To my friends Mary Marienau and Jani ce Engberg, Ph.D., I owe my gratitude. The countless lunches, coffee breaks and emails of encouragement helped me work through the writers block, despair at lack of progress and ultimately gave me the strength to know that I could finish this journey. To all of my other wonderful friends, Anne Marie Dominguez, Phyllis Trcka, Carole Nistler, Susie Hiemenz and many others too numerous to name, who gave me encouragement and knew better than to ask when I’d be finished, I thank you for your confidence in my ability to complete this paper! To Scarlet Tippetts for helping with transcription and proof-readi ng, I am forever grateful! And finally, an enormous thank you to my fam ily. To my parents, Fred and Mary Suhler for believing in me and encouraging me to pursue my doctoral degree, to my husband Scott Hart, for never losing faith in me and making it possibl e to get through the coursework, exams and writing and to my child ren, Elizabeth and Frederick for being the joys of my life! I am proud that you have been able to watch your mother on this journey. ii ABSTRACT This descriptive case study explored, in-depth, the succession planning and management programs in health care organizations in th e State of Minnesota. The purpose was to evaluate the extent to which succession pl anning and management programs are used in these organizations. Review of the literature showed that health care is well behind other businesses and industry in thei r succession planning efforts. To evaluate the efforts in these health care organizations, ten in person interviews were conducted with administrative and human resource leaders fr om member organizations of the Minnesota Medical Management Group Association. Part icipants were asked about succession planning and management programs within their organizations, how they prepared individuals for advancement within the orga nization, future challenges and opportunities and any critical incidents or personal expe riences they had with succession planning. These interviews were then transcribed and evaluated for any themes. There were five major themes identified through analysis. U pon evaluation of those themes, the identified challenges that these organizations faced, mirro r those outlined in th e literature review. There appears to be a lack of coordinated su ccession planning efforts across health care organizations. In order to make improvem ents and develop strong succession planning programs in their organizations, it will be n ecessary to identify the competencies needed by individuals to take organiza tions forward in an uncertain future, openly and constantly communicate employees’ strengths and areas for improvement, deepen their planning efforts past the highest level of the organi zation and continuously evaluate the changing needs of the organization among senior leader ship to ensure alignment with succession planning efforts. iii TABLE OF CONTENTS Acknowledgements……………………………………………………… i Abstract………………………………………………………………….. ii Table of Contents……………………………………………………….. iii List of Tables……………………………………………………………. vi CHAPTER 1: Statement of the Problem 1 Focus of the Research 1 Background 2 Benefits of the Research 2 Research Question 4 Rationale 4 Premise 4 Qualifications of the Researcher 5 Definition of Terms 5 Summary 6 CHAPTER 2: Review of Related Research 7 Introduction 7 Studies of Succession Planning and Management 8 Best Practices 10 Studies of Theory 11 Theoretical Background of Leadership 11 Trait Theory and Leadership 12 Behavioral Theories of Leadership 12 Situational Theory and Leadership 13 Transformational Leadership Theory 14 Chaos Theory and Leadership 15 Summary 18 CHAPTER 3: Research Methodology 20 Introduction 20 Research Questions 20 Development of Interview Questions 21 Selection of Participants to Study 21 Analysis of Interview Data 22 Data Collection 23 Participants 23 Confidentiality 24 Significance 25 Limitations 25 Summary 26 iv CHAPTER 4: In-depth Analysis of Succession Planning and Management in Health Care Organizations 27 Introduction 27 Discussion of Findings 27 Overview of Findings 27 Findings in Detail 28 Most organizations have some sort of succession planning and management activities 28 Succession planning not well defi ned in most companies 32 Communication to employees regarding succession planning and management not always clear or consistent 34 Participants feel they need better or more articulated plans to meet future needs within health care 37 There is some frustration w ith personal succession planning efforts for themselves 41 Summary 44 CHAPTER 5: Discussion 46 Introduction 46 Review of Method 47 Literature Review and Findings 47 Finding One- Succession Planning in Organizations 47 Finding Two- Succession Planning not well defined 49 Finding Three- Communication not clear or consistent 50 Finding Four- Better plans needed to meet future needs 51 Finding Five- Frustration with pers onal succession planning efforts 54 Theory revisited 54 Behavioral Theories of Leadership 55 Chaos Theory and Leadership 56 Situational Theory and Leadership 56 Transformational Leadership Theory 57 Illustration of theory through themes 58 Situational Theory and Leadership 58 Transformational Leadership Theory 58 Summary 59 CHAPTER 6: Conclusions and Implications 61 Introduction 61 Research Questions What models of succession planning are used in health care organizations in the State of Minnesota? 61 How are these plans put into effect? 62 What experiences have health care or ganizations had in development and implementation of these models? 63 Implications for health care 64 Implications for employees 66 v Implications for further research 66 Recommendations 67 References 69 List of Appendices 73 Appendix A: Invitation to Partic ipants 74 Appendix B: Consent form for Interview Participants 75 Appendix C: Institutional Review Board Approval 77 vi LIST OF TABLES Table 1- Participant Contact Data 21 Table 2- Description of In terview Participant and their Organizations 22 Table 3- Succession Planning Efforts by Participant 49 Table 4- Strategies for Succession Planning by Participant 50 1 CHAPTER 1: STATEM ENT OF THE PROBLEM As an employee in a large, world famous health care organization in the Midwest, my interest in succession planning is pers onal. I often watch in wonder as senior leadership positions are filled within my organization. How are these individuals identified as potential leaders? How do I deve lop myself or my employees into the type of employee who could attain a senior leadership position? There is no well-defined, well-communicated succession planning effort across this organizati on. While there are a number of manager and leadership developm ent classes and opportunities offered in my organization, employees do not seem to truly understand where to look and who to look to in terms of upward movement and devel opment. In my organization there does not seem to be any coordinated or communicated efforts to track high performers to specific leadership positions within the organization. This lack of coordination and planning leads