By J. Larry Tyler, FACHE, FHFMA, FAAHC, CMPE, Chairman and CEO and CEO and Health Systems Leadership Practice Chair

The role of CEO has never been more complex in the world of healthcare. Between the ever-present uncertainties regarding the Affordable Care Act (otherwise known as Obamacare) and a time where mergers and acquisitions seem to be so common – it’s almost expected to find CEOs in challenging positions every day. Whether they’re trying to merge cultures after an acquisition, balance an insuperable budget, or position their hospital systems to succeed in the face of changing legislation, one thing is certain – their role won’t get easier any time soon. CEO turnover, unfortunately, is at an all-time high. As the demands change, so do the competencies required for success.

The reason that far too many CEOs don’t succeed today is that they fail to adjust to or change the culture, and that trickles back to the behavioral competencies required for the individual organization. Since no two health systems are identical, determining which competencies are most important in your top leader is crucial. Boards are beginning to take notice and planning more diligently for their hospitals’ futures by adopting a formal succession planning process that includes competency identification and leadership development. But going it alone is no easy feat.   

Tyler & Company has long been in the executive search and succession planning business. We have a formal process for identifying the behavioral competencies that lead to success in CEOs; the competencies are customized for the individual healthcare organization. We call it CEO of the Future℠

The CEO of the Future℠ assessment process is the most advanced we have seen. Involving participation by all board members, the management team, and the physician leadership team, it homes in on a five-year horizon and determines core competencies necessary for your new CEO. Our validated competency model is derived from research sponsored by the American College of Healthcare Executives (ACHE) and conducted by Andrew Garman, PsyD, of Rush University, and me. To learn more about the competency model, please read our report, “360 Feedback for Leadership Development in Health Administration.”

Using this competency model, we involve the stakeholders at the organization in forecasting out five years to determine how important certain competencies will be in the future. This exercise itself is insightful. Although some will say that five years is too long of a time horizon and “anything could happen,” we challenge that; the alternative is being left with a “CEO of Now,” who will be most effective in the present. Based upon the exercise, we’re able to rank for each individual organization the most important of the behavioral competencies that will lead to superior performance.

As an example, we had a client that was experiencing some turmoil over the selection of a COO geared to succeed a CEO. Some stakeholders were concerned he might not be the best fit for the role of CEO, but they struggled to identify the real issues that restrained him. The CEO of the Future℠ exercise proved invaluable; we found that trustworthiness was the most important attribute to stakeholders. As it turned out, the candidate was viewed as being outstanding in trustworthiness. Once the characteristic was revealed, his candidacy as CEO was confirmed and the group had a defined set of competencies by which to evaluate leadership candidates. Had this organization not gone through this exercise, this critical competency likely would have been missed.

How does Tyler & Company’s formal succession planning and CEO of the Future℠ process work?

The CEO of the Future℠ profile is constructed with the benefit of two data collection processes. First, a comprehensive scan of forecasting data sources (e.g., professional associations, consulting firms, research groups) will be reviewed and compiled to distill a 30,000-foot view of the requirements of the future CEO position. We complement that data with vantage points of all board members, medical staff leadership and the senior executive team, which are acquired through onsite interviews. Questions posed by these individuals also help paint a better picture as to the future needs for their CEO. These two datasets then are cross-referenced against the position description to create a current into-the-future CEO competency requirements profile. 

Candidates under consideration for the CEO opportunity will be assessed not only using the position description, but also the CEO of the Future℠ profile. Assessments will include a structured, experience-based interview designed to vet required competencies; a 360-degree evaluation using the competency model we developed for ACHE; as well as candidate self-assessments, including the DiSC tool and Hogan assessments.

Once the processes have been completed, a report summarizing strengths, limitations and development needs across the candidate pool will be provided to the board’s executive committee and to the candidate(s) under consideration. A development plan for each individual and a communications plan also are drafted. We then work on the implementation.

Reach J. Larry Tyler, FACHE, FHFMA, FAAHC, CMPE, Chairman and CEO and CEO and Health Systems Leadership Practice Chair, at (770) 396 3939 or ltyler@tylerandco.com.