Talent Management and Succession Planning Best Practices

Talent Management and Succession Planning Best Practices

August 4th, 2015Health Forum WebinarSponsored by Cornerstone OnDemand

Kevin S. Groves, Ph.D.Associate Professor, Pepperdine University

President, Groves Consulting Group

Assessing Impact on Financial, Workforce, and Value-Based Purchasing Metrics

Brief Introduction

Associate Professor of ManagementGraziadio School of Business and Management, Pepperdine University

– MBA courses in organization design/development, and leadership– Denney Chair Professor (2013-2015)

PresidentGroves Consulting Group

– Succession planning and talent management solutions– Leadership assessment, development, and retention systems

Webinar Preview

• Brief background of research program• Healthcare Talent Management Best Practices model • Best Practices utilization and ROI across performance metrics• Case studies of exemplary health systems• Recommendations for healthcare organizations

What’s Driving the Need for Talent Management Investment?

• Demographic, marketplace, legislative, & financial challenges– ‘5/75 crisis’– Comparatively short hospital CEO median

tenure (4 years)– Lack of sustained investment in talent

management– Rapidly increasing costs and pressure on

HR to demonstrate value– Healthcare reform, reimbursement

degradation, and ACOs– Increasing emphasis on value- versus

volume-based performance metrics

Healthcare Talent Management Research Program

Phase I: Model

Development

• Interviews with hospital/health system CEOs• Qualitative studies of health systems with

exemplary TM outcomes• Development of Healthcare Talent

Management Best Practices model

Phase II: Model

Validation

• Validation of Best Practices model• National studies of clinical, financial, and

workforce performance outcomes

Phase III: Model

Application

• Application of Best Practices model via case studies & client engagements

Phase I: Healthcare Talent Management Best Practices Model*

1. Top Management Team Support2. Talent Assessment & Succession Planning Practices3. Performance Appraisal Practices4. Incentive Pay Practices5. Leadership Development Culture6. Role-based Leadership Development7. Selection & Onboarding Practices8. Talent Management ROI

*American Society for Health Care Human Resources Administration (Groves, 2013); Healthcare Talent Management Survey 2012 (Groves, 2013); Health Care Management Review (Groves, 2011); Journal of Management Development (Groves, 2007).

Phase II: Validating the Best Practices Model

Healthcare Talent Management Survey 2014*

Survey Goals:1. Assess utilization of Best Practices2. Assess impact of Best Practices on multiple performance

metrics: Value-based Purchasing Workforce Performance Leadership Development Leadership Diversity

*Groves, K. (2015). Impact of Talent Management Practices on Financial, Workforce, and Value-Based Purchasing Metrics.

Sample Characteristics

38.3%

31.6%

18.0%

9.8%

Community HospitalHealth SystemAcademic Medical CenterSpecialty Hospital

VARIABLE MEAN

FTEs 16,741

Net Patient Revenue $2.58B

Number of Medical Centers 10.35

Number of Licensed Beds 2,410

29%

20%

7%5%

16%

5%

4%2% 12% CHRO/SVP of HR

VP of HRVP of Talent Mgmt/AcquisitionDirector of HRChief Administrative OfficerChief Operations Officer (COO)Chief Executive Officer (CEO)Chief Financial Officer (CFO)Other Positions

Utilization of Best Practices Overall

Talent Mgmt. ROI

Selection & Onboarding Practices

Role-Based Development

Leadership Development Culture

Incentive Pay Practices

Talent Assessment Practices

Performance Appraisal Practices

TMT Support

Best Practices Overall

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

17%

4%

15%

20%

21%

12%

6%

0%

4%

7%

11%

18%

19%

19%

13%

19%

6%

12%

39%

30%

47%

37%

30%

31%

39%

35%

47%

24%

30%

11%

13%

13%

25%

32%

45%

29%

13%

24%

9%

11%

17%

19%

4%

14%

8%

AlwaysUsuallySometimesRarelyNot at All

Highest Scores

Lowest Scores

PERFORMANCE METRIC High SuccessFactors Utilization

Low SuccessFactors Utilization Primary Drivers

Total VBP Performance Score 42.46 34.54 Talent Assessment

Selection & Onboarding

Efficiency Domain (Medicare Spending Per Episode) $17,493 $20,706 Talent Assessment

