Tag Archives: Board

More examples of what not to do AKA how to stay in the frying pan and not fall into the fire.

This is the second article in the series about what not to do.  The person suggesting this article asked for examples of things that might help you save yourself from yourself.  Please send me your examples and stories of things not to do.  Your confidentiality will be protected unless you want credit for the idea.  Sharing this experience, especially with younger executives is one of the best ways to serve the industry.  I have an outline of a third article and depending upon response, I could probably keep this going for a while since like a consultant friend of mine used to say, “One idiot can keep three consultants busy forever.”

Project planning

Ben Franklin’s adage goes, “Failing to plan is planning to fail.”  I have found this profound simple statement to be true time and again.

After being appointed interim CFO in a hospital, I learned that there was a major construction project under way.  The project and the rate at which the hospital was burning money on the project did not make sense to me.  To make a long, complicated story short, no one could produce a feasibility study to support the project’s value proposition or pro-forma analysis to support the project’s underlying  financing.  When no one could produce a sources and uses of funds analysis, I spent a couple of weeks creating my own from scratch.  When I was finished, it was clear that the project was underfunded by over $20 million and the hospital did not have sufficient reserves to cover the shortfall.  When this information was provided to the Board, after they recovered from the shock and horror, they decided to stop the project that would have resulted in a problem with the bonds used to finance the project by drawing reserves below bond covenant minimum requirements triggering a technical default.  The entire organization was oblivious to this looming disaster.

Ole Abe said that, “You should spend twice as much time sharpening your axe as you spend cutting with it.”  The implication of this admonition is obvious to anyone that has ever cut wood with an axe.  Still and yet, executives let distractions and competition for their time lead them to allow ill-conceived initiatives to go forward then they are surprised when the projects blow up on them.  If you want to entertain yourself, pick any executive out at a cocktail party and ask them if they have ever seen a project go bad.  The war stories you will hear are spectacular. Better yet, ask the ‘expert’ if they have ever seen a peer do something stupid.  Apparently, they have not heard or have disregarded the advice of Einstein, “Doing the same thing and expecting a different outcome is the beginning of insanity.”

Project control

Oh boy!  The easy part of a project is the planing and approval.  The hard part is execution.  There are a lot of challenges with project execution.  One is that other unanticipated confounding priorities arise in the organization that bleed capacity from the organization’s leadership to remain focused on a critical project.  Another commonly seen problem with project execution is the loss of key leaders during the course of the project.  All too frequently, critical assumptions underlying the project’s rationalization are proven inaccurate or incomplete once execution begins.  Sometimes, a project’s success is largely dependent upon one person and if that person leaves or is incapacitated, the entire project goes into jeopardy.

To some degree, a project is analogous to a marriage.  In order for it to succeed, more than 100% commitment is required from all sides.  Every effort you make to manage your risk can be thwarted by uncontrollable changes in your business partner(s).  There is no guarantee that the people that sold a deal and made commitments on behalf of your business partner will be around to honor those commitments.  If they made commitments that were not in the contract, they may not be allowed to honor them.  More than once before a project was completed, I have found myself dealing with an entirely different cast of characters.  What about a business partner that gets acquired during implementation and none of the commitments made before the acquisition are honored?  A business failure or overcommitment by a business partner can move into your life like bad in-laws.  This is why business partner selection is so important.  Too often, a decision maker will chose a business partner based on cost alone and in the process buy himself a set of problems that turn out to be exponentially more expensive than the most expensive option that was under consideration at the time the decision was made.

A project does not have to fail to become a disaster.  Delays in a project can be as damaging.  I do not know of a delayed project that resulted in a better outcome.  Sometimes, delays cause cascading problems.  Take a construction project for example where the electrical contractor is contracted to start on a date certain and the project is not far along enough for them to begin work.  This kind of a delay can rapidly spread throughout an organization and create enough problems to overwhelm the ability of the leadership team to address them.  This is the reason you were required to study PERT in school.  How often do you see it applied in practice?

If a mistake is to be made in project management, it should be biased in favor of overcompensation for potential problems.  I am regularly criticized for being too conservative and too hard on pro-forma analysis assumptions. Never the less, time after time I see projected revenues and time lines being overstated and projected expenses understated.

