging the interim.  They will spend weeks or months struggling with the interim decision.  I have seen the passage of over six months between the time first contact was made with a decision maker regarding an interim position and the time the engagement actually started.

Acceptance of an interim – All too often, once the decision is made to employ an interim, the client wants the interim TOMORROW!.  Generally, the client communicates their desire to accelerate the interim engagement as a means of managing the cost of the interim engagement.  Sometimes, too much time passes between the time the decision maker meets an acceptable interim and the time they make a decision.  Then they are frustrated when they call to find that the interim they wanted is now engaged.  I once had a potential client get upset with me for ‘putting pressure’ on them to hire me.  All I had done was to tell them that I was being proposed by the firm I represented on multiple jobs and if they wanted me, they needed to make a decision.  In this case, one of the reasons they wanted me was perceived cultural fit.  They wanted someone that would fit into a rural eastern North Carolina culture and I had been a hospital CFO in that area.  Two weeks later, I received a desperate call.  They wanted to know how fast I could get to their site to address what had become a big problem.  I told them that I was literally on my way to Milwaukee.  I had been engaged a few days earlier by one of the other clients that had seen me.  The potential client that had let me ‘get away’ was not happy.  Ultimately, the firm lost the gig because they did not have any other resources that this client liked and I got to spend the winter in Milwaukee instead of eastern NC.  If you are a decision maker, MAKE A DECISION.

 
Recognition of the value proposition – I start my engagements with an assessment.  The purpose of the assessment is to determine the degree to which the function I am filling is or is not meeting the needs of the organization.  During the assessment, it is common to find a number of significant opportunities for improvement.  My experience has been that when a client sees the difference between the interim and what they had before or when they see the magnitude of opportunity revealed by the assessment, the value proposition ‘clicks.’  There is no easy way that I have found to tell a prospective client before an engagement that my experience might be valuable to their organization .  It comes across as self serving.  Once they understand the potential of working with a professional interim that is capable of being transformational in their organization, they want to get as much as possible out of the the engagement as fast as they can because they understand that the potential value is multiples of the cost.  This frequently reduces the client’s focus on getting the engagement over as fast as possible.

 
Employment overtures – Somewhere along the line, usually in the six to nine month period of an engagement, the client decides that the interim is highly desirable and recruitment overtures start.  Sometimes, they come to doubt that a recruitment would result in an equal or better permanent solution. According to my dissertation research, 25% – 40% of the time, the overtures result in employment even if it was not the initial intent of either party.  Tatum called this a ‘conversion.’  The respondents to my dissertation research survey stated that they had converted their interim 35.9% of the time.  If the interim is sophisticated, they will generally resist converting as they see consulting preferable to employment.  The challenge to this part of the process is to get through it without the client becoming concerned that they or their organization are not good enough for the interim.

Diminishing returns – If the interim does not convert, they ultimately begin to experience difficulty in achieving transformational gain in the organization.  Initially, they were a novelty full of energy and fresh ideas.  They are generally very impressive compared to their predecessors.  They are humored by the bureaucracy in the organization and their harvest of low hanging fruit is impressive.  Sooner or later, the resistance of the organization to engage in increasingly difficult change and increasing resistance on the part of the bureaucracy reduces the ability of the interim to produce transformational change.  One day the leadership is evaluating their situation and they conclude that the consultants are not earning their keep and the transition(s) start.  I will discuss the topic of culture and change in organizations in a future blog entry.

Recruitment – During this stage of the process, the interim participates in the recruitment by performing a number of key tasks.  They spearhead the development of a revised job description, they develop a specification for the recruiter, they participate in the interviewing and vetting and ultimately in the selection of the permanent candidate.  I have cast the deciding vote on my replacement more than once.

 
Transition – The transition occurs when the interim is replaced by a full time employee which can be the interim.  If it is not to be the interim, the interim generally assists the organization with the recruitment and on-boarding process.  When the on-boarding process is complete, the interim moves on to their next challenge usually leaving their client organization in much better shape and thankful for their service.

