Executive Succession Planning - Taking It to the Council Hall

Succession planning should be a function of the Executive Board in the course. The best practices of organizations are moving executive succession planning and leadership development of the human resources department in the C-level suites and the Council Hall in their search for high continuity planning. This is because the business executive and financial risks of mis-hiring and misalignment can be a threat to the profitability of an organization as a mistake of operations or a large data security breach. Given the challenges faced by hospitals today on many fronts - and why only 30% of hospital managers routinely consider succession planning and take stock of who has the leadership bench1 - management should take into consideration the institutionalization of a council at the function level to oversee the development of leadership and executive succession planning and implementation.

Quantifying the costs

Using a formula put forth by D. Bradford Smart, Ph.D., in his book, Topgrading: How Leading Companies Win hiring, coaching and keeping the best people, I calculated that the cost of a bad hiring decision range from $ 2.4 million for an employee of $ 100 000-per-year to a staggering $ 12 million for a manager of $ 500 000-per-year.

Based on my 13 years of experience in Executive Search and completing over 225 assignments, I think these numbers are close to the mark. For the sake of argument, let's agree that the numbers are inflated and make the numbers up to a mere 25% of the amount sought, which means that you are still looking at a cost of $ 3 million for a hiring decision poor involves a $ 500.000 - for years manager! Executive mis-assumptions and poor planning executive succession will cost you.

Million-dollar mistakes are costly to the company, its shareholders and, possibly, your personal career. The lack of methodologies executive succession planning allows for mis-hired executives and non-aligned to support the costs for their company relative to the sub-standard customer service, inadequate research, failure to meet deadlines and sales targets, failed marketing campaigns, accounting or faulty investment strategies and much more. In addition, there are initial costs of recruiting and training, the gap may have to pay for an employee to leave and the costs of recruitment, training and ramp-up time for the employee replacement. The lack of directional spotlights of succession planning that poor recruitment decisions and the lack of a strong bench can be a significant drain on the income of a department and company. With the continuity of the business and shareholder value in mind, the supervisory board level recruitment, leadership development and succession planning, execution will result in better overall allocation of human resources and improve its competitive position.

Since costs for business risk

In their article published in Harvard Business Review, "growing talent as if your business depended on it," Jeffrey M. Cohn, Rakesh Khurana, Laura Reeves argue that corporate boards have traditionally underestimated the role of a robust leadership development and succession planning executive system of risk management. They suggest that the friction constant talent that occurs in the absence of an effective succession planning executive leaves companies vulnerable to poor decision making in any number of common business scenarios, such as the acquisition or competition sharp.

Instead of stand-alone ad-hoc activities used by human resources departments, these experts recommend at the board level direction of intelligent, integrated, talent development and succession planning initiatives of leaders who are aligned with the priorities strategic. Their ideal organization is one where HR provides development tools and facilitate their use, the leaders are deeply involved in the sourcing and growing talent and business leaders are recognized for their contribution to the organization-wide talent development and executive succession planning efforts.

Particular vulnerability of Hospitals

According to the 2007 survey by the Association for health managers, 32% of hospital CEOs say that the approach of their hospitals in CEO succession planning was effective or very effective - which means that a huge 68% of hospital CEOs acknowledges some concern about the processes for identifying and selecting the person who will fill their shoes. Furthermore - and this is not a surprise - only 16% of hospital CEOs said their hospitals 'approach' to communication on succession planning executive of the hospital staff was effective or very effective.

In recent years, hospitals have taken the manual pages of corporate marketing. Now it might be time for them to look more closely at effective business approaches to leadership development and succession planning executive. Cohn, Khurana and Reeves point for Tyson Foods, Starbucks, and Mellon Financial (now The Bank of New York Mellon), forward-thinking companies with intelligent, integrated, talent development and leadership succession planning initiatives.

Inside Information

Whether or not the succession planning is promoted to the Executive Board Room, senior hospital management would do well to review the work of Harvard Business School Professor Joseph Bower, who studied 1,800 successions in all areas. Bower looked at the results of companies that promote professionals through executive succession planning in senior leadership positions and found that they perform significantly better when measured on more than three years than companies that do not look inside first. By many measures, the stakes are high for hospitals. Hospitals that make leadership development and executive succession planning will be better positioned for the successful management of risk, better profitability and shareholder value and business continuity in the twenty-first century healthcare environment.