Performance Appraisal

Experience of Care Domain (HCAHPS) 71% 64% Talent Assessment


Nursing Turnover 8.74% 13.61% Selection & Onboarding Performance Appraisal

Executive Turnover 3.33% 19.95% Talent Assessment Performance Appraisal

Employee Productivity $173,484/FTE $110,748/FTE Incentive Pay Performance Appraisal

ROI of Best Practices: Value-Based Purchasing & Workforce Performance Metrics

Best Practices & Annual Nursing Turnover

Overa

ll

TMT Su

pport

Perform

ance Appra

isal P

roce

sses

Talent Asse

ssment P

racti

ces

Incentive

Pay Pra

ctice

s

Leadersh

ip Deve

lopment Cultu

re

Role-Base

d Deve

lopment

Selecti

on & O

nboarding Pra

ctice

s

Talent Mgmt. R

OI0%

3%

6%

9%

12%

15%

18%

13.6%

15.6%14.6%

13.7% 13.6%12.7% 12.3%

13.2%11.6%

8.7%

12.2%10.6%

12.3% 12.2%

9.4%

12.5%

8.4%

11.2%

LowHigh

36% TO Reduction$5.13M/year

Best Practices & Value-Based Purchasing Metrics

Process

of Care

Domain

Experie

nce of C

are Domain

Outcome Domain

Efficie

ncy Domain

Total

Perform

ance

Score

05

1015202530354045

9.60 9.15 10.74

3.47

34.54

12.34 13.73 14.56

6.61

42.46

LowHigh

50.1% Improvement

90.5% Improvement

Experience of Care Domain:HCAHPS Scores

Overal

l

TMT S

upport

Perform

ance

Appraisa

l Pro

cesse

s

Talent A

ssessm

ent Prac

tices

Incentive

Pay Practi

ces

Leadersh

ip Development Cultu

re

Role-Bas

ed Development

Selecti

on & O

nboarding P

ractice

s

Talent M

gmt. R

OI56%

58%

60%

62%

64%

66%

68%

70%

72%

64%65%

62%63%

62%

66%65% 64%

65%

71%

68%69% 70%

69% 69% 69%70% 70%

LowHigh

10.9% Improvement

Efficiency Domain:Mean Spending Per Beneficiary Episode

Overal

l

TMT S

upport

Perform

ance

Appraisa

l Pro

cesse

s

Talent A

ssessm

ent Prac

tices

Incentive

Pay Practi

ces

Leadersh

ip Development Cultu

re

Role-Bas

ed Development

Selecti

on & O

nboarding P

ractice

s

Talent M

gmt. R

OI$0

$5,000

$10,000

$15,000

$20,000

$25,000

$20,706 $20,537 $20,917 $20,781 $21,093 $20,865 $19,968 $20,359 $19,906$17,493 $17,638 $17,944 $17,618 $18,288 $17,457 $18,202 $18,053 $18,119

LowHigh

18.4% Difference$3,213/Episode

Talent Assessment & Succession Planning Practices

System-view of Leadership

Talent

Strategic Talent Pools

Rigorous Talent Review Sessions

Formal Assessment Tools

Succession Plans

Talent Assessment & Succession Planning Practices

Formal assessments (e.g., nine-box tools) are utilized to plot employees in key positions according to job performance and leadership potential

Talent review sessions consist of cooperative and collaborative decision-making

Talent review sessions are characterized by authentic, non-politicized dialogue

High potential employees are identified in the context of our organization's strategic priorities

High potential employees are formally assessed at front-line levels of management (e.g., supervisor, shift leader, etc.).