I have personally experienced this progression of an interim engagement time after time. I have also seen every one of my engagements run longer than initially discussed.  Before a client appreciates the value proposition, they are very highly motivated to get the engagement over as fast as possible.  I have been told time and again to not expect more than ninety days, 120 days at the most.   My average engagement is nine months and I am currently twenty months into an engagement  was initially mutually understood to be limited to an assessment only.

The other interesting phenomena that I have seen is that the process can be exited at any stage given circumstances unforeseen initially.  This is one reason that I go the extra mile by making it very easy for my clients to exit an engagement should it become necessary.

One of the factors that lead to engagements dragging on is that the client becomes comfortable with the interim and they allow distractions to degrade their focus on moving the organization beyond the interim engagement.  The next thing they know, the engagement is approaching its first anniversary.

If you are a decision maker considering an interim, my hope is that this material will enable you to better manage the engagement and get the most from it for you and your organization.  If you are considering interim services, and if you are any good, you should expect that your engagements will nearly always run longer than initially discussed with the clients.  Therefore, as an interim, you need to be careful making forward commitments that assume the engagement will be over by a time certain.

This is original work.  I have not seen content of this nature in my extensive dissertation research.  This material is copywrited by me with reproduction prohibited without prior permission.  I always note and  provide links to supporting documentation for non-original material.

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.
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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.

If the executive is going to get fired anyway, why do they need a contract or severance?

In my last blog, I said I would address the topic of severance packages.   From the perspective of a lay person, a severance deal can be seen as an undeserved reward for failing in an organization.  The severed employee goes on an extended company paid vacation while the minions are left to slave away for months or years cleaning up the mess.

I should clarify my terminology.  I am making a lot of references to CEOs in these commentaries but the principles I am describing apply equally to all of the ‘O’s.  In fact, either the CEO is setting the tone for the organization or what happens to him has a collateral effect on the other executives in organizations.  While I am on this subject, I should also acknowledge my  use of the male gender.  This is not intended to offend anyone or indicate bias.  I am tired of the political correctness that is killing our society.  If you see me use male gender, you can feel free to read him/her in its place.

I covered a number of reasons why an executive might leave an organization in my last article.  The overwhelming majority of causes of executive turnover are not controllable by the executive and sometimes are symptomatic of issues beyond the control of the executive or possibly even the Board.  This is the fundamental reason for a severance package.  In an earlier blog, I covered the risk that other executives are exposed to in the event of CEO turnover.  You can become eligible for turnover by just being in the wrong place at the wrong time.

A severance package has two basic goals.  The first is to ease recruitment by reducing the risk associated with turnover.  An executive is more likely to join an organization if they believe they are putting themselves or their family at less risk.  The second primary reason for a severance package is similar to the first.  The only way an executive is going to put the needs of the organization ahead of his own is if he does not care whether a course of action results in him losing his job.  An administrative assistant in a hospital once told me that the best CEO the organization had ever had was independently wealthy and did not need the job.  As a result, his focus was always on what was best for the hospital without regard to whether it put his job in jeopardy.   I not have seen other situations where an executive was sufficiently independent that his only goal in every situation was the best outcome for the hospital, especially in the absence of a severance agreement.

Even with a severance package, the executive still has fear of loss of his job.  Without severance, a Board is delusional to believe that their executives are going to engage in material personal risk on behalf of the organization.  They can be expected to pursue the more pressing objective of job preservation.  This type of paralysis will always lead to sub-optimizaton in the organization.   This phenoma explains one reason that interim executives can be transformational in an organization.  They are generally not running for the job and they have nothing to lose by focusing on the best for the organization.  If an organization wants the best from their executives, they must be willing to insulate them from as much risk of repercussion of the politics of their activities as possible.

On the other hand, severance packages can add sting to a bad outcome that results from a bad hiring decision in the first place.  If an organization makes a mistake in recruitment and the executive has a short tenure as a result, the severance package adds insult to injury and makes the turnover even more expensive than it would be otherwise.  Unfortunately, it is difficult if not impossible these days to recuruit a CEO without a severance package and I believe it is becoming increasingly difficult to recuit other well qualified executives without severance packages.  An organization unwilling to offer a severance package may be excluding itself from some of the best qualified candidates in a search.

