If ever there were a time for the continuing care industry to take succession planning seriously, it is now.
If ever there were a time for the continuing care industry to take succession planning seriously, it is now. One important reason is that the industry may be facing a severe talent shortage in the very near future.
Perhaps the best support of an impending shortage comes from the 2012 Leadership Compensation Survey completed for the Chief Executives of Multisite Organizations (CEMO), a subgroup of the senior advocacy organization LeadingAge. They found that the average age of its 151 CEO members is 56.3 years. Fifty-four percent of these CEOs will reach retirement age in the next five years; 34 percent in the next three years. And while the economy may encourage some to retire later than age 65, there could be a significant turn-over in leadership in the next few years.
Adding to the shortage of experienced leadership is the fact that the bench strength of many organizations — their CFOs and COOs — is the same vintage as the CEOs. The average age of these two potential talent pools is 53.8 years for CFOs and 54 years for COOs.
Why succession planning is important
Organizations should have a formal succession plan in place for all key positions in order to:
- Ensure the organization’s long-term viability
- Ensure smooth top-level transitions
- Identify, assess, and develop the next generation of senior leaders
- Avoid being blindsided, and perhaps damaged, by whatever lies ahead
- Prepare the organization for future talent needs through the development of a comprehensive succession management and leadership advancement initiative
Whatever the reason for it, succession planning just makes good sense, and high performance organizations take it seriously. It is a risk management strategy designed to ensure the continuous operation of the organization. Boards might even consider it a requirement of their “duty to protect.” Accreditation bodies look for a leadership transition plan. Lenders often consider the stability and longevity of leadership when providing new capital. When done well, it provides a new connection and commitment to key staff that strengthens the organization and the professional relationships already in place.
In my work, I have often heard continuing care clients say they have a succession plan. On closer review, the plan may simply consist of the name of someone within the organization who would take over if the CEO were hit by the proverbial bus. However, a real and effective plan includes a thoughtful and thorough process to ensure that the organization has leadership that is prepared to assume the key roles at any time it may be needed.
Planning means taking action
Succession management is a straightforward, action-oriented process that lets current leaders assess the capability and talent of team members to determine three things:
- Their organizational fit, given the future direction and challenges of the organization
- Their readiness for advancement
- Their professional development needs
An individual succession plan can be likened to a good resident care plan. It includes a “history and physical” to determine the individual’s background, experience, and organizational fit. Like a plan of care, it should include an assessment and step-by-step action plan to ensure the candidate has the support and resources needed to achieve the highest level of leadership ability.
Simply said, succession management is an opportunity to build overall leadership capability, typically targeting senior management positions and roles critical to the long-term strategic and economic health of the organization.
Consider your organization’s future needs
Begin planning by determining the future needs of the organization. A strategic plan should be used to inform this step. And remember, the leadership experience and competencies that were needed 20 years ago are quite different from those needed now and in the future. The next generation of leaders should, and undoubtedly will, look quite different than those we know today.
When assessing the readiness of individuals, gather the most reliable and valid information and consider:
- Historical performance data, focusing on the individual’s demonstrated results (e.g., financial, operational, research), historical progress against areas of development, and alignment with the organization's mission, values, and culture.
- Behaviorally based interviews, including 360 degree interviews among the leadership and potential key board members. These interviews should pinpoint strengths; potential derailers such as personality, gaps in knowledge or skill, and communication and management style; effectiveness in team relationships; improvement needs; “coachability;” and motivation to change and sustain change.
To determine the individual readiness of internal leadership, use the position requirements in the job description as a foundation. Then tailor each plan providing prospective leaders with feedback and coaching about their strengths and development needs. We often recommend a behaviorally based method that gathers feedback from multiple stakeholders.
A rigorous and focused approach to identifying the most capable candidates will result in a more rounded view of each individual’s talents and potential. Ongoing assessments are set up in “cycles” to provide a review of progress and feedback for the leader.
One last thing to remember: Succession management is not a program with a beginning and end. Instead, it should become a discipline that is an ongoing component of the organizational culture.