Managing Partner and Practice Leader, Interim Leadership
Is There a Remedy for Executive Retirements?
By Brian Krehbiel
A client called me the other day with a pressing problem—three executives had announced their retirements in the span of just a few weeks.
I wasn’t surprised. In talking with executives across healthcare on a daily basis, I hear many of them bring up the subject of retirement. Either they’re seriously considering it themselves or know a close colleague who is thinking about it. We’re experiencing a wave of retirements that I think will catch many hospitals and health systems by surprise in the coming months. These organizations may find themselves without executives in key positions.
The Pandemic Push
There are a number of factors at play.
- First, let’s not forget that we’re in the middle of the bell curve of baby boomers retiring. This trend has resulted in a large segment of executives calling it quits in recent years. With the stock market riding high and retirement accounts flush, it is simply the right time for many leaders to step away.
- COVID-19, of course, exacerbates the issue. It is pushing people to retire who, pre-pandemic, might have stuck it out for another two, five or 10 years. Healthcare executives have had enough of the stress of working 24/7 during the pandemic and see retirement as a very attractive option. A related phenomenon I’m witnessing is that of middle-aged executives taking sabbaticals. Tired and burned out leaders tell me, “Life is precious. I’m 55 and there are some things I want to do now just in case I don’t have the chance later.”
- Finally, some executives may be asked to retire by their organizations. COVID-19 shined a light on executive performance. Hospitals and health systems discovered which leaders had the grit and strength to manage the crisis. Many executives struggled during the pandemic and thus may not survive the leadership reshuffling that happens as employers prepare themselves for future crises.
How to Respond
As executives retire or take time off, health systems are understandably anxious about maintaining full leadership teams. Some employers are pleading with their senior executives to stay on for another few years. They’re even adding perks to retirement packages to incent leaders to stick around a little while longer.
These same employers know that the current market for hiring top executives is ultra-competitive. Candidates have the upper hand (just as sellers have the upper hand in today’s housing market). Many health systems may not be able to get the right executives for their needs right now, at the right price.
An attractive option that mitigates these issues is the utilization of interim leadership.
Interim executives lend support and stability in times of uncertainty. Installing interim leaders into key executive roles buys an organization time – time to assess their post-COVID leadership needs and time to make the right permanent hires. In many cases, the interim leader plays a critical role in onboarding the permanent hire once that executive is selected.
I don’t expect the wave of retirements to diminish any time soon. I expect to get more calls from clients wondering how to handle gaps in the leadership team. Therefore, I expect that more and more hospitals and health systems will engage interim executives to help them through this difficult period.