The Business Case for Leadership Assessment in Healthcare

April 1, 2021
April 1, 2021

This article by Kevin Groves, Ph.D., Associate Professor of Management, Graziadio School of Business and Management, Pepperdine University, and President of Groves Consulting Group, was featured in the inaugural issue of HealthStream's Healthcare Workforce Advisor, our quarterly magazine designed to bring you thought leadership and best practices for developing the healthcare workforce.

Of the many critical challenges facing healthcare organizations, including the intensifying transition from volume to value-based performance metrics, reimbursement degradation and dwindling margins, and the emergence of accountable care organizations (ACOs), none is more daunting than the rapidly aging workforce and its impact on identifying and sustaining a pipeline of leadership talent. The ‘5/50 crisis’—a common refrain from human resource professionals regarding the expectation that 50% of management staff will be eligible to retire in 5 years—is exacerbated for healthcare organizations. By 2020, 75% of nurse leaders will have either retired or be eligible to do so  while the pools of potential future leaders are shrinking. The Bureau of Labor Statistics (2014) currently predicts that by 2022, the U.S. labor force share of those 55 years or older will increase by 29% while the share of those ages 25-54 and 16-24 will contract by 2% and 13%, respectively. As such, healthcare organizations face the formidable task of identifying high-potential leaders for a surging number of leadership roles while concurrently the pool of potential leaders is shrinking and the requisite leadership competencies of key leadership roles are changing.

These dramatic workforce shifts place a premium on a health system’s talent management capabilities, specifically the identification, development, deployment, and retention of leadership talent. The identification of high-potential leaders in healthcare organizations is particularly critical as many of the published or commercial tools fail to capture the challenges that high-potential employees face as they transition into leadership roles. Given the increasing importance of accurately assessing future leadership talent and the overall lack of research that targets the unique transition challenges of healthcare leaders, we conducted semi-structured interviews with 28 nursing, physician, and administrative leaders across a diverse sample of hospitals and health systems. These leaders included Chief Nursing Officers (CNOs), Clinical Directors, Chief Medical Officers (CMOs), Medical Directors, Medical Group CEOs, and Chief HR Officers (CHROs). While the interviews focused on a range of high-potential leadership assessment issues, two key findings are summarized below: (1) the primary challenges faced by high-potential employees as they transition into leadership roles, and (2) the critical characteristics (traits, competencies/skills, knowledge bases, etc.) that designate an employee as demonstrating readiness for leadership success.

The full article addresses:

  • Leadership transition challenges
  • High-potential leadership characteristics
  • High-Potential Healthcare Leadership Model
  • Important Applications for Healthcare Organizations