For two years, Richard E. Murray knew the day was coming when he’d step down as president and CEO of the $403 million
Kennedy Health System. But circling a date on the calendar was only the beginning. In the months leading up to his May 31 retirement, Murray, who took the top spot back in 1992, has helped lead a massive transitional effort that has included identifying potential successors, assisting the board of directors in the hiring process as needed and, most importantly, helping the entire 3,600-employee health care system make the transition to his successor. “There has to be a date where the new person takes over,” Murray says. “But by the same token, to make that transition successful, I do think you need a transition period. All companies and corporations have separate cultures and ways of doing things, some of which is on paper and some of which is not on paper. Some of the hardest transitions occur not on the technicalities of the job but because of the unwritten culture of the organization.”
When you do decide to step down, your successor might be an internal promotion or an external hire. The person might have
been selected by you, by your board of directors or by a vote of shareholders. No matter how you find your successor, Murray says he or she is going to need the support of the people in the company. That starts with the transition process.
Make the best hire
The transition process formally began in September 2007 when Murray announced his retirement to the board. Following his initial announcement, Murray appointed a succession planning committee composed of members of the board of directors and himself.
“I wanted to make sure that there was sufficient time for the organization to quietly and systematically go about the process of selecting its next CEO,” Murray says.
In order to identify the best candidates and make the best hire, Murray says you have to take your assumptions and preconceived notions out of the equation.
To aid in that, the leadership at Kennedy Health brought an independent consultant on board. Murray says consultants can help a company’s leaders take a wide-angle view by removing personal bias from the decision-making process. Consultants can also put metrics in place to help you better weigh the positives and negatives of the decision you are about to make.
“Our consultant evaluated each of the candidates using various testing methodologies,” Murray says. “There was personality profiling, written and electronic exams, and different testing protocols that typical search firms use to evaluate candidates and make good matches for their clients. It allowed us to really take objective measures in the testing of our internal candidates and see how they might stack up against the best talent that might be out there across the region and the country.
“When we went through this process, we recognized that the first decision we’d have to make would be whether we had someone in-house who is the best candidate for us or whether we’d have to engage in a nationwide search. When we brought in (our COO), that was the result of an extensive search, and we were willing to go through that again if need be.”
As part of removing himself from the decision-making equation, Murray says he made it a point to take a backseat to the board of directors.
“I acted as sole counsel to the board, and when asked, I gave my opinion on the suitability of a candidate,” he says. “But really it was just consultative. This was the board’s decision on who to hire, and I tried to be very careful not to overstep my position or to try to influence the decision in any way. In our case, the board has to live with the decision they make, and it’s certainly their role and authority to make the call.”
After an internal search by the succession planning committee whittled the search down to several internal candidates, last year the board elected to hire Martin Bieber as Kennedy Health’s new president and CEO, effective June 1. Bieber had been hired as the COO in 2006 and is now the system’s executive vice president. Murray says he had prior CEO experience from a previous career stop, making him a natural fit for the role.
“Marty Bieber was the logical internal choice, being the COO, but we had two other senior executives who have a great deal of experience and who, under normal circumstances, would be considered potential candidates,” Murray says.
Keep your people informed
Shortly after announcing his retirement to the Kennedy Health board, Murray made his announcement to the entire system.
When a major change is forthcoming in an organization, the quickest way to start rumors and spread anxiety is to remain tight-lipped on the reasons behind the decision. Murray made it a point to communicate as transparently as possible about his retirement.
“There are normal anxieties whenever there is a change in leadership,” he says. “Part of that, in our case, is that even without a major change in leadership, the health care industry in New Jersey is under a lot of strain. We’ve seen many of the hospitals in New Jersey close, and there are more in bankruptcy.
“There are questions about stability, questions about change, is there going to be a new direction, will there be a tailing off of productivity and success.”
Murray announced his retirement through a letter sent directly to the homes of all Kennedy Health employees and kept employees informed on the progress of the successor search through internal mass-communications, including e-mail and the companywide newsletter.
Murray also relied on in-person communication facilitated in large part by those in upper-level management.
“An organization with between 3,000 and 4,000 people is a large organization, so we have regular meetings with various groups to make sure information is communicated upward and downward,” he says. “I have a corporate officers group of four senior vice presidents. I meet with them regularly to discuss our progress and changes. They each meet with the people that report to them.”
It might seem obvious that open communication helps a company remain able to adapt. But Murray says you need a detailed plan for how to approach communication during a transition at the top, and see to it that the plan is cascaded to all areas of the organization. If you don’t, you’ll risk losing people in the shuffle.
“Good managers and good leaders know that the success of an organization depends on its people,” he says. “People have to naturally adapt to a changing environment. From a managerial point of view, it’s establishing regular sets of goals and objectives, then holding people accountable. You also have to have the right level of communication with the various levels of the organization so that change can be brought to the forefront and acted upon in a reasonable period of time.
“It’s not brain surgery. It’s just the sound principles of managing and, more than anything, maintaining the lines of communication. It’s having a style that incorporates participatory management that allows for an organization to adapt to things that come down the pipe.”
Manage the change
Murray tries to stay ahead of the curve with regard to change, and that includes his own tenure. He says change is inevitable in any business, and when the need for change becomes apparent, you should adapt, not resist.
“I’ve been very sensitive to staying at the party too long,” he says.
“I’ve been around a long time; I’ve been very much involved in the major health care associations. So I’ve known a lot of people in the state, and I’ve seen CEOs come and go over the years. But the one thing I’ve been sensitive to is getting out at the right time.
“This was not a spur of the moment decision. I’ve been thinking about this for some time, and I told select members of the board several years ago that this was generally the time frame I had in mind.”
Your responsibility as the leader of the company is to set the stage so that a management transition is ultimately a positive experience for employees at all levels of the company.
“Well-trained, committed and cared-for associates recognize that change is necessary, and that the most important thing is to manage that change so that it is successfully accomplished,” he says. “What I mean by managing change is that I think change has to occur for good reasons, not just for the sake of change. It has to be clearly spelled out why things are changing so that people understand it and embrace it.”
In the end, succession management is change management. You might only retire once in your career, but you’ve been learning the lessons of how to bridge the gap between you and your successor for most of your career. Interacting with your people to get a feel for what they can tolerate with regard to change is one of the essential steps in change management.
“Part of managing change is to have a good grip on where your people are and what they’re capable of taking at any one point in time,” Murray says. “Change will come, and when it does, you have to parcel it out and prioritize what is important. If you try to jam in too much change at one time, it can demoralize your personnel and weaken the company, and it leaves you with a very bad result.
“Even without any dramatic changes, there are newfound requirements — certainly in health care, and I know in other industries, as well. Life is more complicated today, the bar has been raised and associates are being asked to do more with less. That’s part of business even without adding on layers of major change. There are a lot of pressures and responsibilities day to day.
“That’s the role understood by good management and good leadership, to evaluate change and understand how much is appropriate to overlay at any one point in time.”
HOW TO REACH: Kennedy Health System, (856) 566-5200 or www.kennedyhealth.org
