I got two calls recently from healthcare chief executives who had just been fired by their boards-unexpectedly. Both had the same comment, more or less: "I guess I should have spent more time with the board."
Both CEOs had been on the receiving end of that well-known board-to-CEO evaluation pattern known as "good job, good job, good job-gone!" Hit them like a bolt of lightning.
Assuming they were capable CEOs, how much time should they have spent with their boards? The Governance Institute did a survey recently of 150 CEOs of hospitals and health systems to find out how much time they actually were spending on "governance" tasks such as board recruitment, orientation, board meetings, board committee meetings, meetings with individual directors who call or drop by, retreats, board self-assessments, and so on.
The results were all over the ballpark, but on average the CEOs said 22% of their time was spent on some board-related activity. Many said up to 40%. And this doesn't include strategy sessions with staff, trying to figure out what might fly with the board and what may be shot down.
This is a remarkable amount of time. If you calculate 22% into hours per year, it amounts to more than 500 hours based on a 10- to 12-hour day, which is common for CEOs.
It would be interesting to see if the percentage of CEO time spent on governance varies depending on the size of the board or the different type of ownership. Also, it may vary between younger CEOs and their saltier colleagues, who may have smartened up over the years about how much time it takes to provide care and feeding to this key group of policymakers. We'll ask those questions next time, although our guess is that board size and who owns the organization probably doesn't make much difference in how much time should be spent with board members. It also would be interesting to see if there's a correlation between which CEOs are dismissed and the percentage of time they spent on "board" things. We guess yes.
Where are the teachers? Where do CEOs and CEO wannabes learn how to work with boards? Not much is taught in graduate programs, and virtually nothing is taught in medical schools, although an increasing number of doctors are ending up in management jobs.
Most learn by sitting and watching how their bosses work with their own boards. What they learn varies wildly and is wrong in many cases. They hear, as I have heard many times, dangerous comments by CEOs that demean the board, such as, "Our board is the weakest link in the organization," or "The board is just another group to manage."
That teaches a message with the wrong premise: that the board is an obstacle for management to overcome, rather than that the board is where the buck stops and has an enormous debt to the owners-usually the community. Too many CEOs begin to think, over time, that it's their board and their health system being managed.
An old friend who was CEO of one of America's largest banks told me that the smartest thing he did accounting for his long tenure was to meet individually with each board member each year to hear what was in their minds and discuss his plans and ideas for the bank. He recognized that they were the final authority.
He was a busy guy-pulled in many directions by customers, market forces, regulators and the usual crises-but he religiously met with every one of them every year, even though he had to catch a plane to get to some of them.
Freshman classes. The majority of board members on hospital and system boards have never served on any other board. Most are flattered to be asked, but they go to their first meeting with a lot of doubt about what goes on in the boardroom, what their role should be, or what a good board does. Like their CEOs, they didn't study boardroom behavior anywhere either, so we have freshman on all sides of the table learning as they fumble along together.
In the commercial business world, CEOs of corporations have a huge advantage in their board relationships because in 80% of the cases they also occupy the powerful chairman's job. By contrast, fewer than 5% of CEOs of hospitals and health systems also chair their boards.
What's a CEO to do? With his or her limited power, no real constituency group to lend support, no ownership equity to provide security for the future, and a current market brimming with change and risk, the smart ones are spending more time helping the board understand two things better: First, what the boards are supposed to do and how they can do it well. Second, what's going on out there in the fast-changing managed-care marketplace. Unfortunately, less time is being spent on the first point than should be.
It's far easier to first learn how to be a good board than to unlearn and relearn after the mistakes are made. New board members want to know what's expected of them. It's up to the CEO to see they get off to a good start and get feedback as the calendar roles along. Spending more time with them, as a group and individually, is the key.
CEOs must, of course, spend huge amounts of time with key people such as physician leaders, nurse executives and health plan executives, which often means less time with the board members. But my two shocked friends should have remembered who hired them.
Ewell is president of the Governance Institute in La Jolla, Calif.