Wednesday, August 19, 2015

Knowing When It's Time To Leave

Over two years ago, the folks over at the athenahealth kindly invited me to submit columns to their Health Leadership Forum, and I have done so on an occasional basis since them. As I recently reviewed the columns, I realized that my own thoughts on the topics of leadership and coaching have evolved a bit, and I thought my readers over here at Not Running A Hospital might enjoy witnessing the transition. So for several days, I will be reprinting the posts from the Forum over here. Comments are welcome at the original site and here. Today's reprint, with some additional embedded links, is from a post dated March 27, 2014, "Knowing When It's Time To Leave."

In a recent article on the HBR Blog Network, Manfed F. R. Kets de Vries asks the question, “How long should a CEO stay in his job?” He answers by saying, “seven years in probably the period of maximum effectiveness for most people in what can be a very stressful job.” He goes further to describe three phases that characterize the tenure of many CEOs — entry, consolidation, and decline.

He asks, “So what can be done when a CEO starts to decline? The best scenario, of course, is if that the CEO himself realizes what is happening, acknowledges his increasing ineffectiveness, and looks for new horizons when the going is still good. Ideally, that is at the point when they are in the sweet spot of being at the peak of their performance, just before decline.”

In my case, I arrived at Beth Israel Deaconess Medical Center in January of 2002, with the assignment to lead a financial turn-around of an extremely troubled organization. By September of 2003, we officially declared the end of the turn-around, as the hospital had returned to sustained profitability.

Having survived, it was then time to engage in a full-fledged series of strategic plans—focusing on the three parts of this academic medical center’s mission–clinical care, education, and research. By engaging the faculty and staff, we were able to reach a consensus on the overall direction of the place.

Meanwhile, due in great measure to the recruitment of Dr. Mark Zeidel as chief of medicine, we began an intense program in safety and quality improvement. Mark’s commitment to this journey was soon matched by the other incumbent chiefs and supplemented by the recruitment of new chiefs of pathology, radiology, and anaesthesia. My role in this effort was to initiate unprecedented levels of transparency with regard to clinical outcomes. Our Board was on board, too, adopting a four-year goal of eliminating preventable harm in our hospital, and posting on our corporate website—for the world to see—progress towards that goal. Every quarter, the actual numbers and types of cases of harm in our hospital would be made transparent.

In March of 2009, we faced a new crisis as the financial meltdown occurred in the US economy. Having started the fiscal year with projections of a $20 million surplus, by mid-year we were instead looking at a likely $20 million deficit. My COO and CFO recommended laying off 400 people to balance the budget.

I refused and instead asked people in the hospital to suggest ways in which they were willing to absorb personal financial sacrifices to help avoid layoffs. The response—which received national attention—was overwhelming. We not only avoided the layoffs, but we were able to exempt the lowest paid workers from having to participate in any of the sacrifices chosen by the others.

In August of 2009—right in line with de Vries’s timetable—I woke up one morning and realized I was tired. I was tired from a job that had extremely demanding physical and psychological components. I was also tired of the job, having felt that I had done my most creative work. I was ready for new challenges. In terms of my personal health and well-being, it was time to leave. Also, it was time to let a new person with more energy and enthusiasm handle the next stage of challenges facing the hospital.

But I decided to stay on. Why? Here’s where I let myself be trapped by the close personal relationships that had grown between the staff and me. Hospitals are compelling and emotionally complex places, and an empathic CEO feels the joy and pains of the staff and builds a deep personal bond with these well intentioned people who devote their lives to eliminating human suffering caused by disease.

In this case, there was an additional anchor. I felt an obligation to our generous staff to stay long enough to see the hospital through its financial crises and to restore the pay cuts and reductions in benefits that they had voluntary taken. I knew that this new turn-around effort might last at least another year, and I decided to commit myself to staying the course.

Sure enough, by the fall of 2010, our fiscal health had been restored. I was able to restore the cuts in pay and benefits. I was even able to award everyone with a $500 bonus out of gratitude for all they had done to help to the hospital and one another.

This was a source of great personal satisfaction for me, but as I look back on the experience, I realize that it was a mistake to stay beyond the seven years. While my motivation in staying was not selfish—it fact, it was just the opposite—it was self-centered. Was I the only person who could have led the organization through that recovery? No, there were many able leaders in the hospital who would have done just fine without me. But my dedication to the staff made me want to stay long enough to feel that I had delivered the goods to them.

As de Vries suggests, it is at such a moment when a Board needs to step in. They need to closely monitor not only the performance of the CEO but his emotional mindset. They must overcome inertia in governance, the natural reluctance to change horses when the race is going well. The loyalty and friendship that a Board feels towards a successful CEO is, ironically, a danger. It leads to complacency on the Board’s part, particularly during moments of corporate triumph. It is precisely then that a Board needs to carry out its most important function—telling themselves and the CEO that it is time for him to move on.


Tom said...

Surgeons often have the same problem. When to quit is a stress question. I was fortunate to have made the decision on my own. Too many refuse to acknowledge their skill slippage and folks like me have to “suggest” they leave the OR.

Barry Carol said...

Boards generally operate within a very collegial environment. If I projected myself into the shoes of one of your former hospital’s board members, I would find it extremely difficult to lead or even participate in any effort to ease you out when the consensus view was that you were doing an excellent job in leading the hospital and you weren’t yet ready to leave.

While many organizations have mandatory retirement at age 65 for CEO’s and other senior executives, I wonder if term limits of 7 to 10 years might be an acceptable option coupled with the opportunity to extend the CEO’s tenure by a year or two if deemed necessary to complete an important program or get through a crisis.

At the same time, among large publicly traded companies, there have been any number of CEO’s who served with distinction for decades and the company and all of its stakeholders benefitted from that leadership. So, every organization, whether it’s a publicly traded company, hospital or university needs to decide what leadership model works best for it.