Experts in senior living know there is an impending leadership problem, if not a crisis. A wave of the industry’s top executives are set to retire and it’s uncertain from where the next generation will come.
It is not unusual to encounter senior care leaders who have been in their positions for decades. In an informal 2016 survey that my firm conducted of 47 CEO/presidents or top administrators of multi-site and single site continuing care retirement communities, more than half had been in place for 10 or more years. About a third were planning to retire within five years. This correlates with other surveys of broader nonprofit organizations that suggest as many as half of CEOs are within retirement range.
In the Witt/Kieffer survey, more than 90% noted that they believed in the need for succession planning, but just over 60 percent said that they had worked with their boards to create formal succession process. A quarter of respondents said they were grooming a designated successor to take over at the helm.
So there is a gap between the acceptance of succession planning and its implementation.
In the senior care sector, there is an added challenge: Executive teams are smaller in number than in acute healthcare and many times there are no legitimate successors to the CEO role—this isn’t anyone’s fault, just the nature of our business with smaller, “flatter” organizations. CEO succession planning often relies upon proactively developing executives by giving them a greater scope of responsibility within the organization.
When depth isn’t there, succession planning needs to get more proactive and creative. Here are a few things that I am seeing progressive organizations do:
- They start early. A rule of thumb for organizations expecting a CEO turnover is to begin the process at least one year out. In terms of comprehensive succession, however, more than two years is common. Some organizations and their boards need to educate themselves on how to conduct CEO succession, more comprehensive leadership succession and talent development. There is a wealth of information available – from organizations like The Bridgespan Group and Council of Nonprofits – on general best practices for succession planning and CEO transitions in the nonprofit space.
- They set the stage for the next leader. One organization with whom we partnered on a CEO search began its multi-year effort in succession planning by taking a step back and making sure it had the right foundation for its next CEO and leadership team: a reassessment of its mission statement and organizational culture; a vision plan for the year 2020 and beyond; and an audit of what they desired in the next CEO. The results were woven into a comprehensive profile of the next CEO.
- They challenge their idea of the “right” CEO. It is very easy to want to recruit someone in the same or similar mold to a past, often iconic leader. However, especially when the outgoing CEO has been in place for a decade or more, organizations find that the competencies of a “successful” CEO have changed dramatically. In the recruiting that colleagues and I conduct for senior living organizations, essential competencies today include: a strong commitment to leadership, mission and culture; innovative vision and strategic skills; quality, operational and financial acumen; an ability to forge strategic partnerships (sometimes with traditional competitors); and, local community and industry leadership and fund-raising expertise to promote the growth and stewardship of the organization.
Rethinking what a CEO does opens the door to a broader perspective of what the next CEO should look like — that is, that the next CEO is more likely to be a woman, person of color, or representative of another minority group. It may even be a millennial around the age of 40, and the board needs to get comfortable with that possibility.
- They cast a wider net. Organizations that once looked regionally now must look nationally for potential candidates. They can also look outside of the traditional senior care or CCRC space. This is hard to do for a CEO, since it must be an executive experienced in healthcare and all of its regulatory and political nuances. They never forget the mission.
From wherever the next CEO comes, this person needs to have a passion for seniors and the opportunity to serve them. In my years of recruiting CEOs and other senior living executives, the defining criterion for success in the job is a passion for the mission. It is simply an environment where smart, well-meaning leaders don’t cut it if they don’t find meaning and fulfillment out of serving aging and elderly populations.
Diane R. Tanking is a consultant in the healthcare practice of the executive search firm Witt/Kieffer. She leads the firm’s senior care, home care and hospice practice.