You could get very dizzy watching all those revolving doors—the ones spinning people in and out of hospital executive suites these days.
Though the turnover rate of hospital CEOs dropped slightly in 2010—to 16 percent, from a 10-year high of 18 percent in 2009, according to the American College of Healthcare Executives—that's still a hectic pace, and it's bound to pick up as baby boomers stampede into retirement. Some 60 percent of hospital CEOs are over 55 and by some estimates, a jaw-dropping 75 percent of health care organization CEOs will retire in the next 10 years.
And don't expect the doors to suddenly stop revolving once the boomers are gone. Those Gen Xers now eyeing the corner office over the tops of their Facebook pages "do not seek jobs for life or the gold-watch or silver-tray trappings of longevity," warns a white paper from executive services firm B.E. Smith. As for Generation Y? They "tend to think that a good job lasts three to five years."
In other words, the days of the CEO-for-life are vanishing, if they really ever existed. Back in 2006, an ACHE survey found that only a tiny fraction—3.4 percent—had served at the same institution as CEO for more than 20 years. The median tenure of a hospital CEO was just 43 months.
If, as expected, that "churn" intensifies, it will be very hard on hospitals. "The loss of a CEO can cost a health care organization $1.5 million in severance, recruitment expenses and the new CEO's salary," write B.E. Smith's Zachary N. Beesher and Christine Ricci. Moreover, it often prompts others on the executive team to leave, and it delays construction projects, new equipment purchases, physician recruitment programs and new service development.
That's not all: If there's a whiff of instability at the top, staff morale and public perception suffer, and competitors might take advantage of the situation by trying to poach members of the medical staff.
All of which ought to be motivation enough for CEOs and board members now in place to keep a sharp eye out for young staffers or job candidates with leadership potential. They should also get very familiar with what those up-and-comers expect in their careers. The expectations are, to put it mildly, "nontraditional," a fact that might stick in some boomers' craws. But it's essential for the long-term viability of an organization to understand them, adapt accordingly and build a reputation as an attractive place for Gen Xers and Yers to work.
Here are some characteristics of younger professionals identified in the B.E. Smith report:
- Because they don't plan to stay with one organization forever, they "prefer benefits loaded on the front end or a flat salary out of which they can fund their own benefits."
- They respond well to 15-25 percent management or productivity incentives and bonuses.
- They will not work the long hours their predecessors put in, and they want flexible schedules to allow a balanced work-home life.
- They need "constant feedback on performance and one-on-one time with supervisors."
- They "relish prompt recognition, even if it involves a simple card, thank you or token of appreciation."
- They "quickly grasp new concepts and are avid users of technology."
- Coaching is advisable, preferably "a formalized process that uses professional coaches to achieve specific, measurable outcomes, holds both coach and student accountable and focuses not only on organizational goals, but also on personal development."
By the way, several recent surveys have found that far too few CEOs are paying any attention at all to leadership succession plans. That can't be good.
How is your hospital preparing for the next generation of leadership? Or is it? Let me know at email@example.com. And look for my column every Tuesday in this space.