0% 10% 20% 30% 40% 50%

23%

6%

6%

11%

13%

23%

12%

7%

13%

30%

8%

19%

21%

22%

21%

23%

42%

47%

36%

21%

23%

21%

19%

18%

15%


Lowest (46%)

Lowest (43%)

Phase III: Best Practice Illustrations at Exemplary Organizations

Sutter Health– Talent Assessment and Succession

Management System

Hospital Corporation of America– Executive Development Program (EDP)

Cleveland Clinic Health System– Executive Onboarding Program (EOP)

Sutter Health at a GlanceSutter Health

– Community-based, not-for-profit , non-denominational system in Northern California

– Integrated delivery network comprised of affiliated hospitals, physician organizations, foundations, and home health services

2014 Financials & Size– 50,000 employees and 5,000 physicians– $10.2 billion revenue ($402 million income)– 24 hospitals; 28 ambulatory surgery centers

Sutter Health’s Talent Assessment & Succession Management Practices

• Succession planning objectives– Enhance leadership capabilities via diverse talent pool– Cultivate strong succession plans for critical positions– Create a central, searchable repository of leadership talent– Develop system-wide approach to talent management

• Talent review processes– Standardized, annual, data-driven process across affiliates and

management levels (affiliate, region, and system)– Leadership talent reviewed sequentially; data rolled-up to

successive levels (March-July)

Talent Assessment & Succession Management: Best Practices at Sutter Health

Clear Hi-Po Definition

Strong Assessment-Development Link

System-wide View of Talent

Disciplined Use of Performance

Mgmt. Platform

Performance vs. Potential Ratings

Staggered

Post-talent Review Actions

Succession Planning Performance MetricsWhat is the evidence that these talent assessment practices are effective?

1. Leadership Development Metrics 68% internal/external executive placement ratio (2011-2014)

79% (2014); Six of seven affiliate CEO positions filled internally (2014) 10% of mgmt. population identified as high potential/high performing leaders (n = 536) 22% annual growth rate (2007-2014) of ready now candidates for leadership roles (n = 419)

2. Leadership Diversity Metrics 62% female successors for all executive positions 52% female successors for critical roles (CEO, CAO, COO CNE)

3. Workforce Performance Metrics 86% retention rate for Leadership Academy alumni (175 active alumni) 14% of Leadership Academy graduates are now CEOs 57% promotions/transfers to higher level roles Over $5 million in recruitment costs savings since inception (2004-2014)

Sutter Health’s CEO Succession

Our nationally recognized talent review and succession planning program allows us to cultivate leaders from within, and the Sutter Health Board and I identified Sarah early on to one day assume my role. I encourage other organizations to invest in their teams and to take time to mentor and plan for succession, so they experience smooth transitions in leadership. – Pat Fry (May 19, 2015)

Pat Fry, CEO Sarah Krevans, COO

PERFORMANCE METRIC High SuccessFactors Utilization

Low SuccessFactors Utilization Primary Drivers

Leadership Benchstrength 52% 7% Selection & Onboarding Talent Assessment

Internal/External Executive Placement Rate 67.7% 21% Selection & Onboarding

Role-based Development

Annual Executive Search Costs/Medical Center $13,696 $129,333 Selection & Onboarding


C-Suite Gender Diversity 52% 24% Selection & Onboarding Performance Appraisal

C-Suite Ethnic Diversity 43% 12% TMT Support Performance Appraisal

ROI of Best Practices: Leadership Development & Leadership Diversity Metrics


High Engagement,

Productivity, & Retention

Leadership Competency Behavioral Interviews

Formal Onboarding for Internal & External

Leaders

New Leader Assimilation

Stakeholder Analysis


Managers hired from outside our organization complete a formal on-boarding program (a systematic learning and socialization process lasting at least three months).

Employees promoted into managerial positions or roles that are new to our organization complete a formal onboarding program.

The distinctiveness of our organization is made clear to external candidates for key positions.

The selection process for managerial positions involves behaviorally-based interviews linked to leadership competencies.

