How to Create a Better Board-CEO Relationship
Snapshot
A positive relationship between the board and CEO is a prerequisite for hospital and health system success. Frequent, candid communication, alignment in goals, productive meetings and continuous learning strengthen this important partnership.
The best board-CEO relationships are greater than the sum of their parts. Working together, the board and CEO can foster a mission-driven culture throughout the organization, inspiring clinicians and staff to deliver high-quality, compassionate care consistently. They can make courageous decisions in the community’s best interest, and they can develop innovative strategies to sustain long-term success.
By any measure, Parkview Health — with seven hospitals and 9,000 employees in Fort Wayne, Ind. — is a successful health system. Market share is slightly more than 50 percent, with 26 percent growth in inpatient discharges and 23 percent growth in outpatient visits since 2010. Sixty-one percent of all departments are at or above the 90th percentile for patient satisfaction, and all hospitals have achieved a combined performance score of 99.5 out of 100 for Medicare’s value-based payment system.
While CEO Mike Packnett credits the hard work of his whole team for these achievements, he also notes that it was the vision and commitment of Parkview’s board of directors that made it possible. “The board has always had a keen sense of responsibility for the part we play in moving the needle on major issues in our community,” he says. “They are willing to take on appropriate risk for our health system, even if it’s controversial.”
Packnett and the board rely on four governance and leadership best practices to maintain an effective working relationship and sustain Parkview’s performance. They are: aligning the CEO’s goals with organizational goals, communicating clearly and candidly, connecting meetings to the mission and creating a learning culture. Using Parkview as an example, we will take an in-depth look at each of these best practices.
Align Roles, Accountability
The board approves the hospital’s strategic plan while the CEO executes the day-to-day operations to meet the goals that align with it. The best way to ensure that the CEO understands his or her role and responsibilities is to set clear expectations from the outset, well in advance of the performance evaluation, and to review them annually.
Trustees should link organizational objectives to the CEO’s personal performance objectives so that there is accountability without micromanaging execution [see Sample Governance Decisions Template, below, and Sample Goals for Organizational Alignment, Page 15]. Performance data provide the foundation for the chief executive’s evaluation, which should be a continuous process that concludes with a formal, annual performance review. Make leadership in achieving the mission, vision and values of the organization the centerpiece of the evaluation, with compensation driven by performance in specific areas.
At Parkview, the CEO and the leadership team share five objectives that align with the organizational goals around quality, service, safety, growth and financial performance. These flow from the strategic plan approved by the board and also cascade to all other leaders in the form of specific weighted goals to ensure vertical and horizontal alignment across the organization.
“Board members see a report card with performance scores on these metrics each quarter so they understand how we are trending, with no surprises. We provide in-depth reporting in board packets, but don’t focus on them during meetings,” Packnett says. “My evaluation as CEO, as well as the executive team’s evaluation, is based on those same five goals. Our incentives are also based on meeting them to ensure full alignment.”
Clear, Candid Communication
Good communication between the board and CEO is essential, and this applies to both substance and style. In building and maintaining a strong board-CEO relationship, it’s best to assume that everyone arrives at a board meeting with good intentions. Aim to create a culture of trust where it’s safe to disagree, but everyone understands that once a decision is made together, everyone supports the decision whether they agreed or not [see A Board Member’s Manifesto].
Additionally, because board members have a fiduciary and community responsibility to advise the CEO, it’s critical that they have the courage to speak up when they feel they don’t have enough information to advise the CEO or make decisions. Saying “I don’t understand. Please tell me more,” also helps to stimulate discussion.
The best boards select trustees for the specific skills and knowledge they can bring to bear on organizational challenges. For example, a hospital struggling to improve employee retention can benefit from the ideas of a trustee who works at a company where retention is high. Or if the hospital wants to grow, the board and CEO may want to tap the expertise of a leader at a fast-growing company in the community.
If those particular trustees fail to speak up and ask questions, however, the organization loses the opportunity to benefit from their skills and insights. These complementary skills are most powerful when strong points of view are balanced with open-mindedness and flexibility, so the board and CEO should strive to create a culture of respect for productive communication. Additionally, remember that extroverts are quick to speak while introverts may hold back, so it’s important for the CEO and board chair to seek their input. Building relationships proactively will help someone become more comfortable by saying, “I value your input. Tell me more about what you are thinking.”
