Paul F. Levy

Leadership Insights

Knowing When It’s Time To Leave

By Paul F. Levy | Mar 27, 2014 | Comments (3)

In a recent article on the HBR Blog Network, Manfed F. R. Kets de Vries asks the question, “How long should a CEO stay in his job?” He answers by saying, “seven years in probably the period of maximum effectiveness for most people in what can be a very stressful job.” He goes further to describe three phases that characterize the tenure of many CEOs — entry, consolidation, and decline.

He asks, “So what can be done when a CEO starts to decline? The best scenario, of course, is if that the CEO himself realizes what is happening, acknowledges his increasing ineffectiveness, and looks for new horizons when the going is still good. Ideally, that is at the point when they are in the sweet spot of being at the peak of their performance, just before decline.”

In my case, I arrived at Beth Israel Deaconess Medical Center in January of 2002, with the assignment to lead a financial turn-around of an extremely troubled organization. By September of 2003, we officially declared the end of the turn-around, as the hospital had returned to sustained profitability.

Having survived, it was then time to engage in a full-fledged series of strategic plans—focusing on the three parts of this academic medical center’s mission–clinical care, education, and research. By engaging the faculty and staff, we were able to reach a consensus on the overall direction of the place.

I was tired from a job that had extremely demanding physical and psychological components. I was also tired of the job … I was ready for new challenges … but I decided to stay on.

Meanwhile, due in great measure to the recruitment of Dr. Mark Zeidel as chief of medicine, we began an intense program in safety and quality improvement. Mark’s commitment to this journey was soon matched by the other incumbent chiefs and supplemented by the recruitment of new chiefs of pathology, radiology, and anaesthesia. My role in this effort was to initiate unprecedented levels of transparency with regard to clinical outcomes. Our Board was on board, too, adopting a four-year goal of eliminating preventable harm in our hospital, and posting on our corporate website—for the world to see—progress towards that goal. Every quarter, the actual numbers and types of cases of harm in our hospital would be made transparent.

In March of 2009, we faced a new crisis as the financial meltdown occurred in the US economy. Having started the fiscal year with projections of a $20 million surplus, by mid-year we were instead looking at a likely $20 million deficit. My COO and CFO recommended laying off 400 people to balance the budget.

I refused and instead asked people in the hospital to suggest ways in which they were willing to absorb personal financial sacrifices to help avoid layoffs. The response—which received national attention—was overwhelming. We not only avoided the layoffs, but we were able to exempt the lowest paid workers from having to participate in any of the sacrifices chosen by the others.

In August of 2009—right in line with de Vries’s timetable—I woke up one morning and realized I was tired. I was tired from a job that had extremely demanding physical and psychological components. I was also tired of the job, having felt that I had done my most creative work. I was ready for new challenges. In terms of my personal health and well-being, it was time to leave. Also, it was time to let a new person with more energy and enthusiasm handle the next stage of challenges facing the hospital.

But I decided to stay on. Why? Here’s where I let myself be trapped by the close personal relationships that had grown between the staff and me. Hospitals are compelling and emotionally complex places, and an empathic CEO feels the joy and pains of the staff and builds a deep personal bond with these well intentioned people who devote their lives to eliminating human suffering caused by disease.

In this case, there was an additional anchor. I felt an obligation to our generous staff to stay long enough to see the hospital through its financial crises and to restore the pay cuts and reductions in benefits that they had voluntary taken. I knew that this new turn-around effort might last at least another year, and I decided to commit myself to staying the course.

Sure enough, by the fall of 2010, our fiscal health had been restored. I was able to restore the cuts in pay and benefits. I was even able to award everyone with a $500 bonus out of gratitude for all they had done to help to the hospital and one another.

This was a source of great personal satisfaction for me, but as I look back on the experience, I realize that it was a mistake to stay beyond the seven years. While my motivation in staying was not selfish—it fact, it was just the opposite—it was self-centered. Was I the only person who could have led the organization through that recovery? No, there were many able leaders in the hospital who would have done just fine without me. But my dedication to the staff made me want to stay long enough to feel that I had delivered the goods to them.

As de Vries suggests, it is at such a moment when a Board needs to step in. They need to closely monitor not only the performance of the CEO but his emotional mindset. They must overcome inertia in governance, the natural reluctance to change horses when the race is going well. The loyalty and friendship that a Board feels towards a successful CEO is, ironically, a danger. It leads to complacency on the Board’s part, particularly during moments of corporate triumph. It is precisely then that a Board needs to carry out its most important function—telling themselves and the CEO that it is time for him to move on.

Paul F. Levy served as President and CEO of Beth Israel Deaconess Medical Center from 2002-2011.

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  • Tony Kovner from Prof,NYU wrote:

    You are assuming that the new hire CEO will work out which is not always the case.
    You are assuming that the CEO cannot re-energize, say after a three-month sabbatical.
    No one is irreplaceable, but outstanding leaders do make a difference and they are not easy to find and keep being supported.

  • M T wrote:

    Thank you for sharing your candid insights on the natural evolution of a CEOs tenure. This piece, as well as years of writing a blog, has provided excellent and transparent teaching for those in leadership. It is much appreciated.

  • V N from NA wrote:

    There are times when you need a strong person to lead. FDR was kept in because of that. I understand the 7 years but I think there is room when a truly fine leader can go past that. You’re right in many ways. However, you make an excellent CEO. I wish the focus on people would be in true in my area at some places.

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