A troubling statistic has senior care organization boards rethinking their succession planning strategies. In short, a large sector of the senior living C-suite is soon to have a very big retirement party.
A stunning 43 percent of recently surveyed top-level senior living CEOs will reach age 65 in the next five years, according to a new survey from CliftonLarsenAllen. Compounding the problem, many CFOs and COOs are right behind them, averaging only three to five years beyond the CEO’s tenure until their own retirement ages.
The 2015 LeadingAge-Chief Executives of Multi-Site Organizations (CEMO) Leadership Compensation Survey tapped 129 senior living organizations with multiple locations for data on compensation levels and compensation trends. The data trends highlight the importance of succession planning, including solid internal succession strategies and competitive incentive pay.
The involvement of the board is key, as is an early approach to impending executive retirements. "Succession planning has to be led by the board, and, ultimately, has to achieve the board’s objectives," the report states. "[B]oards should know their full executive team and others within the organization who may be future succession candidates."
Incentive pay—used both to keep internal candidates and entice external hires—is becoming a widely accepted method of encouraging quality work and the right attitude, especially in healthcare's "pay-for-quality" environment.
"Incentive‐based compensation is becoming more common because of the increased emphasis on performance and competition for talent," says Mario Mckenzie, principal author on the survey. "A well-crafted incentive compensation program must direct individual behavior toward achieving established organizational goals [while allowing] a substantial portion of compensation to be a variable cost."