to confusion and speculation each time a senior leadership opening occurs. This trickles down to middle management and lower management positions too. The pool of candidates for senior leadership comes from these ranks, but there is not a coordinated effort to develop lower-level employees into th e leaders of tomorrow. I fear that if this continues, my organization will see decreased job satisfaction and lose potential high talent individuals to other organizations. Over time, I have been told that I have been identified as “emerging talent”, yet I do not see any difference in how my career is being developed from all of those around me. There s till seems to be inquiry regarding interest, rather than a strategic assignment of pr ojects, departments or daily tasks. For far too long, the thought process has been “this individual has been here a long time and is ‘nice’, so they should get the job” (J. Arnott, personal communication, 2 May 3, 2007). This process may have worked in the past but as the pool of qualified candidates begins to shrink w ith the upcoming retirements of the Baby Boomers and the increased business pressure to stay afloat with the falling reimbursements for larger Medicare patient populations, be ing a “nice person” is not go ing to continue to be an effective means of leading the organization. In order to stay viable, health care organizations need to develop and foster robust programs to develop the leaders of tomorrow. Purpose The purpose of this study is to examine succession planning efforts at health care organizations across Minnesota. By identif ying the different succession planning efforts currently in place in a select ed sample of organizations, barriers and challenges to successful implementation can be identified. By researching these planning programs this study can be used to develop a solid model fo r fruitful succession planning efforts in health care organizations of a ll sizes and geographic regions. Rationale The U.S. labor gap will reach 7 m illion workers by the year 2010 (Corporate Training & Development Advisor, 2006). This gap will continue to grow throughout the next two decades as the Baby Boom genera tion reaches retirement. By 2012, the 55 and over segment of the workforce will have increased to 19.1% with an annual increase thereafter of 4.1% (Journal for Quality & Par ticipation, 2005). Many of the people in this ever increasing population segment hold senior level positions in organizations. The result of this workforce shrinkage is that it will become increasingly difficult for organizations to promote and retain th e best employees for middle and senior 3 management positions. Arnone (2006) identified the following as the top concerns from business and industry: availability of tale nt, talent management , retention of key employees and maintaining intellectual capital. The Cutting Edge Information’s data “Succession Planning for Results” indicates that 67% of organi zations polled do not currently have any kind of formal succession planning and management process and that in addition, 45% of the world’s largest corpor ations have no formalized and meaningful strategy in place for developing their next senior executives (Journal for Quality & Participation, 2005). This study also explor ed the considerable lack of confidence organizations have in their ability to competen tly staff senior leadership positions in the next five years as well as their assumption that there will need to be a significantly different skill set required of leaders in the future. This theme echoes through the literature time and again and is repeated over and over in all co rners of business and industry. According to Arnone (2006), nearly one in five Americans aged 65 and over is currently working. As this population rises, or ganizations need to develop mechanisms to attract and retain these older workers as one strategy for coping with the projected shortfall of workers caused by mass retirements. Health care organizations may need to use this strategy to fully develop their su ccession planning and management programs. According to Norm Devine, consultant for Development Dimensions International (DDI), (personal communicat ion, May 10, 2007), only 38% of health care organizations have formal succession plans. In conversations with Mr. Devine, it became clear that many health care organizations are looking at succession planning as a replacement planning activity rather than looking more long term at developing leadership competencies, educational programs and looking at desirable personality traits. 4 Understanding the ever changing health care in dustry and developing a strategic plan for identifying the necessary skills to successfully manage through these changes will be imperative for the continue d strength of the health care industry. In addition, organizations need to develop growth opport unities to retain talented employees by challenging their skills and finding more oppor tunity than they would find elsewhere (Corporate Training and Deve lopment Advisor, 2006). This study seeks to identify applicable th eory behind the issues that health care faces with succession planning and management and ultimately develop programs that lead to the successful implementation of these efforts across health care. Research Questions 1. What models of succession planning are used by health care organizations in the State of Minnesota? 2. How are these plans put into effect? 3. What experiences have health care or ganizations had in development and implementation of these models? Premise 1. The lack of high level qualified workers in health care organizations has resulted in a growing need to develop formal succession planning efforts. 2. Health care organizations may struggle mo re than other types of businesses with developing and sustaining succession pla nning and management programs due to the ever changing nature of the health care environment. 3. Health care organizations are looking for assistance with developing formal, effective succession planning and management programs. 5 Qualifications of Researcher I was a doctoral candidate in Human Resource Development at the University of Minnesota. Because of my twenty years of e xperience in health care organizations, I chose to focus on succession planning and management. Having a background in health care, along with the knowledge gained through c oursework, I have the necessary skills to undertake this study. In order to understand the st ate of succession planning and management in health care organizations, I conducted eleven in-person in terviews with leaders from health care organization in the state of Minnesota. Thes e interviews employed open ended questions to understand the types of programs these organizations have developed, how they identify and nurture talent, lessons learned and any persona l anecdotes they wished to share. Definition of Terms Competency assessment- the process of discovering job co mpetencies (Rothwell, 2001). Core competencies- specific core skills or characteristics necessary for successful execution of job duties (Rothwell, 2001).