Off Track – Now What?
By Rob Thames
It happens. The organization is off plan…by a lot; and it is not the first time. More than a modest correction or a “wait until next month.” Many factors were likely involved, but the relentless dynamics of the market have overwhelmed a longstanding management team. It is akin to a cyclist who has slipped back from the peloton due to chronic cadence deficit – and now the gap is widening.
When a leadership change is made while the organization is on plan, it is often political. When an organization is off plan, and a leadership change is NOT made, it is often political (or paralysis). But when performance is off plan and the board and/or corporate office makes a CEO change, what are the key considerations?
It’s Time. Congratulations, you made a hard call. But wait; there’s more. The risk is stopping after making the initial hard call. A successful CEO change needs a deliberate set-up.
Turn. You know significant transformation is needed, likely involving more than one transition. In order to get different outcomes, what needs to be turned? Quality improvement guru Donabedian reminds us that outcomes are determined by process and structure. Some of these will need to be turned. But while changes to these are necessary for different outcomes, they are not sufficient. Human energy is in the relationships with physicians, colleagues, board and management (externally, community, payer or others may also be involved). If structure is about anatomy and process is about physiology, then people relationships are about the soul or spirit.
Timing & Tenure. How long is a reasonable period to make this transformation? Three years? The answer to this, as well as whether a new CEO should be external or internal, often depends on the size of the gap, the true readiness (and self-awareness) of the board and organization, and the culture.
The track record of how people deal with significant change, especially when they have fallen out of the cadence of accountability required by the market, is clear. Many leaders are strong in maintaining an operation that is on track. Fewer are strong at transforming an organization. And even those who may be skilled at both are at high risk for not surviving after a successful transformation.
No Good Deed…
The work to change capacity and culture to get outcomes back on track hurts: it is emotionally painful. That cyclist who slipped from the pack has to do double time to get back. One difference is that this physical pain is often forgotten, while the emotional pain in an organizational transformation is not. And this emotional pain is often associated with the leader. The intestinal fortitude of the board/corporate office to weather the emotional blow back from this pain will be tested. The pain is inevitable, it will pass and it may even result in a sense of organizational pride, confidence and resiliency. However, it takes a mature board to be willing to persevere in partnership with the CEO.
Expectations. Matching expectations about the time needed to transform and a leader’s tenure is key. Too soon can result in changing horses in the middle of the stream and likely set-back; adjusting expectations to sync with the challenge will enable all to be aware and monitor where the organization is in the process. A board or corporate office is wise to size up the transformation, discuss it candidly with leadership and consider matching it with the CEO’s initial contract duration. It is less important whether the role is actually called “interim” or not. It is best for all to be transparent, clear and unified regarding the situational need and time frame for getting back on track.