Executive recruiting: The mergers & acquisitions catch-22 and how interim leaders can help

Interims step in when permanent hires may be on hold.

We've been saying this for years in healthcare, but mergers and acquisitions (M&A) are reshaping the landscape. And experts say, they do not seem to be letting up any time soon. There are the high-profile mergers involving, for instance, health plans (eg, Cigna, Aetna) and pharmacy retailers but more often the activity we see is with local community hospitals, regional medical centers, senior living organizations, children's hospitals and other established care providers trying to retain or create a competitive niche for themselves.

M&As are disruptive, to say the least. At the C-suite level, they result in position restructuring and role overlap. There is job turnover but also job creation – for instance, new regional CFO, COO or CNO roles within consolidating, matrixed health systems.

Executive recruiting cannot stop during consolidation, yet M&A activities can sometimes be paralyzing from a talent perspective. Organizations undergoing consolidation are presented with a sort of executive talent Catch-22: "We need great executives to manage the merger and beyond but can't convince great executives to join us amid all the uncertainty."

An organization will wonder:
• How do we convince executives to sign up in a time of flux? (And how much can we disclose to candidates regarding deals in progress?)
• How do we know which roles to keep, and which not?
• For those positions we keep or create, how do we define roles and responsibilities during a major restructuring?

Because it's hard to define roles much less recruit good executives to fill them, it makes sense to enlist executives who can bridge the transition period – that is, interim leaders.

In my work in supporting health systems with interim leadership needs, I find that more and more clients are those dealing with some kind of merger, partnership or major restructuring initiative.

Interim executives provide a solution to the Catch-22 in that:
They thrive on uncertainty. Many interim leaders get into this line of work knowing they'll be thrown into uncertain – even unstable – situations.
Interims can more readily effect change. As outsiders to an organization, interim executives are able to encourage change and move mergers and acquisitions forward in ways that challenge executives inside the organization. Interims, while committed to the task at hand, are less invested in the past and more focused on the future – getting through one phase and on to the next.
They help shape a new or changing position. As consolidation happens, the interim executive has a front-row seat, helping the organization to determine what a specific role (and the leadership team) will become. She or he helps draw a blueprint for the eventual permanent placement.
They serve a finite tenure. Once their job is complete – serving as CFO until the ink is dry on a merger agreement, for example – the interim steps aside. There is no organizational hand-wringing as to how to utilize the executive going forward. She or he will walk away, having helped bridge the transitional period and established a foundation for a successor.

Once at or near the completion of a merger or acquisition, a health system can then set its sights more intently on hiring permanent executives. When the deal is done, the environment is more conducive for bringing long-term leaders on board.

About the Author
Brian Krehbiel is principal and leader of Witt/Kieffer's Interim Leadership practice. He has more than 25 years of healthcare industry experience. Brian focuses on identifying C-suite interim placements primarily for CEOs, COOs, CNOs, CFOs and CHROs for hospitals and health systems.

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