How many of you CEOs plan to retire one day?
I'll bet all of you are nodding your heads vigorously, especially if you're having a particularly bad day. But let me finish. I'm not talking about working a few days a month in a consulting role, or transferring your title to the next rising star inside our outside your system, and taking your place on the board of trustees. I'm talking about really retiring, and going away, and not meddling in the affairs of your former hospital or health system unless somebody asks you to. Maybe not even then.
I'll bet not so many heads are nodding now. Not many of you would find this type of retirement fulfilling. Most of you have spent so many years and hours working the daylights out of your position that not having anything to do with the hospital or system you so recently led would be out of the question. But it's probably what you should do—at least for a couple of years. Why? Because your involvement could be damaging.
That's the take of the Conference Board, anyway. Their data, however, is drawn not only from the world of healthcare, but from publicly traded companies, so take their wisdom with a grain of salt. Their conclusions come from analyzing 358 cases of CEO turnover at S&P 1500 firms over a three year period (1998-2001). So the data's old, but it has to be in order to draw long-term conclusions from the effect of former CEO involvement.
In short, it finds that companies that retained former CEOs on boards have relatively lower stock returns than companies whose CEOs continued as chief executives.
"Retention as a board member has important consequences for subsequent board decisions and post-turnover firm financial performance, since delayed departures often appear to restrain the maximization of shareholder value," the report says.
Fine, so is it applicable for healthcare? I think it can be.