Waiting too long to intervene

I have watched executives demur from engaging an issue in hopes that it would go away.  I have rarely seen this strategy work.  More often than not, a problem in an organization will get worse the longer intervention is delayed.  There are a lot of reasons that this occurs not the least of which is that addressing operational problems most often involves dealing with a personnel problem.  I do not know many executives that enjoy taking on a personnel problem.  Vince Lombardi said, “Hope is not a strategy.”  Failing or refusing to intervene can allow a problem to become exponentially more damaging until it reaches the point that the organization’s financial statements are impacted.  Time and again as an interim, I have been asked, why it was going to take so long and cost so much to address a problem?  I have seen ten or more interim executives committed to address what had been allowed to become a major business problem on more than one occasion.  My answer to this question is always the same.  Cutting costs after an organization finally decides to address a problem only prolongs the time and cost necessary for the mitigation.  All too frequently, organizations create a problem by under-resourcing an area or initiative.  When this leads to a melt-down, the leaders charged with the mitigation are frequently frustrated by the cost and time associated with fixing the resulting mess.  Sometimes, I have to tell them for their future reference that the cost associated with keeping a process or function under control is always a small fraction of the time and resources necessary to straighten it out after it goes catawaumpus.  Every executive I know can relate one or more horror stories to prove this point.  More often than not, the fiasco is related to an I/T implementation where the costs and operational consequences associated with a failed project can exceed the original budgeted cost of the project.

Fire fighters are known for over-commiting resources to a fire.  This strategy is designed to err on the side of having more resource than is needed to address the fire as opposed to running the risk that a growing fire will overwhelm the resources that are available on site.  Once, I asked an interim CEO how it was going relatively early into his engagement in a very troubled large hospital.  His answer that I have never forgotten was, “The platform is on fire.”  A platform is like a ship.  When it catches fire, getting off is rarely an option.  You must fight the fire where it is and failure is not an option.  Remember the USS Forestall?  Skimping on resources when dealing with a problem like this can lead to figurative death in the form of an unplanned career transition.  A business problem is analogous to a fire in the organization.  If you are going to make a mistake addressing a problem, your personal risk will be much lower if you respond aggressively to a problem and err on the side of over-commiting resources until the problem is resolved and the situation stabalized.  The alternative is a potential conflagration.

Non-evidence based decisions

The mantra of UAB’s Doctorate of Administration in Health Sciences program is, “Evidence based practice in Healthcare Administration.”  I have commented before on what appears to be a paradox in healthcare.  On the clinical side, most of what is done is based on evidence gained from objective, peer reviewed research.  The purpose of the research is to yield better outcomes and safer facilities for patient care.  In the administrative suites of too many healthcare organizations, decisions are routinely made based on seat-of-the-pants hunches, historical precedent, little or no analysis, ridiculous assumptions, no assumptions, flawed analysis, systematic ignorance or reckless disregard of applicable evidence and research.  More often than not, harried administrators do not even bother to see if any applicable research is available to help them make better decisions.  In other cases, decisions are made for political expediency or to appease Dr. Huff-and-Puff.  I got into trouble in a Catholic hospital for suggesting the leadership team’s decision making ranged from magic eight ball to Ouija board.  I now keep a magic eight ball on my desk as a reminder to not fall into this trap.  It is funny to have younger people ask me what the magic eight ball is.  They’re not old enough in some cases to have ever heard of the magic eight ball and they are fascinated to see how it works.  It is a wonder some organizations get along as well as they do.

Indecisiveness
I was perusing novelty signs in a gift shop in Indiana when a sign captured my attention.  It said, “Decision making around here is like a squirrel crossing the road.”  Indecisiveness can be dangerous when it is practiced in the front office.  At its least, indecisiveness can lead to project and initiave delays.  At worst, it can wreck not only projects but the credibility of executives with their Boards.  There’s a one liner that says, “The road to failure is littered with run over squirrels.”  In an earlier article I said, “If you are a decision maker, make a decision.”  Not making a decision is making a decision.
As before, I would like to thank Dr. Christy Lemak Professor and Chair of the UAB Department of Health Services Administration for the inspiration or should I say assignment that resulted in this article. I am looking forward to seeing my grade.
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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Where is Mark Richt?

A lot of people do not understand executive succession events.  It is common for a leader to be liked inside and outside the organization.  The performance of the leader is seen differently based upon the perspective of the viewer.  While many may see a leader as ‘nice’ and ‘trying hard’ others see him as ineffective.  In several of my articles, I make reference to the fact that as you progress in leadership, you are evaluated more on the results of what you do than the effort expended in leadership.  Some times, personal or organizational limitations inhibit the potential of a leader to be effective regardless of how hard he tries.  Ultimately, the people responsible for the leader conclude that in order for the organization to reach its perceived potential, a leadership change is necessary.  It is at this point that executive turnover begins and it is almost always followed by collateral turnover as lower level leaders are replaced in an effort to improve the ability of the organization to better meet its challenges or mission.

In Georgia, we have an excellent example of this phenomena.  When someone asks me what happened to someone or how the organization could do something so harsh to such a nice guy, I ask them, “Where is Mark Richt?”  In November of 2015, the University of Georgia announced that Mark Richt was leaving.  Many wonder why.  This gives me an opportunity to launch a Socratic dialog.  My questions usually go something like this:

Would anyone argue with the following premises?

That Mark Richt was not a nice guy?

That he compiled a record at Georgia and in the NCAA that places him among the icons of sport leadership?