Michael Rindler writing for Trustee Magazine produced an excellent article on Use and abuse of golden parachutes.  In this article, Mr. Rindler makes a number of observations about how severance packages have been abused and argues for performance based severance.

While I generally agree with Mr. Rindler, I have a somewhat different view.  If an organization wants the best from a CEO or any other ‘O’ for that matter, it must insulate them from the risks that their actions will result in their termination.  If an executive is indifferent regarding whether or not they maintain a job in an organization as long as they are doing the right thing(s), they will get superior results.  It is when they have fear of the repercussions of their activities that they start to sub-optimize or prioritize their self preservation interests above the intents of the organization.

Another reason for severance is that it enhances the recruitment process.  Being an ‘O’ in healthcare these days is among the most unstable, high risk jobs among similar executive positions in any industry.  This risk makes it difficult for an otherwise highly desirable executive to leave a comfortable situation to go into an unknown situation that might offer greater opportunity at unknown risk.  If the executive already has a severance package, they generally will not even consider another situation that does not offer the same ‘safety net’ regardless of the appeal of the new situation.  Therefore, severance packages are often necessary from a competitive perspective if the intent is to recruit the best talent available under the circumstances.

Where does this leave us?  Are severance packages a good idea?  I would say yes on balance.  Is is proper to reward executives for taking risks in an organization that may result in them leaving.  It is also justifiable to use severance packages to ease transitions when the fit is no longer right.  I do agree with Mr. Rindler’s argument that severance packages should be performance based.  I have not seen this done and I expect that many organizations would have difficulty with these arrangements because it is so hard to quantify the performance being measured and the effect of an executive or lack there of in influencing that performance.   The severance packages I have seen for the most part do the exact opposite of what Rindler is suggesting.  In order for them to not be honored, the executive would have to be CONVICTED of a felony related to the performance on their job.  This is also know as the Clinton defense where undisputed perjury does not constitute a crime as long as it is not related directly to the job.

Most of this has been written from the perspective of the Board of an organization.  I would advise a prospective executive to always seek a severance agreement. You have no way of knowing what you are really getting  yourself into and it is a reasonably safe bet that you will learn things that might have changed your mind had you known them before signing on.  Whether you are the CEO or not, you are exposed to a great deal of risk you cannot control and may end up on the street as collateral damage related to the failure of some other executive.  The time to get the severance deal is during the job negotiation.  It will become infinitely more difficult if not impossible after the fact.  I know executives that felt they were promised severance packages that never materialized.  The operative principle here is the same one applied by practitioners of the world’s oldest profession.  They know the perceived value of a service is always higher before it is delivered than after the fact.

In conclusion, severance packages are tricky and frequently they do not work as intended for either party.  Excellent executive talent is in very short supply and severance agreements are minimum requirements in most executive recruitments.  The best an organization can hope for is a package that encourages longevity and enhances the probability of desired outcomes.  Getting this for an organization is the trick.   As is the case in most complicated situations, an astute organization will seek the guidance and counsel of experts in negotiation, employment law and recruitment to obtain the best talent possible at the best cost with mutually beneficial employment arrangements.  Failure to do this can result in the spectacularly bad outcomes Rindler and others complain about.  Whether the complaints are justified or not, the organization can still end up in the media defending their actions handicapped by the fact that the complainants have the benefit of perfect hindsight.

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.

Why do CEOs get fired or leave organizations anyway?

In my previous post, I made reference to comments written by ‘TiredofTheOverpaidFailures’ in response to a Becker Review article.

Among other things, this writer said, “As a healthcare staffer for 35 years from entry-level employee to Director, I’ve literally never seen any CFO or CEO leave our organizations for any reason other than to “spend more time with my family”.  It’s true, because in every case they collected an inflated golden parachute for the next 2-3 years and indeed manage to take off time to spend with their family or most of the time do part-time consulting at some other organization where they have no idea the horrific failure they were in the previous position. For that matter, what shape they left the organization in.  They usually consider them “the expert” because they are from somewhere else.”

