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Analysis

How Hospital Boards Can Succeed at Succession Planning

By Melanie Blackman  
   June 25, 2020

Chief quality officer and practice leader Jim King shares succession planning and diversity best practices for hospitals and health systems, especially during times of crisis.

The COVID-19 pandemic has brought succession planning to a new level. Amid the chaos, what happens if someone on the board of directors or a C-suite member contracts the coronavirus? And what if the successor also falls ill? Or what if a CEO abruptly quits during a crisis, such as the pandemic?

To offer solutions for these issues, HealthLeaders recently spoke with Senior Partner, Chief Quality Officer, and Board Services Practice Leader James (Jim) King at WittKieffer, an executive search firm, about what strategies hospital and health system C-suite members and boards of directors can implement for successful succession planning. King also shared diversity and inclusion recruiting best practices.

This transcript has been edited for clarity and brevity.

Jim King, Senior Partner, Chief Quality Officer, and Board Services Practice Leader, WittKieffer (Photo courtesy of WittKieffer)

HL: If a CEO gets the coronavirus or is afflicted by another sickness or disease, what are some strategies that boards of hospitals and health systems can put into place to ensure continued operations for the organization?

Jim King: One of the things I constantly talk to board chairs and governance committees about is, you need to ensure that you have a succession plan. If your CEO became incapacitated in any way, who can step in in the interim to lead the organization?

What we found is, with a pandemic like COVID where there was really no playbook, it has required boards to plan for succession several layers down in the organization. A lot of boards … did have an initial successor identified. But … if that individual became sick with coronavirus, where were you going to go? It's caused boards to look well beyond just that initial line of succession and typically go at least another line back, and possibly another line back as well.

Also, most of the boards I work with do a good job from their governance committee standpoint of making sure that they know where's the next succession of board leadership coming from—who's in line to be the next chair, who's going to be vice chair, who's our secretary, our treasurer, and so forth. They're building that pipeline of board leadership governance leadership.

I'm starting to see a lot of them say we need to be thinking two to three layers deep around our governance leadership. And I can honestly say before COVID hit, those weren't conversations I was seeing governance committees having, but they seem to be having more now.
 

HL: How can interim leadership help during a pandemic or crisis, and how do boards go about choosing that interim leader if a CEO is unable to lead?

King: When you're doing succession planning, the board is going to be looking within the current C-suite, to identify: Do we have a couple of individuals that, if needed, could be called upon to step in and provide interim leadership at the CEO level? And what they normally are looking for [are] people that are on the C-suite team that have had a lot of exposure to the board through various committees. They want to make sure that they're very involved in the development of the strategy for the organization, and that they're in that inner circle with the CEO at all times. Most boards, if they're doing good governance, have that shortlist identified.

I've seen a board member who has CEO experience agree to step off of the board and step in as the CEO for that interim period of time. In other cases, I've seen organizations work with our firm with our interim practice [to] help them find an appropriate interim CEO to step in for a set period of time. It could be six months, nine months, up to a year to provide that leadership. As we go through that process, the board has to decide, is there an opportunity where [the] CEO will … be able to take the reins again, or are they going to have to name a permanent replacement?

HL: What are recruiting and hiring best practices for boards if they're looking for a permanent CEO during a crisis?

King: Before the pandemic hit, most of the boards wanted to make sure that they had CEOs that were experienced in creating a vision for an organization, being able to work with the board to develop a strategy and [work with] the executive team to develop that strategy to bring that vision to light, but they wanted to make sure that they had significant experience managing large P&L. If this is an organization that was looking to grow, [they wanted to ensure] the CEO had merger and acquisition experience and understanding how to grow the organization in that particular way.

What I'm finding now is as I talk to boards, do my candidates that I would be looking at to be the next CEO for an organization actually have experience when it comes to disaster preparedness? Have they found themselves leading an organization through a time when there was a crisis? And so, that has now often become the No. 1 thing that boards are looking at.

It takes us back to looking at candidates that possibly were in significant leadership roles back in the '08–'09 recession, potentially even looking at candidates that were in leadership roles earlier in their career when 9/11 hit. Things that nobody was quite expecting [to] happen.

HL: How often should hospital and health system boards update their succession plan?

King: Once a year. The Governance Committee of the board should take a look at the succession plan, and make sure it's current. I believe that pandemic has proven to us that boards that are doing that were well prepared and had appropriate succession identified. Boards that maybe were only doing it every two or three years, we're finding, might be a little light on who the next successor is going to be.

Once a year … have your governance committee make sure that you know all of the key positions in the organization that need to be filled to sustain the life of the organization, [and] you've identified appropriate successors.

Virginia Hospital Center CEO to stay around for several additional months

HL: What about retirement delays or pulling previous leaders out of retirement as a strategy of leading a health system through a crisis?

King: As COVID hit, what we're finding is a number of those CEOs that had told their boards their intent was maybe a year to three years away from retiring, a number of them are making a decision to delay that. Partly because they feel loyalty to the organization and they feel, "I need to shepherd an organization through this. I've got to get them to the other side." And they don't want to walk away. I've also seen a few that have said, "As soon as I get my organization through this, I am going to retire, because it's just taken a toll on me."

I've had a few organizations talk to me about [putting] a response together for COVID, depending on where they were in the country. Some of them have gone back to recently retired executives in key roles and asked them if they would come out of retirement. A lot of it just depends on the role; is it mission critical? In a few places, I have seen organizations go back to their recently retired Chief Medical Officers or Chief Clinical Officers, Chief Nursing Officers, and asking them to come back because they needed more hands on deck, more leadership.

HL: Outside of the pandemic, what are some diversity and inclusion best practices that boards can follow while recruiting?

King: It is absolutely a board's responsibility to be focused on diversity, equity, and inclusion. And I think it is incumbent upon boards to make sure that the representation of leadership in the boardroom is more representative of the communities that their organizations are serving. I personally believe that it's important for boards to keep diversity, equity, and inclusion permanently on that board agenda. It's something that has to be at the forefront.

I think at the end of the day, it's important that the board and the CEO embrace diversity, equity, inclusion because everything starts with leadership at the top. I think they have to model it. I believe we have to work closely with the CHRO (chief human resources officer) and other key leaders to develop short- and long-term objectives for how can their organization continue to grow and be more diverse and more inclusive. I think it's something that, in light of everything that we're seeing going on right now in the country, is incredibly important that boards are focused on creating the most diverse, inclusive leadership boards possible.

HL: What ways can boards show they're openly recruiting women and diverse leaders?

King: There's a lot of conversation [with boards] about [wanting] to see candidates that are underrepresented minorities [and] strong female candidates.

Have the board go through unconscious bias training and have the executive team do it as well, because then it will help [them] to see the world from the other person's point of view. And it will also help [them] understand where you might have biases that you didn't even realize. The feedback we've received thus far [about the training] has been phenomenal; … it's really opened their eyes to look at certain candidates that they honestly said they probably would have overlooked.

I personally think the way that you have the greatest success in recruiting diverse leaders, it's by [creating] an environment in the organization that is absolutely welcoming to all … To be successful, it starts with your CEO. They have to live those values every day. And you have to have a board that's attentive to it, deliberate about it, and sees it as a top priority for the organization.

“... I think it is incumbent upon boards to make sure that the representation of leadership in the boardroom is more representative of the communities that their organizations are serving. ”

Melanie Blackman is the strategy editor at HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The COVID-19 pandemic has changed the qualifications that the board of directors look for in new C-suite hires.

The best practices for recruiting new C-suite hires can also be used for recruiting new board members.

Succession plans should be updated on a yearly basis to stay prepared for anything.


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