It might seem counterintuitive, but hospital and health system boards may want to stop worrying so much about making CEO transitions seamless and painless.
That's the argument Reshmi Paul, PhD, makes in a blog post for Harvard Business Review. Dr. Paul leads the CEO Succession Practice at leadership advisory firm ghSMART.
She said boards are mistaken when they treat the retiring CEO with kid gloves, let him or her dominate succession strategy and continue to keep the former executive involved in strategic planning and governance. Dr. Paul cited an example of one global company that tried to make the succession smooth, only to face repercussions afterward.
When the company's long-tenured and successful CEO neared retirement, the board readily agreed to the successor he designated. The first mistake was by not questioning the CEO's choice. "While this candidate had risen up the ranks and performed superbly at every level, he had a serious weakness in his lack of experience dealing with the board and other external stakeholders," wrote. Dr. Paul. "Some directors saw this as a worrisome risk, but kept quiet given the current CEO's confidence and their own hesitation to ruffle feathers."
The CEO's request to stay on the board as chairman further curtailed the board's concerns at the time, only to prove problematic later on. After watching how the former CEO interacted with the new chief, the board observed behaviors that "undermined the new leader." Ultimately, board members had the chairman removed after only a year.
Dr. Paul has the following advice for boards:
"There is a way for directors to ask the tough questions without undermining the sitting CEO or the company. But that means giving up on smooth succession as the overriding goal. It's time for boards to accept and prepare for the bumps and bruises that come with successions geared to serve the company's long-term interests — rather than the current CEO's comfort."
And, too, for CEOs:
"The truly great CEOs recognize their limits. They have the humility to expect their boards to challenge them usefully in their thinking on future strategy and succession — and to keep their boards informed enough to do so."
More Articles on CEO Succession Plans:
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Does CEO Tenure Affect the Value of Hospitals?