Creating a Succession Plan to Drive Strategy

Transcription

1 WEALTH ADVISORY OUTSOURCING AUDIT, TAX, AND CONSULTING Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor Creating a Succession Plan to Drive Strategy AZ LeadingAge Annual Conference

2 In summary As our overall workforce ages: plans to attract, develop, and retain top talent at all levels Aging communities: presents a challenge for organizations and their strategies Need to develop plans to ensure we can thrive in the future How Strategy impacts Succession How Succession impacts Strategy 2

3 Objectives: Practical steps to: Review the impact of the transition throughout the industry Discuss how compensation and benefits may align within your Organization s mission Identify how Strategy impacts Succession and how Succession can impact Strategy Discuss the role of governance and management Review successful examples 3

4 Aging of Executive Leadership Transitions throughout the industry 4

5 Transitions across the industry Who has recently had or will be having a C-Suite transition in the near future? Transitions will be occurring at a higher rate CLA/CEMO data and analysis what is it telling us? Are we prepared? How will it be accomplished? 5

6 2016 C-Suite Age Profile COO CFO CEO Average Age Age Gap from CEO Source: LeadingAge/CEMO & CliftonLarsonAllen Executive Compensation Study for Multi-Site CCRCs 6

7 Source: LeadingAge/CEMO & CliftonLarsonAllen Executive Compensation Study for Multi-Site CCRCs 7

8 6 Number of CEOs which retired from out of a sample of 99 survey participants Average age of the retirees 100% CEOs were replaced by in-house candidates. Source: LeadingAge/CEMO & CliftonLarsonAllen Executive Compensation Study for Multi-Site CCRCs 8

9 Compensation General Workforce 9

10 Transitions across the industry Let s not forget there are many transitions happening outside of the C-Suite within our organizations and industry overall! Front-line staff Managers Our future successors Impact? 10

11 Supply and Demand Organizational Pay Practices Employee Engagement and Recruitment 11

12 Supply and Demand 39% Growth Food Service House keeper CORE RN CNA LPN GROWTH IN CORE POSITIONS (LIFE PLAN COMMUNITIES) Source: BLS and Economic Research Institute Data 12

13 Supply and Demand It s Not Just Nurses, Senior Housing Competes With Hospitality Too Source: U.S. Bureau of Labor Statistics 13

14 Supply and Demand Demand for Labor Source: US Bureau of Labor Statistics,

15 Employee Engagement and Recruitment 15

16 Transition It s a Process 16

17 Heightened Pressures on Executive Teams Technology Consumerism New Entrants Wellness Pace of Change Innovation Work Force Regulations Competition 17

18 10 Key Responsibilities of Governance Determining the organization s mission and purpose, and periodically reviewing and revising the mission statement as appropriate. Selecting, supporting and evaluating the CEO. Ensuring effective organizational planning. Ensuring adequate resources within the organization. Managing the resources effectively. Determining and monitoring the organization s programs, services and policies. Promoting the organization within the local communities and throughout the service area; enhancing the organization s public image. Receiving and acting upon recommendations from Committees. Assisting in fund raising on behalf of the organization through solicitation and personal contributions. Assessing the performance of the Board. 18

19 What we need to understand Preparing for a new CEO it s a big change Consider the role of Governance with new leadership Should we look inside or out? Strategic Plan before or after CEO selection? Understand the risks and challenges How to Plan for Success 19

20 Terms Succession Planning Process that ensures future leadership needs are met Includes identification and development of leadership skills in those with future leadership potential Executive Transition Process when incumbent departs and successor is hired and integrated Executive Search Process of identifying, recruiting and hiring a candidate to fill an executive position Source: Friends Services for the Aging Ensuring Successful Executive Transitions in Quaker Senior Living Organizations 20

21 Are We Ready To Begin the Process Mission, Vision and Values- Become the Guiding Principles A Strategic Plan- a clear direction, goals, objectives, action plans, measures of success An Executive Succession Plan An Emergency Succession Plan A Healthy Organization A Current Position Description An Effective Management Team An Engaged Board Source: Friends Services for the Aging Ensuring Successful Executive Transitions in Quaker Senior Living Organizations 21

22 Succession Planning Brainstorm Plan Execute Evaluate What We Need Create Plan Transition Outcomes 22

23 Succession CREATING THE PLAN (ROAD MAP) 23

24 Principles for Good Governance and Ethical Practice The board should hire, oversee, and annually evaluate the performance of the chief executive officer of the organization, and should conduct such an evaluation prior to any change in that officer s compensation 24