Clearly, he or she  was very bitter about what they had observed in the front office of their organization over a long period of time.

It is true that some of the folks occupying C-suite offices are not that stellar but more often than not, when they leave it is rarely because they are an idiot.  The system does a pretty good job of weeding out idiots before they can reach positions of such power and influence although I have seen a number of suspects among the casts of characters I have dealt with in healthcare administration.  So if the CEO is not an idiot, why let him go?  I will discuss a variety of situations that I have seen that I believe explain in part why CEO turnover in healthcare is so high.

I frequently hear complaints about what a Board is and is not doing with respect to the organization and the CEO.  A healthcare organization is not much different from a professional sports team.  The Board is the owner and the CEO is the coach.  In the end, like a sports team, the Board only has one switch or lever to use to guide the organization; hire the coach or fire the coach.  As long as the Board has not decided to fire the coach (CEO), by default they are supporting or at least tolerating him.  He is still their guy until the notice is delivered which can happen on the same date that an incentive award is given.  If you do not like what you see the CEO doing, it is not necessarily his fault.  Look to the Board for responsibility for the actions and results of their CEO.

The CEO is taking the organization in the wrong direction.  This does not mean that the direction is actually wrong.  Usually, it is very different from the predecessor’s course of action.  Sometimes, a new CEO will read that the reason for his predecessor’s failure was that he had the organization on the wrong track and the new CEO over compensates and sure enough, in two years or less, the Board concludes the new guy is on the wrong track.  This bad outcome is the fault of the Board.  Strategy and organizational direction is NOT the responsibility of the CEO.  It is the responsibility of the Board.  The CEO can facilitate the process but it should be a Board initiative so that the guidance to the CEO is clear and that the strategy transcends different CEOs should turnover occur.  In fact, a smart Board will insure that a candidate CEO concurs with their strategy BEFORE he is hired.

The leadership of the medical staff comes into the Board room.  I have counseled many CEOs on this phenomena that I believe to be one of the most common reasons for CEO turnover.  Name one case where the leadership of the medical staff went into the Board room and said “The boy is done,” and the Board fired the medial staff.  IT DOES NOT HAPPEN.  Every CEO lives in fear of this phenomena and he has seen many of his peers fall to this situation.  Therefore, CEOs are always constrained in what they can accomplish in the organization because if they push the medical staff too far, even if it is for the right reason, they are done when the vote of no confidence comes.  The CEO typically is hired from out-of-town and relocated to the hospital.  The Board rationalizes that the CEO can find another job elsewhere while doctors are ‘rooted’ in the community.  Whether this logic holds or not, the end result is the same in every case.  If anyone is aware of any case of a Board firing the medical staff and keeping their CEO, I would like to know about it.

A major project fails.  Even projects conceived or started before a CEO’s run starts can fell him.  Major construction projects or I/T projects that are not on time, not on budget or fail to come up flying on both wings represent major risks to a sitting CEO. The CEO does not do the project but he will be held accountable by the Board for failing to put the correct staff, resources and controls in place to ensure that the project is successful and to prevent a medical staff revolt if the medical staff is impacted by the project.

The results are just not there.  A financial plan or a strategic plan should be the result of a process or negotiation undertaken between the Board of Directors, their CEO and his management team.  The plan outlines the intended course of the organization over the coming period.  Once the plan(s) are approved, it is the responsibility of the CEO to execute the plan and deliver the results.  Frequently, the CEO is constrained by limitations of his team and in order to accomplish the organization’s objectives, the team has to be changed.  Sometimes different skill sets or different levels of capability are required than what is present on the incumbent team.  If the CEO fails to deliver the agreed results, the Board is justified in considering removing him for failure to execute.  If the failure is due to weakness of the management team, the CEO still owns the problem.  This is what provokes a lot of the collateral turnover discussed in a previous blog.

