Industrial Engineering

Healthcare’s Pivot to The Leadership of Tomorrow

Healthcare’s Pivot to The Leadership of Tomorrow

ISE Magazine January 2020 Volume: 52 Number: 2

By Casey Bedgood

https://www.iise.org/iemagazine/2020-02/html/bedgood/bedgood.html

As the healthcare industry continues to evolve rapidly, many leaders are overwhelmed with the rate, pace and direction of industry change. Over the last few years, healthcare has arguably experienced more change than at any other time in his-tory. Many national news outlets have reported that nearly 20% of rural hospitals are at risk for closure and approximately half of the healthcare organizations in the country are losing money.

Unfortunately, there does not seem to be a shift away from this path in the near future. Many leaders are asking: When will this end and what’s driving this disruption?

The short answer is that the healthcare market is evolving quickly and being transformed – the days of old are simply that. In years past, organizational and government leaders dictated what healthcare services, resources and access points were made available to consumers. They also decided what price points were optimal for those services. In essence, the consumer was a back-seat passenger on the healthcare train with little to no input into the care and services desired.

In today’s market, the tide has changed. Consumers have taken the driver’s seat by dictating what services they want, where they want them and what prices are acceptable. The rise of consumerism and customer-tailored healthcare have rocked traditional healthcare models across the country. Moreover, the injection of technology, particularly e-health, and retail medicine are accelerating the disruptive forces. Only those enterprises that can pivot, become agile and transform their portfolio(s) around new customer requirements will thrive. Organizational longevity in healthcare is now directly correlated to meeting and exceeding customer requirements in a highly reliable fashion.

Unfortunately, many enterprises have not been able to keep pace. The more proactive health systems and national best practice model enterprises have pivoted and are poised for the next onslaught of evolutionary changes coming to the health-care industry. These trendsetters are focusing strategies around efficiencies, innovative technology, improving the health of populations, smart growth and creating value for consumers through low costs, high-quality services and innovative access points.

All these are winning strategies, but there is one piece missing: Where is the focus on people? In particular, where is an emphasis on the people who run the organization and use the technology to ensure customer expectations are at minimum met and hopefully exceeded?

The keynote is that leadership sets culture, and culture drives quality of services provided. The linchpin connecting leadership and culture is people, who really represent the soul of the business, how work happens and are the ones who ensure organizational goals are met. It is imperative that leaders hire, train, groom and promote the right people to create a high-performance culture. The best strategy cannot compete against an organizational culture that does not support it. Thus, people who bring the organization to life are as or more important than any playbook, portfolio or strategic plan.

As market forces continue to rage, there has been a collision between “old school” traditional leadership styles and the new leadership archetypes. Many nationally respected information outlets have consistently reported healthcare CEO turnover rates hovering near 20% the last couple years. In addition, the record-setting pace of change in the industry has also disrupt-ed leadership teams, resulting in continual restructuring and pivots. As leaders ponder the current impacts on enterprises, they should also consider what skill sets are needed to ensure organizational viability long term and why so many leaders are being disrupted.

There was a similar trend a few decades ago in the apparel manufacturing industry due to various international trade agreements. During that time, my father was an “old school” industrial engineer long before the emergence of computer automation. As time progressed, the industry changed as market forces drove prices down and forced manufacturers to create cheaper production models.

Initially, the focus was to automate production as much as possible to reduce human capital expenditures. This lasted for a short time; increasing market forces then forced manufacturers to outsource labor in cheaper environments around the world in order to compete and survive. Eventually, most of the apparel manufacturing industry was shipped overseas and leaders found themselves in a predicament with outdated skills and a market disrupted beyond repair. These leaders were forced to pivot their skill sets heavily to computers and performance improvement, change career fields or retire.

Healthcare is similar in that disruption is grossly changing the nature of the business and for the leadership attributes re-quired. But the nature of the healthcare industry will have to keep resources local as much as possible due to the human component of the business.

Historically, healthcare leaders tended to master one craft. For example, most leaders mastered either the clinical side or operations side of healthcare but not both. Most enterprise leaders also knew little about performance improvement. Thus, as the healthcare market has changed, many organizations and their leaders have failed to transition from the old and embrace the new.

In today’s market, the new minimum basic threshold for leadership attributes is high proficiency in clinical, operations and performance improvement methodologies, as noted previously in “The Transformational Healthcare Leader of To-morrow” (ISE February 2019, https://link.iise.org/ISEFeb19_Bedgood). Unfortunately, a gap of mastery in any or all three attributes opens the door for disruption.

Identifying Human K archetypes

The basis of all organizational transformation starts and ends with people. As organizations and leaders plan, prepare for and mitigate current disruptive forces, people – also known as hu-man capital or Human K – should be the centerpiece of the conversation. If the market requires organizations to pivot to high performance, leaders must also complete this migration. Traditional leadership styles and attributes will no longer suffice.

