I was surprised to learn in Growing Leaders in Healthcare by Brett D. Lee and James W. Herring the extent to which we under-invest in healthcare leadership. The average Fortune 1000 company spends on average 2.5% of its annual budget on employee education and training (p.41).  Eighty-five percent of Fortune 500 companies sponsor formalized internal leadership development programs, but only 21% of US hospitals have formal processes for identifying and developing candidates for senior leadership positions (p.1-2).

Think about the potential if we approached leadership development as a long-term investment rather than as a short-term cost. Hospitals are hubs where patients receive care, but in the process, we exchange information (eg via electronic health records) and train leaders and managers.  The rationale for investment in leadership development is clear: successful companies recognize that effective leadership is their only sustainable competitive advantage (p.1).

I remember in business school that we studied General Electric when Jack Welch was CEO.  We concluded  that GE was fundamentally a leadership development and management training company, not a portfolio company of loosely related businesses. The authors quoted Welch, “I spend all my time on developing people… the day we screw up the people thing, the company is over.” (p.8).

This concise, well-written book comprises eight lessons:

• Establish leadership development as an organizational policy
• Define desired leadership values and behaviors
• Formally assess employee career potential
• Emphasize speed and diversity in leadership development
• Create structured leadership education and development programs
• Develop depth charts and succession plans for key positions
• Provide formal oversight of the leadership development process
• Foster high-potential talent streams

The authors encourage healthcare executives to take a four-step approach (p.14) to:

• Identify personal values
• Leverage personal values to create organizational value statements
• Assess present leadership behavior against the desired future state
• Develop strategies to eliminate the gap

Merely posting job vacancies does not promote effective employee development (p.24). Instead, the authors recommend that someone in senior management assess each employee’s career because immediate supervisors do not have the perspective to recognize performance at significantly higher levels of management.

The key components of a formal leadership development program are that it (p.43):

• Be strategy-driven and focused on 1-2 top goals
• Encompass all levels of employees
• Be comprehensive
• Use diverse methods to achieve its goals
• Involve senior executives for sponsorship and training

The authors evaluate the success of leadership development programs in terms of (p.72-3):

• The reaction of participants to formal training sessions
• The participants’ evaluation of how much long-term learning took place
• A 360-degree feedback assessment of how colleagues believe that participants have behaved differently as a result of their training
• Quantitative and semi-quantitative performance metrics, such as financial performance, employee satisfaction, and compliance with core measures

What do you think?

• Does your organization invest in leadership development training
• Do you have a succession plan for senior executives
• If no, why not
• If yes, how successful is your leadership development program, and how has it changed individual behavior and organizational performance

As always, I welcome your input to improve healthcare collaboration.

Kenneth H. Cohn
© 2009, all rights reserved