25 Succession Management and Planning The purpose of Succession Planning is to create and maintain a solid foundation of high-performing leadership. The elements of Succession Planning include: Building a leadership team with depth, rather than simply developing capable individuals. Aligning the development and succession of leadership with the organization s strategic imperatives. Centrally managing the identification and development of talent for succession through supporting levels of management, from first-line supervisor through the CEO. Rigorously assessing annually the leadership performance of all executives, managers and supervisors against key competencies essential for the attainment of the organization s vision. Once identified, the Board will create the development plan. The plan, valid until the next assessment cycle, should include challenging assignments, rotation among programs and services, formal training, mentoring and coaching. 25

26 Expected Outcomes of Succession Planning The result will be a productive leadership culture: one that provides opportunities for professional growth, development, and challenging assignments in which an individual can demonstrate high levels of performance and ability and can make productive contributions to the organizational goals. Creating an organizational system to select and develop certain employees to fill key leadership positions is critical to the future success of all continuing care programs. With the many and varied concerns created by the economy, for many, leadership succession has been superseded by other management priorities. Having a succession management plan and supporting process is becoming increasingly important. 26

27 Fit, Readiness and Development Done correctly, succession management is a straightforward, action-oriented process that enables management to assess the capability and talent of team members and determine three things: Organizational fit, given the future direction and challenges of the organization. Readiness for advancement. Development needs to ensure a viable pipeline of leadership talent. 27

28 Much more than a replacement process Succession management is an opportunity to build overall leadership capability, typically targeting senior management positions and roles critical to the long-term strategic and economic health of the organization. 28

29 Assess Fit The first step in assessing the fit of internal (and external candidates) is to identify the targeted positions and delineate the requirements for each position. Key Accountabilities and Responsibilities focus on the specific outcomes (accountabilities) as well as the primary tasks and activities (responsibilities) the position is expected to achieve relative to the company's mission and strategy. Accountabilities and responsibilities are identified carefully, considering the future business direction of the ministry. (Senior Leadership, CCRC or program). Competencies The skills, knowledge, abilities and other attributes are deemed critical to fulfilling the position's accountabilities. Consider competencies that differentiate superior performance for the organization, including: providing resident value, strategic contributions, CCRC, Health Care and Senior Living acumen, function/technical expertise and interpersonal effectiveness. Critical Experience Sets Identify experiences that best prepare an individual to fulfill the position in question. Consider experiences and previous roles that are required (must-haves) and those that are preferred because they provide a strong platform. Also consider the length of experience and required or desired education. 29

30 Determine Readiness Using the position requirements (resident in the Job Description) as a foundation, assess the organization's internal candidates and provide them with feedback and coaching about their strengths and development needs. Consider a behaviorally based method that gathers feedback from multiple stakeholders. This rigorous approach to identifying the most capable candidates will result in a more rounded view of candidates' assets and potential. 30

31 Create a Succession Plan for the Position Based on a planned retirement date of (?) Create a timeline that would work backwards from the departure date to the search process: Orientation, introductions and transition occurs during the month of (month) The new CEO is on-board (Date) The selection decision is made and accepted on or about (Date) Second Interviews (Date) Initial interviews in (Date) Candidate finalists (Date) Finalist Profiles submitted for Committee Review:- (Date) (#3months), candidate sourcing, interviewing and reference checking occurs. Ads are placed and Position Specification is approved (Date) Position Specification is submitted for Search Committee review (Date) Search Committee meets, kick-off process, staff, leadership (and Board) interviews completed; input received; (Date) Search Firm selected; (Date) Search firms are interviewed, screened; (Date) Proposals (RFP) for Search firm selection are sent; Search Committee is named; (Date) Note: The time-line can be compressed, but this sample gives plenty of time for delays, weather issues, schedule challenges etc. 31

32 Things to remember Each search process is different and should respond to the identified needs of the organization. This time-line is presented as a sample for consideration and to provide an understanding of the steps and possible timing. To get the most reliable and valid information, consider: Historical performance data, focusing on the candidate's demonstrated results (e.g., financial, operational, research), historical progress against areas of development, and alignment with the organization's mission, values and culture. Behaviorally based candidate interviews, including 360-degree interviews designed to pinpoint key strengths, potential "derailers" (personality, knowledge, skills, and communication and management style), effectiveness of team relationships, improvement needs, "coachability" and motivation to change and sustain change. 32

33 Things to remember continued Regular talent reviews enable senior management to focus on individual employees by: Evaluating their strengths and ongoing improvement opportunities Identifying strengths and weaknesses for critical roles within functions and for the organization as a whole. Determining actions required to address key talent gaps. These might include the need for internal development investment and plans to source potential external candidates. Following the talent review meetings, work with individuals to implement and monitor progress on development plans. 33

34 Ensure Continued Development Succession management is an ongoing process. The process enables senior management to answer the following key questions: Are there immediate, viable replacements for key positions? What are the key talent gaps for each key position? Are there significant retention risks for incumbents in key positions? Who are the high-potential employees to fill key positions? Do we have clear developmental pathways? What are the performance issues in these key positions? 34