Packnett meets biweekly with the board chair at Parkview Health to keep communication flowing. “Our relationship is candid and open,” he says. “If there’s a secret to our success, it’s the candor between the executive team and boards across the system. They know this. We are very transparent about the good things going on and the challenges we face. We are not spin doctors.”
Meaningful Meetings
When it comes to board meetings, too many agendas start with the “what” instead of the “why.” In other words, meetings begin with reports instead of inspiration. Consider taking a different approach: Every time the board convenes, the chair opens the meeting by reading the mission, vision and values of the organization.
Trustees, executives and staff want the opportunity to harness the power of the mission, vision and values in the work they do every day. While every organization has them, those that actually use them are rarer, and the difference in such organizations is palpable. The mission, vision and values reflect the organization’s identity, why it exists and what it believes in. The CEO and board should use those statements to guide each other and provide context to discussions and decisions.
Productive meetings require engagement. A brief presentation from the CEO with no discussion may allow everyone to go home early, but it doesn’t fulfill the board’s responsibility for oversight. Instead, meetings should make time for focused discussion among the CEO and trustees where everyone learns together. Maximize the use of experience, time and talent during the board meeting by asking people to read materials in advance. To increase efficiency in meetings, some boards move all of the informational items off the agenda for trustees to read on their own. Then, during meetings, board conversation focuses on three to five issues that require voting.
To close the meeting, the board chair should ask the group: Did we focus on the right issues? Participate in an active way? Learn more to get better? This makes the board a partner in shaping meetings and ensuring the time spent together is productive.
Learning Together
Leading organizations engage in shared learning. Parkview Health, for example, trains and develops leaders through its quarterly Leadership Development Institutes, or LDIs, and board members are welcome to attend. “We just completed our thirty-third LDI,” Packnett says. “The last one was on population health. We have seven boards for seven hospitals with 100 board members total. Typically, eight to 10 board members will attend.”
In addition to a session in which board members can ask questions of leaders in attendance, trustees can participate in celebrating milestone achievements and attending an inspirational closing keynote that recharges the organization and creates momentum for next steps. “We are currently in the process of reassessing our mission and vision through a crowdsourced understanding of who we are today and what we want to be by 2020,” he says. “We’re using a facilitated process to hear from all 2,000 individuals in our health system as well as board members.”
Packnett also makes a point to expose the board to the executive team, which is a smart succession planning strategy because it allows trustees to assess the leadership pipeline. Members of the executive team present at compliance, audit, quality, finance and executive compensation committees. Additionally, helping new board members to understand the organizational culture and connect with others in these smaller, more focused settings gives them context and confidence when they arrive at larger board meetings.
A Powerful Partnership
The relationship between the board and the CEO is based on trust and mutual goals. Both are dedicated to making their organization a better place for patients to receive care, for physicians to practice medicine and for employees to work. Both want their organizations to succeed, and by investing in a mature and transparent relationship, they can work together better to realize these goals. T
Bob Murphy, R.N., Esq. (bob.murphy@studergroup.com) is senior leader and executive coach at Studer Group, Pensacola, Fla.
Mission Check: Why Are You Here?
If you’ve ever been a patient in a hospital bed, or sat with a family member who was hospitalized, chances are you have a deep passion for board service. One of the most powerful ways for a board to connect to the mission and vision of the organization is to share this.
At the next board meeting, consider asking the CEO to share why he or she went into health care and what the journey to excellence means on a personal level. Then go around the room and ask each board member to share a personal story about why they serve. The responses will be surprising and inspiring. — B.M.
A Board Member’s Manifesto
Consider including this statement in your board orientation materials or with the agenda for the first meeting of the year.
As a board member, I promise to:
• effectively advise the CEO
• ask tough questions instead of assuming
• act when necessary
• demonstrate full commitment and engagement
• collaborate with the CEO to establish expectations, agendas, processes and decision rules
• build professional relationships with the management team
• demonstrate humility, self-awareness and check my ego at the door
Source: The Studer Group, 2015