Tag 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 a head hunter.   Executives recruiting for talent will peruse your CV looking for places where you 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 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 always 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 to 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.

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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.

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.

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.