That he did not understand the game of football?

That he did not want to win?

That he did not live an exemplary Christian life?

That he intervened in the lives of dozens if not hundreds of young people to set their lives on a better course?

And in spite of all of this, he is gone.  However painful the transition must have been for him, at least it was a homecoming of sorts as he has returned to his alma mater in Florida.

The reason for the transition is that the people responsible for Mark’s employment concluded that the program was not going to reach its expected potential under his leadership.  Those of us familiar with SEC football know that this means that nothing much matters in GA if you cannot beat Alabama and Florida consistently.

People are inclined to blame a lot of things for a situation like this.  Things like recruiting, the players, the coaches, facilities, funding, the play book, play calling and on and on.  Sometimes a coach like a business leader is handicapped by unexpected loss of talent due to behavioral issues like those pointed out in another of my articles, injuries, transfers or other losses.  The reason is irrelevant.  The leader of an organization or part of an organization is accountable for the results achieved or lack thereof and a responsibility that cannot be abdicated rests upon his shoulders.

Sometimes, leadership turnover induced in an organization makes things worse.  We will see as the season progresses if the Georgia team has achieved improvement.  As is the case in situations like this, it may take some time (several seasons) before the final analysis can be done.  As I have said before, if you are a leader, you have to lead; from the front.  You cannot wait for someone to tell you what to do.  In order to be effective, you must take initiative and frequently risk if you wish to keep yourself ‘off the radar.’  This is unless you have reached the limits of your capability and are falling victim to the Peter Principle.  If this is the case, you still have control of your destiny.  You must continue to invest in yourself though study, professional credentialing, post-graduate education or other means of continually re-inventing yourself and maintaining your relevance to a constantly changing and increasingly challenging environment.

The current healthcare environment is difficult to say the least.  As the industry transitions to value based payment, many of the rules and assumptions of the past are crumbling before our eyes.  Individuals and organizations that are capable of adapting and prospering in this rapidly changing environment will do well while many others will fall by the wayside.  Leadership is hard enough in a ‘stable’ environment if there is such a thing.  It is infinitely more difficult in an environment where the organization is striving to improve itself while it reacts to external environmental forces.

What is the outcome of your self assessment?  Are you up to the challenges?  Do you understand the nature of coming heightened demand to make your area better?  If so, are you up to the challenges and opportunities that are being presented?

One of my personal challenges is that I am ever cognizant of the difference between what I believe are my capabilities those of my team of leaders and what I believe the environment is demanding.  I will never be satisfied that we are accomplishing as much as our collective potential should deliver.  As a result, I spend a great deal of time in continuous study and research in an  effort to improve my ability to understand and properly respond to challenges, opportunities and risks that come my way every day.  I feel the burden of leaders reporting to me, the staff of the organization, the patients, the medical staff and the hope of the community that we will ‘get it right’ for them.  I find the exhilaration of this dynamic environment stimulating and I am up to the challenge.  My hope for you is that through these articles and your development of you own capability you will be inspired to emerge as one of the strongest leaders in your organization.

As the healthcare environment continues to become more challenging, organizations and their leadership teams are being shaken out.  This is what is causing a lot of the consolidation we are seeing in the healthcare industry.  Leaders, systems and processes that worked in the past are failing in this tougher environment.  Some of the problem is government induced problems that are difficult if not impossible for community hospitals to overcome.  An example is the cumulative effects of government healthcare policy on rural hospitals that are systematically being forced out of business.  In spite of these handicaps, some organizations do better in a given environment than others.  There is a dearth of leadership in healthcare just like there is in professional sports, business and other endeavors.  One of the causes of the inordinately high turnover in healthcare administration is a continuing effort on the part of hospital Boards and executive leadership to improve the caliber of talent and this effort is one of the reasons that good people are being turned out of organizations at an alarming rate.  One of the few benefits of this activity is that it is creating growing demand for Interim Executive Services.

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.

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.

CFO Radio Interview

On October 17, 2011,  I was interviewed by Lorraine Chilvers on CFO Radio on the topic of Interim Executive Services.  The interview that lasted around 45 minutes is proceeded by some industry news.  During the course of the interview, I am asked about a variety of aspects of Interim Executive Services.  Since Lorraine has insight into the Interim Executive Consulting business, her questions were deeply probing and she did a very good job of engaging me on many of the more important aspects of Interim Engagements and the Interim Executive lifestyle.

Lorraine and I previously served together at Tatum.  Eventually, we went our separate ways.  I went on with my Interim Executive Services career and Lorraine went on to found Delaney Consulting and CFO Radio.

At the time of the interview, I was serving as the Interim Chief Financial Officer of The Central Florida Health Alliance serving Leesburg and The Villages in central Florida.  I recently listened to the interview again and it struck me that the material in the interview is just as current now as it was then.

The interview may be found here.

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.
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.

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.