When you Google “Hiring a CEO for Small Business” the first page of results is filled with articles that include helpful information about how to hire a CEO provided by industry leaders like Inc. and Money CNN; and the articles are titled clearly, e.g., “5 Tips For Hiring A CEO” and “Bringing In A CEO”. When you do the same search for “Hiring A CEO For Human Services” you get pages of job openings and letters from existing CEOs in health and human service agencies. Finally there is one article and it’s about how CEOs of non-profits are aging out of their jobs and retiring at a faster pace than ever before.
So why are there so few articles written about how to find the right leadership in our marketplace? How do human services agencies generally, and behavioral health service agencies specifically, go about finding new leadership? One answer is that recruitment in our market includes some challenges that are difficult to understand for people outside of the health and human services environment.
There are five factors that make leadership recruitment complex:
Hiring for mission – It is not uncommon for people in the human services environment to be promoted because they are really good at what they do in their direct service job. However, just because someone is a great clinician and a responsible worker, doesn’t mean that he or she has the skill set to lead people. I often speak to leadership representatives from behavioral health agencies and generally find a person who is completely connected to the mission but who can’t explain the organizations information technology strategy, financial strategy, or growth strategy.
Compensation inequities – Behavioral health and human services salaries and bonus opportunities are lower than in other types of jobs. According to Payscale.com, the median salary for a non-profit CEO is slightly over $100,000 per year, while an executive director is slightly over $60,000 (see Chief Executive Officer (CEO), Non-Profit Organization Salary). While that can be a step up in earnings for direct care workers, it may not be enough to attract talent at the C-level. More worrisome yet is the lower salary profile for positions that don’t compete at the mission level. For example, directors of IT, finance and/or human resources have similar jobs in organizations that are for-profit, as well as non-profit. That means a more competitive landscape for those leadership positions, especially in urban markets. It can result in having to pay inequities within the leadership of the organization.
Lack of experience with finance – In a for-profit world, the mission of a company is to create value for the shareholders. At a non-profit, the mission must include the making of enough money to assure that the organization can serve its community and stakeholders. However, financing that mission is not always something for which CEOs can take full responsibility. One component of this problem is the history of program funding for certain behavioral health and human services. Even though program (grant and government) funding has diminished, there is still a sense that the work is quasi-governmental and therefore will be protected. And there is some basis to that. There are certainly agencies that continue to receive funds from their county or other local behavioral health oversight entities. More and more, as services that were program funded are moved to Medicaid, the responsibility for staying fiscally healthy requires operational effectiveness in documentation, billing, and accounts receivable management. C-level staff must not only embrace this new reality but have clear strategies for how to take advantage of it.
Cultural dissonance – Since the 1980s, short-term thinking has become more and more acceptable as an approach to business decisions (e.g., I will buy this company, merge its customers into my company, lay off its employees and make money right now). The concept of keeping a money-losing program alive because it is at the core of the mission is quite complex, and can be much harder than developing short-term strategies for profit. Hiring a person who is solely focused on revenue excess as the marker for success of the program can result in the death of the agency’s mission. The culture of the agency is an artifact of both the mission and the leadership. Hiring the wrong leaders can damage commitment to the mission.
Role of the board – The role of the Board of Directors is often not as clear cut in non-profits. This means that the Board may support hiring a CEO candidate who doesn’t have the business skills but who has demonstrated great commitment to the mission. Or the Board may be populated with business people who don’t fully understand the mission and are looking to bring in a leader who is narrowly defining success as excess revenue over expense.
Stay tuned for more next week, when I discuss the pros and cons of hiring from inside the organization and provide some structure to help hiring committees determine whether the needs of the company are best served by an external or internal strategy. And for more in the meantime, check out the recent post by my colleague Monica E. Oss, What To Look For In A C-Suite Executive In Health & Human Services.