Report: Succession planning, incentive compensation crucial as execs retire
A coming retirement wave among healthcare executives means organizations should focus on succession plans and incentive compensation, according to a new report.
The average age for healthcare CEOs is 58.2, with many mulling retirement in in the next five years, according to a report on succession planning and incentive compensation released Tuesday by firm CliftonLarsonAllen.
The average age for CFOs and COOs — 53.3 years old and 53.6 years old, respectively — should also be cause for concern, CLA noted, as they're the most likely candidates for internal succession and may only serve a few years before their own retirements. The aging executive workforce means it's “never too soon to develop a succession plan,” the report's authors said.
As boards evaluate their succession plans, many will choose from four courses of action: internal succession, hiring externally but within the industry, hiring from outside the industry or affiliating with a similar organization to access executive talent.
The CLA report also recommended creation of an incentive compensation plan to retain top talent in a competitive environment, and ensure that the organization's goals are met. The prevalence of incentive programs as grown in recent years, the report said.
Succession planning and incentive compensation were highlighted as areas of immediate concerns for healthcare organization boards in the 2015 LeadingAge-CEMO Executive Compensation Survey, published by CLA in November.
“Providers are experiencing a leadership transformation that has wonderful potential for their organizations,” LeadingAge President and CEO Kate Smith Sloan told McKnight's. “These changes have great opportunities for success as long as organizations invest in developing future leaders and establish smooth transition plans during the strategic planning process.”
LeadingAge has forecasted the looming mass CEO exodus for the past decade, Sloan noted, and created a leadership academy to recruit and train new leaders for the healthcare field. To date, more than 300 individuals have graduated from the program.