0% 10% 20% 30% 40% 50% 60%

20%

13%

2%

2%

13%

11%

7%

2%

20%

24%

18%

15%

32%

28%

31%

33%

15%

24%

42%

48%


Highest (81%)

Lowest (33%)

Cleveland Clinic at a GlanceCleveland Clinic Health System

– Internationally renowned academic health system– Numerous distinctions and awards

• America’s Top Hospital for cardiology and radiology; top three rankings for orthopedics, gastroenterology and GI surgery, etc. (US News & World Report 2015)

– Physician-led, multi-specialty group practice integrating clinical and hospital healthcare services with research and education

– 70 accredited residence training programs; $168M grant/contract revenue

2014 Financials & Size– 43,000 employees– $6.2 billion revenue– 12 hospitals; 16 family health and ambulatory surgery centers

Cleveland Clinic’s Onboarding Phases

• Includes all activities from acceptance of offer to Day 1 (welcome letter, forms, benefits package, company info, etc.)

Preboarding

• Program designed to provide all new caregivers with standard information about the organization (strategy, history, operations, culture, etc.).

Orientations

• Long-term process to transition new caregivers into the organization.

• Includes welcome and integration (introductions, lunch, building tour, etc.), detailed work plan (job responsibilities, initial assignments, etc.), and peer sponsor.

Onboarding

Timeline

Pre-Day 1

1st Week

1st 90 Days

Responsibility

Human Resources

Hiring Manager

Human Resources

Cleveland Clinic’s Onboarding Framework

Cleveland Clinic’s Executive Onboarding Practices

Executive Book of Knowledge

Stakeholder Analysis & Interviews

90-Day Transition Plan

New Leader Assimilation

• Facilitated

Thumb drive of CC leadership data Strategic plan, org charts, budgeting processes, strategic initiatives Administrative systems

Hiring executive analysis of critical stakeholders Scheduling one-on-one interviews

Learning priorities Work activities and deliverables Focus on ‘early wins’

Facilitated team-building sessions

Strong communication & leader/staff relationships

Executive Onboarding: Best Practices at Cleveland Clinic

Strong Hiring Executive-OLPD

Alliance

Comprehensive & Personalized

Integration Activities

Hiring Executive Prioritization of Onboarding

Socialization to Culture & Leadership Role Rapid Assimilation to

New Team

Opportunities for Early Wins

Cross-level & Cross-Unit Relationship

Building

Executive Onboarding Performance Metrics

What is the evidence that Cleveland Clinic’s executive onboarding practices are highly effective?

1. Executive Job Performance

2. Executive Engagement

3. Executive Productivity

Executive Job Performance

Exceptional Performance Fully Meets Expectations Meets Most Expectations0%

10%

20%

30%

40%

50%

60%

70%

36.1%

60.8%

3.1%

31.8%

59.1%

9.1%

EOP Participants (n = 194) EOP Non-Participants (n = 22)

Executive Engagement

I would recommend this organization to family and friends who need care.

I am proud to tell people I work for this organization.

I would stay with this organization if offered a similar job elsewhere.

I would like to be working at this organization three years from now.

I would recommend this organization as a good place to work.

Overall, I am a satisfied caregiver.

Employee Engagement Overall

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00

4.63

4.63

3.81

4.38

4.19

4.25

4.31

4.71

4.59

4.13

4.48

4.40

4.31

4.44


Executive Leadership Support

I am involved in decisions that affect my work.

The person I report to treats me with respect.

I like the work I do.

I respect the abilities of the person to whom I report.

The person I report to is a good communicator.

The person I report to gives me useful feedback.

Leadership Support Overall

3.90 4.00 4.10 4.20 4.30 4.40 4.50 4.60 4.70 4.80

4.25

4.38

4.38

4.50

4.19

4.25

4.32

4.46

4.67

4.54

4.69

4.36

4.39

4.52


Executive Productivity

Disagree

Agree

Disagree

Agree

Nec

essa

ry E

xecu

tive

Trai

ning

90-D

ay T

rans

ition

Pla

n

0% 10% 20% 30% 40% 50% 60% 70%

25%

46%

27%

50%

21%

60%

24%

54%

20152013

Executive Productivity

< 30 Days 30-60 Days 60-90 Days 90-180 Days Still Discovering Areas that I Need

to Understand

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

8.1% 9.5% 10.9%

26.5%

46.9%

7.1% 7.9%

17.3%

33.8%37.2%

2013 2015

Best Practice Recommendations

1. Audit your organization’s talent management system Which Talent Management Best Practices are consistently executed across your

organization? Identify those Best Practices that are executed sparingly or inconsistently. Interview senior leaders across facilities and functional units to assess the quality and

consistency of talent management practices.

