Insights (Essays)

Insights (Essays) April 2014

Response to Steven Lewis’ essay, “Chasing CEO Talent in Healthcare: Is It Really About the Money”

Steve Ashton

I read with great interest Mr. Lewis’ essay on CEO compensation1.  While he makes several good points, the focus on pay distracts us from the far more important questions related to our healthcare system and the leadership we need to transform it.  

  1. What kind of performance and results do our healthcare organizations need to achieve?
  2. What kind of leadership and experience is required to achieve those results?

In fact, if we answered these two questions first, we may be in a far better position to ask of our CEOs and other leaders, ‘are they worth it?’

For context, I am basing my opinions on 25 years in executive recruitment and HR executive roles in both the private and public sector. The last five of these have been in an academic, tertiary care centre.  I have worked with many talented and committed executives and boards across all sectors.  While fair and effective compensation is an important topic, I believe most would agree our time is better spent on the performance and execution.   

1.     What kind of performance and results do our healthcare organizations need to achieve?

Whether in strategic planning or recruiting senior leaders, there is one question that is invaluable to ask of boards and hiring committees: “In five years’ time, what does success look like?” 

Let’s get the table stakes out of the way first. ‘Success’ in this context does not mean sustaining the status quo.  Our healthcare organizations have well-educated, dedicated, committed professionals who want to serve the people in our communities and beyond.  We employ more PhDs, MDs, Masters and Bachelor-trained professionals than most employers in our communities.  Our teams perform miracles every day.  They heal and save lives.  They do world-class research and they teach and train students from around the world.  We are doing good work – and that’s the way it should be.

With a nod to Jim Collins, our Boards, CEOs and executive teams should not be focused on managing the status quo – but on getting from good to great. 

So what does great look like in healthcare?  Not balanced budgets, low administrative overheads or manageable waitlists.  Again, table stakes.  In five years, I would hope we’re talking about higher patient satisfaction, more focus on prevention, and evidence that we’re helping to improve the health status of our population.   We would be improving efficiency, recruiting and retaining top talent, developing high performance teams, translating research into practice, embracing e-health solutions, and moving infrastructure from ivory towers into our communities.  These goals would be built into our five-year strategic plans with targets and accountabilities spelled out.

Of course, we are all challenged with the same issues – fewer dollars, increased demands from the public, aging demographics, costly new drugs and technologies, eroding infrastructure.  Healthcare budgets are closing in on to 50% of provincial spending.  That has driven many to focus on cost cutting and deferrals, and distracted us from the strategic investments needed to change the course of an outdated and unsustainable healthcare system. 

So if we agree that healthcare needs to transform, we should also ask whether we have invested in, and developed, transformational leaders who can help us change the status quo. 

2.     What kind of leadership and experience is required to achieve those results?

A private sector colleague once observed, tongue-in-cheek, that healthcare is the only sector he knew that worries about having too many customers wanting to buy more of their products and services. While few of us would argue that we want more sick people, but there is some validity in thinking about our problems through a different lens.  Hiring leaders with different experiences and perspectives can be valuable in transforming healthcare. But this kind of conversation almost always stirs up heretical fervour among the protectors of the public healthcare system. 

In his article, Mr. Lewis seems to support sticking to insiders.  He notes that healthcare will rarely venture outside its own to seek leaders.  He warns us that few of those who moved in from the outside have survived.  And, unintentionally perhaps, he backhanded our current leaders and their potential to translate their leadership to other industries when he asked, ‘Has one Canadian hospital CEO ever landed a megabucks job in the private sector?’

Too many of us perpetuate the myth that healthcare is too complex to trust leaders who didn’t work their way up the ranks.  In reality, the best leaders in our society are able to translate what they do across sectors and into other organizations.  And we can learn from other industries who have innovated, survived radical upheavals and change, and reshaped their customer experience.

To this end, our next generation of healthcare leaders need to excel in several areas that haven’t always topped healthcare’s CEO wish list.  Change management, leveraging technology, lean/six sigma, public engagement, and social media.  These are in addition to the standard requirements for vision, learning agility, systems thinking, listening, trust, teambuilding and ability to execute a plan.  Finally, let me add the ability to encourage and lead our governments to be more innovative, as opposed to looking to the bureaucracy for permission to change.  Our best CEOs today bring many of these skills – but we should not shy away from looking beyond healthcare for experience leading change in new environments.

Finally, healthcare must also acknowledge that it hasn’t always developed risk takers, especially in administration. Consider the following dampeners:

  1. We have a lot of creative and innovative thinkers in research and clinical practice.  Yet not enough of them move into senior leadership roles – either because we don’t make the connection, or they don’t see the reward in moving to ‘the dark side.’  We need to fix this. 
  2. We punish failure and discourage risk taking in our leaders and administrators.  Yes, there have been some embarrassing experiments and stumbles (e.g. Ornge2), but successful, innovative cultures encourage calculated risk taking and learn from their mistakes. 
  3. Governments and the public are obsessed with cutting administrative overhead (often without addressing the underlying governance and operational inefficiencies).  Is it any wonder that many health executives have their heads down with the threat of more cuts and mergers?  Worse yet, we’re actively discouraging others to aspire to leadership.
  4. Governments, by nature, are risk averse, focused on four year re-election cycles and keeping controversy out of the papers.  As a result, why would we expect them to hire mavericks in the Deputy Minister roles (although bless those who sneak through), let alone support free-thinking CEOs outside of the tried and true mold. 

I firmly believe our next generation of CEOs and executives will have to include some outsiders, risk takers and proven change leaders.  We need to shake up the current DNA, if for no other reason than the fact that we can’t survive doing things the same old way. Yes, if we hire some outsiders, they won’t all last.  That is, in part, because leaders willing to lead tough change can’t (and don’t) live in fear of being fired for doing the right thing. 

Likewise, we need to do a better job of finding those inside our organizations with the “right stuff” and develop them as internal successors.  That includes exposing them to best practices from other industries and sectors.  Consider the financial sector alone, who long ago managed to overcome privacy and security concerns with ATMs and Internet banking. Yet, we’re still fighting over electronic health records 20 years later.

Little of this has to do with money

Here’s a fundamental truth: few people will say they are happy with their pay.  And they are even more dissatisfied with what other people are paid.  A colleague once warned me years ago that dealing with compensation will ruin one’s faith in human nature.    

Don’t get me wrong.  I support transparent, defensible practices and being responsible with the pubic purse.  The average working Canadian, who earns just over $48,000 per year3, may well struggle with a healthcare CEO earning $300–800,000, let alone $7.96M for our top private sector CEOs4.   But too much focus on ‘sunshine lists’ can distract governments and boards from the more important questions of leadership.

We all agree that healthcare cannot continue on its present course.  We need to define what breakthrough success means.  And we need to hire people, whether insiders or outsiders, who have the skills and abilities to lead change and transform cultures.   By focusing on pay and not performance, we will continue to play it ‘safe’ …which is just another word for ‘mediocre.’  And our patients and their families deserve more.

About the Author(s)

Steve Ashton is Vice President, People & Organization Development, IWK Health Centre, Halifax, Nova Scotia

References

1. www.longwoods.com/content/22718

2. www.cbc.ca/news/canada/toronto/opp-called-in-to-probe-ornge-irregularities-1.1206615

3. www.statcan.gc.ca/daily-quotidien/140331/dq140331b-eng.htm

4. www.cbc.ca/news/canada/top-canadian-ceos-earn-annual-worker-s-salary-by-lunchtime-on-jan-2-1.2481494 

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