Speaking of results, a common error of new CEOs is their failure to get an independent, objective assessment of the organization or conduct their own upon arrival.  A Board tends to be more tolerant of issues that are documented and associated with the prior regime.  A CEO that fails to deliver a thorough assessment to the Board in the earliest part of their run in an organization will discover that after a few months, they will ‘own’ all of the problems in the organization whether they created them or not.  Documenting the initial state of the organization is a good way to establish a base line and clearly delineate what existed at the inception of the CEO’s employment.  An assessment is also a good way to facilitate and support requests for incremental resources to quickly address initial problems.

An Illness or accident interferes with the CEO’s ability to execute.  Sometimes, a CEO is beset by an uncontrollable illness that renders them incapable of continuing their duties.  Boards do not do as good a job of succession planning as they should and when something like this happens, the organization is thrust into an unexpected transition situation.  Sometimes an interim whether internal or external can bridge the gap but if the CEO is permanently disabled, a transition becomes inevitable.  WellStar Health System in Atlanta suffered such an incident in a widely publicized accident when their CEO was riding a motorcycle that he bought at a charity event was struck by an automobile and killed.

Indiscretion.  Don’t ask me why indiscretions occur.  Clearly they arise from CEOs that fail heed the adage of keeping their pen out of the company inkwell.  I know of a case where a CEO fornicated with a physician in a hospital stairwell under the watchful eye of a security camera.  The physician was impregnated and the resulting scandal thrust the organization into an unplanned transition.  A CEO’s position in an organization is very powerful and they have a lot of groupies.  Some of them allow it to go to their head and before they know it, they are felled by their own ego,.

Illegal activity.  The same is true of illegal activity.  Why an otherwise intelligent person with a living standard well above average would engage in illegal activity is one definition of insanity.  This behavior is a living example of Lord Acton’s adage that power tends to corrupt; absolute power corrupts absolutely.  Illegal activity within an organization frequently involves collusion and the fallout can result in collateral turnover and losses of time and resources while the organization is forced to focus on remediation of the crime and the resulting transitions.  A GA hospital CEO ended up in prison following convictions related to government programs.

Fit.  Sometimes, there is a fit problem that was not detected during the interviewing and vetting process.  This lack of fit could be based on personality, skill set or interaction/management style.  Whatever the reason, the hire was a mistake and it will not end well.  Sometimes, family fit is discounted and the CEO’s engagement ends up failing because the family did not relocate or did not tolerate the relocation.

Culture.  A friend quoting his Italian mother liked to say, “The fish stinks from the head.”  Indeed, the culture of an organization emanates from the office of the CEO and the Board room.  The longer a CEO’s predecessor has been in place, the more deeply ingrained the culture he will inherit.  The harder or faster he pushes to implement cultural change, the greater  the risk that he will be come a victim of his efforts.  Organizations resist cultural change and pushing too hard or too fast has more than once resulted in a CEO leaving an organization sooner than he planned.  This is true even if the CEO is acting at the DIRECTION of the Board.  I know of a case where a Board ordered a CEO to take a course of action that resulted in a serious conflict with the medial staff.  The Board had decreed that, “this will not stand.”  Never the less, when the leadership of the Medical staff showed up in the Board room, the CEO was done.  The Board had such remorse that they prepaid over five years of severance but the CEO still left the organization.  By the way, the first successor did not last very long either.

The CEO decides to move on.  It would be nice if organizations created an environment where career advancement transitions could be more open and managed in such a way as to create less turmoil as a result of the transition but this is frequently not the case.  Usually, the first notice a Board has of this situation is when their CEO announces his resignation and thirty-day notice.

Retirement.  Sometimes, the CEO survives until retirement.  If the retirement is handled properly, an orderly succession takes place.  If not, even a retirement can lead to a difficult transition.

The main point of this discussion is to lay groundwork to address the question referenced in my previous blog about the wisdom of severance packages and why I think they are generally the right thing for an organization to do.  My goal in this blog is to illustrate how risky it actually is to be a CEO.  There are a lot of things, many of which are out of the control of a CEO that can lead to CEO turnover.  Part of the reason for a severance agreement is to mitigate risk on both sides of an executive employment deal.  While much of the discussion here has focused on the CEO, the same principles apply to every C-Suite executive generally defined in each organization as the executives reporting directly to the CEO.

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.