2. Sharpen the business case for investing in talent management practices Elevate the strategic priority of talent management by highlighting the impact of Best

Practices on clinical outcomes via CMS’s Value-Based Purchasing program. Compare anticipated retirements with leadership benchstrength (at least one ‘ready

now’ candidate) across executive positions and critical leadership roles. Develop a Talent Management Scorecard that benchmarks your organization’s talent

management and succession planning capabilities.

Best Practice Recommendations3. Align talent management practices with strategic initiatives

(diversity, quality outcomes, LEAN) Create a formal mentoring program for senior leadership teams that integrates

high potential employees identified through talent review sessions. Engage senior leaders in teaching courses as part of leadership development

programs, learning sessions, or other forums. Ensure high potentials’ development plans include participation in system-wide

initiatives.

4. Enhance talent assessment and succession planning practices Adopt or develop a standardized high potential assessment tool. Utilize nine-box tools (or equivalent) that plot employees in critical positions

according to job performance and leadership potential. Create talent profiles and succession plans for critical positions. Assess high potential leadership competencies at the front-line.


5. Assess composition, format, and consistency of talent review sessions Conduct annual talent review sessions that target multiple talent pools. Complete annual talent review sessions at least two months following the completion of

the performance appraisal process. Staff annual talent review sessions with an experienced HR/OD facilitator. Ensure that review session agenda addresses high potential leadership development

opportunities that are aligned with strategic initiatives.

6. Implement consistent, multi-rater performance feedback processes Offer employees in managerial roles with standardized, confidential feedback on

their leadership competencies via 360-degree, multi-source feedback processes. Establish formal intervals (at least twice per year) in which high potential employees

meet with their supervisors for formal performance feedback. Incentivize support for talent management practices via managerial performance

appraisal practices, such as goal-setting and incentive pay plans.


7. Enhance workforce diversity initiatives Accelerate your organization’s workforce diversity initiative by seeking transparency

with the high potential designation process and outcomes. Formally train managers to clearly communicate high potential status to employees,

such as skills training in ‘crucial conversations’. Identify management incentives that actively promote a culture of adopting an

enterprise-view of talent by ‘releasing’ high potentials to other business units.

8. Develop onboarding programs for managerial promotions and external hires Design and deploy formal onboarding programs for employees promoted into

management positions or new roles, as well as managers hired externally. Design formal onboarding programs to include employee orientation, new leader

assimilation activities, 90-day transition plan, and stakeholder interviews. Develop a leader assimilation program that facilitates new managers’ integration with

their direct reports, peers, and other key organizational stakeholders.


9. Develop high potential employees Selectively place high potential employees into experiential development

opportunities that are directly tied to strategic, system-wide initiatives. Engage senior leaders in the design and sponsorship of action-learning projects as

part of ‘leadership academies’. Utilize job rotations whereby high potential leaders are re-assigned on a least a

half-time basis to roles in other functional units or facilities.

10. Evaluate and reinforce the talent management system Develop a Talent Management Scorecard for your organization that comprises

those metrics that are most critical for reporting to the board. Engage management teams in a discussion of the most critical metrics for

evaluating the talent management system’s strategic impact. Mandate annual reporting of your organization’s Talent Management Scorecard

results to multiple stakeholders, including the governing board and management teams across the hospital or health system.

Concluding Comments

• Questions, comments, and feedback are welcome.

• Thank you!

Kevin S. Groves, Ph.D.Associate Professor of ManagementPresident, Groves Consulting GroupGraziadio School of Business and ManagementPepperdine [email protected] | (310) 568-5729

mailto:[email protected]

Talent Management and Succession Planning Best Practices

Healthcare

Transcript of Talent Management and Succession Planning Best Practices