The Cost of Leadership Turnover

Leadership turnover is an unfortunate but inevitable aspect of doing business that can result in both direct and hidden costs to healthcare organizations. How much are leadership gaps costing the healthcare industry? According to the 2017 National Healthcare Retention and RN Staffing Report, it’s estimated that critical position vacancies are costing healthcare organizations nearly $8 million annually. Moreover, a healthcare leader search can take up to six months and one in three open positions go unfilled for four months.
Beyond these direct costs, there are innumerable soft costs to the organization when leadership changes occur, such as decreased productivity, strategic planning delays, and interruptions to the development of fiscal plans. Additionally, CEO turnover can initiate a domino effect resulting in secondary turnover of the senior executive team. A study conducted by the American College of Healthcare Executives found that approximately 77% of chief medical officers left the organization within one year of the CEO’s departure, followed by half (52%) of chief operating officers, as well as more than one-third of chief finance officers, human resource officers and chief information officers.
What can healthcare executives do to manage the turnover and gaps in leadership when they occur to reduce costs, stabilize turmoil and minimize negative impact? According to the experts at Novia Solutions, one of the most fundamental strategies is to fine-tune the recruitment process to find the right fit for the leadership roles from the get-go. This includes thinking outside of the box by reaching out to talent pools with diverse backgrounds and skill sets, as well as using innovative techniques and channels for sourcing new talent. Healthcare organizations can enlist support from recruiting firms that specialize in healthcare leadership to facilitate this process as well as to tap into networks of candidates who may not be actively looking, but interested in making a career move.
In tandem with these recruiting efforts, healthcare organizations should focus on employee retention and engagement, not only at the leadership tier, but at all levels. Employee satisfaction is key to retention and this can significantly reduce the turnover and fall-out from changes in management. As compensation is one of the most critical influences on employee satisfaction, it’s important for healthcare organizations to ensure that their salary and benefit packages are competitive and attractive to current and prospective employees. Flexibility is also increasingly desired by executives seeking to achieve greater work-life balance and is seen as a valuable commodity within the job marketplace.
The opportunity for growth and career advancement cannot be overstated as an incentive and retention tactic. Employees and leadership alike should be able to identify a clearly defined pathway to not only increase their compensation, but also to expand their professional development. Many employees also seek a greater sense of purpose within the organization, which can be offered to them through a deeper connection to the organization outside of their day-to-day roles through volunteering and community outreach initiatives.
While leadership and employee turnover may be part of the cost of doing business, healthcare organizations can take meaningful steps towards reducing its occurrence and negative impact. And they don’t have to go at it alone – working with experienced recruiting professionals who are well-versed in the latest strategies and techniques can alleviate the burdens facing internal HR and hiring departments.
Sources:
The Impact of Hospital CEO Turnover in U.S. Hospitals, prepared for the ACHE
Lean Human Capital by HealthcareSource survey, 2016
The Impact of Hospital CEO Turnover in U.S. Hospitals, prepared for the ACHE