The hidden cost of executive turnover
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.
Disruption and distraction
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.
Searching for solutions
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.
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