It is not uncommon to find a distribution of at least 70% traditional leaders in most traditional healthcare enterprises. This definitely contributes to the high levels of disruption experienced nationally in leadership teams and enterprise structures. Therefore, many organizations must consider redesigning their leadership cadre toward high performance.

There are four to five human capital archetypes that most organizations recognize.

The first archetype includes top and higher performers. Distribution models vary, but it is not uncommon for organizations to strive to have up to 20% of their leaders fall in this category. Top performers are the leaders who master trans-formational change with high levels of innovative thinking, agility and performance improvement. It is also important to note that these top talent performers typically meet at least 90% of their operational goals and produce national best practice performance. In addition, they master clinical, operations and performance improvement with measurable systemic out-comes.

The higher performers tend to champion innovative thinking, performance improvement and a culture of daily continuous improvement. They also can integrate clinical, operations and performance improvement as well, but they may not have mastered the attributes of a transformational change agent. Irrespectively, top performers of either category should be re-warded, promoted, modeled and coached as the next wave of enterprise leaders. If not, another organization will do so

The next leadership archetype relates to organizational “backbone” leaders. This category of Human K adds high levels of value to the organization and tends to possess extremely high levels of organizational knowledge. They represent the soul of the organization and are the gatekeepers of organizational values and culture. Organizations could not function without the backbone leaders and this subgroup can represent as much as 70% to 80% of the leadership cadre. The goal is to reward, mentor and pivot these leaders to top performer status.

The next two Human K archetypes relate to those with potential and departures. Leaders classified as potential are those that meet 50% to 70% of their respective operational goals with the potential to improve through mentoring, structure and performance incentives. The goal for these leaders is to pivot to the backbone and eventually higher performer status via a management plan, mentoring and incentives to improve outcomes.

Departures tend to be leaders with unsatisfactory performance evidenced by goal attainment of less than 50%. The organization’s focus should be to allow the departures to respectfully exit the organization so resources can be reprogrammed to higher performers. Some organizations strive for a distribution percentage of less than 10% for the potential and departure archetypes.

Building the Human K matrix

Now let’s pull it all together. As organizational leaders pivot their organizations toward high performance, people cannot be left behind. To transition the organization from high distributions of traditional leadership archetypes into new higher performing leadership models, a Human K matrix is needed.

This matrix has four quadrants focused on performance and growth potential. Each leader can be assessed individually based on values, goal attainment, innovative thinking and other objective performance outcomes important to organizational viability.

It is also important to note that subjectivity should be eliminated as much as possible during the assessment. Performance should always be assessed objectively to avoid perceived or unconscious biases. Growth potential essentially relates to a leader’s ability to grow with help, time and resource commitment. The question to be answered is: Can the leader become better with time and help? If yes, then invest. If no, then reconsider and pivot.

The matrix identifies leaders as stars if they produce high levels of performance and potential. These stars relate back to the top and higher performers previously noted. Stars should become the enterprise leaders for the organization via grooming, promotion and coaching. During transformation, they are the ideal choice to lead, model and pivot the organization toward high performance.

Next, the matrix identifies leaders in category 2 who exhibit low levels of objective performance and high potential for growth and improvement. These leaders could become higher performers and even backbone level leaders, as previously noted, with a management plan, incentives and mentoring. They are worth an investment over time.

Category 3 identifies leaders with high performance and low potential for growth. This leadership cadre may reach their full potential as backbone leaders who are extremely important to the organization and a necessity. But they may exhibit little potential to move into high or top performer status.

Finally, category 4 identifies leaders that exhibit low performance and low levels of potential for growth or improvement. Some organizations classify these leaders as unsatisfactory and focus on respectfully removing these archetypes from the leadership cadre.

The overarching theme in using a Human K matrix is to identify the leadership stars and leverage their performance and potential to transform the enterprise, culture and customer experience. The end goal is to transition traditional leaders quickly to higher performers who are agile, innovative thinkers, outcome-driven and prevent the organization from being a victim of market disruption.

In today’s market environment, the only constant is change. Market disruptions are likely to continue for some time and only those leaders and enterprises able to pivot, remain agile, transform their cultures and produce customer-driven outcomes will thrive in the new world.

Human K will be the driving force of all healthcare enterprises. The new leadership archetypes will exhibit star qualities, as previously noted, as traditional models fade. The keys to success are to pivot before disruption occurs, study the national landscape to anticipate, plan for and mitigate change before it occurs, embrace new ways of doing business and reliably exceed customer requirements.

The only path for success in the new healthcare world is new operating models, cultures and leadership archetypes focused on outcomes, quality and creating personalized value add experiences for customers. The old is gone and the new is here. Leverage the leadership stars and enjoy the fruits of transformation.

Source: IIISE Magazie (https://www.iise.org/iemagazine/2020-02/html/bedgood/bedgood.html)