35 Conclusions It is important for organizations to have a formal succession plan in place in order to assure: Smooth top-level transitions, Ensure the organization s long-term viability. Identify, assess and develop the next generation of senior leaders, Avoid being blindsided, and perhaps damaged, by whatever lies ahead. Provide for the future talent needs for the organization through the development of a comprehensive succession management and leadership advancement initiative for the organization. Succession management should become a discipline that is an on-going component of the organizational culture. Conduct a comprehensive review of the current management structure, at the Senior Leadership level Strengths assess the Board and staff perception of strengths, pose the question: What are the critical success factors for the organization going forward? 35

36 Managing the Executive Transition SUCCESSION 36

37 Executive Transition Management Represents a crucial turning point for the organization Requires Board management of the process to insure good outcomes Leading a transition requires a larger view Transitions involve not just risk, but rewards too Transitions have a profound human dimension They are not just process Moves the focus from search/selection/hiring to on-boarding Offers the Board an opportunity for introspection and if needed realignment 37

38 Legacy Issues - Defined Those leftover projects that did not get done The way we used to do it Role challenges or conflicts Informal reporting relationships A less active or more active Board of the past Anything that might affect the new executive's performance 38

39 Three Phases of Executive Transition Management Prepare The Board ensures the organization is ready to hire a new Executive Pivot Search, hiring process and selection Prepares the organization to work effectively with new leader Addresses legacy issues that might impact the executive s performance Thrive Designs and implements an effective orientation and launch for the new executive 39

40 Rules of Thumb for a Successful Transition Don t rush the process Strive for a good beginning so you can have a good ending Engage the staff and residents- reap the rewards Begin with the end in mind Come to terms with history A successful search does not = a successful transition Step up and support the new executive 40

41 Type of Change You face- Hard to Follow Facing the departure of a Founder A highly entrepreneurial executive A long tenured leader Departure represents a major organizational change in: Culture Performance expectations Relationships and structure Each being a reflection of the departing leaders thinking and personality 41

42 Transition Checklist: Organize-stabilize-understand-plan-execute To ensure the transition is well thought-out Develop/Implement Communication Plan Consider how the board itself may need to change in order to work effectively with new Executive Appoint Transition Committee: oversee process Define appropriate role for departing Executive Appoint/hire Interim Executive Identify/address legacy issues To prepare for the new CEO 42

43 Thrive Phase Includes: A proactive announcement Share the process and criteria Plans to start off on the right foot Don t assume the work is done Clarification of priorities What is to be done in the first year Clarification of roles and responsibilities A good time to review the Board s duties Clarification of the Board s expectations Plans for monitoring and evaluating performance How will success and outcomes be measured? 43

44 Launching and Keeping the New Executive What can we do to help our new Executive start off on the right foot? What can we do to structure the Board-Executive relationship in a positive way? What are the priorities for the Executive in the first year? 44

45 Initial Steps Announce the new Appointment Chance to tout the new executive s credentials Can signal the Boards new vision or direction Create a solid Orientation Involve key staff Separate operations from governance Start building new relationships early Create intentional opportunities for exchange Set review points to look back at progress 45

46 The Taking Charge Process Entry first three to six months Introduction, orientation, early stage learning Critical relationships established; assessment Immersion next three to six months Begins to manage; more informed; planning Reshaping generally another three-six months Begins to implement plans; continues learning Consolidation Follow through on initial planning work Refinement Final phase of taking charge; no longer new 46

47 How does Governance ( the Board ) help? Identify the Executive s needs; provide support Where can the Board create connections, introductions and relationships Create a Leadership Agenda A collaborative plan for the first year Define how to monitor performance A year is too long to wait Create a safe passage Offer feedback opportunities 3, 6, 9, 12 months Then 18 and 24 months 47

48 Lessons Learned SUCCESSION 48

49 Key Lessons It is not over with the hire A high percentage of Execs fail when following a legacy leader Monitor staff support of new Exec (or opposition) Make the success of the new Exec the full responsibility of the Board Rethink the role of the board; realign your thinking as may be appropriate Plan to succeed May be the most important Board function for the next twenty years 49

50 Examples (Time Permitting) SUCCESSION 50

51 Strategic Questions Will yesterday s skill sets and capabilities be adequate for todays and tomorrow s challenges What capabilities will you value the most? Are the right people on the bus? Can we manage like we did yesterday? Can we innovate like we did yesterday? Can we operate like we did yesterday? 51

52 CLAconnect.com Chad D. Kunze, CPA Principal linkedin.com/company/ cliftonlarsonallen facebook.com/ cliftonlarsonallen twitter.com/claconnect youtube.com/cliftonlarsonallen 52