The hidden cost of executive turnover

AdobeStock_290499192 [Converted]

Executive turnover, which has held steady at 18% for the past five years now, is taking a toll on healthcare organizations. From a financial perspective alone, turnover can be devastating. The replacement of a CEO, for example, can cost anywhere between four and eight times the CEO’s salary. And there are hidden costs to consider as well. 

 

Turnover often spreads to other members of the executive team, costing an organization even more in replacement expenses. It also disrupts the completion of organizational projects and negatively impacts performance.

 

We’ve witnessed firsthand how turnover affects a leadership team. More than once, we’ve been involved in a project that has suffered from year-long delays and a loss of momentum due to a change in leadership. We’ve learned that a project’s potential for a positive outcome is dramatically reduced when the focus shifts away from future-minded initiatives to the immediate needs of an organization in transition. 

 

It comes as no surprise that executive retention has become a top priority in healthcare. We’re receiving more requests than ever before for executive compensation programs built to reward longevity. 

 

Our Healthcare Executive Advantage Plan (HEAP) is a cost-effective program that supports consistency in executive leadership by utilizing a combination of short-term and long-term rewards. We’ve found that this strategy is effective due to its flexibility. Organizations have the freedom to use compensation to support their most pressing goals. For example, to create stickiness at top positions, you can emphasize short-term rewards. To focus on retention, you can emphasize long-term incentives that require both loyalty and performance. Incentivised rewards can also be used to align executives behind organizational goals and promote continuous growth. 

 

What makes all of our programs unique is that they are designed to be stable for years to come, providing organizations with a little predictability in an ever-changing industry. To learn how, download our latest white paper. 

 

REQUEST OUR WHITE PAPER

Complete the form below and receive a copy of our latest white paper: Rewarding Excellent Administrators
Something went wrong. Please check your entries and try again.

Want to Learn More?

Proposed legislation could impact physician compensation

Proposed legislation could impact physician compensation By: Kyle Worthy Most patients assume their care will be covered by insurance as long as they go to an in-network hospital. But this is not the case if they’re treated by an out-of-network physician. Patients in this situation can end up with surprise…

Curbing ED costs could save rural hospitals

Curbing ED costs could save rural hospitals By: Kyle Worthy A recent study confirms that rural hospitals are threatened by significant financial instability. Out of the country’s 1,844 rural hospitals, 453 are vulnerable to closure. In fact, nearly 50% are operating in the red, and this number is steadily increasing,…

Addressing physicians’ top employment concerns

Addressing physicians’ top employment concerns By: Kyle Worthy More physicians are considering employment than ever before, but many have concerns about the hospital-physician employment arrangement. Due to our current physician shortage, competition continues to rise among healthcare organizations for physician talent. Organizations have an opportunity to stand out from their…

The Politics of Pay

The Politics of Pay Why nonprofit hospitals boards must be prepared to defend their executive compensation By: Kyle Worthy Competition for healthcare executive talent is on the rise. This is evidenced by reports that the average tenure of a hospital CEO is only 5.6 years and that 67% of executives…