09/22/2014 05:22 pm ET Updated Nov 22, 2014

Finding the Right People: A Challenge in Transforming Industries

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There are two mega-trends affecting both higher education and health care: the demand for value and the need for size. (Even more so in institutions like mine, Georgia Regents University and Health System, which, as our state's only public academic health center, straddles both worlds.) And the often transformative responses to meet these trends have placed inordinate strain on institutional leadership.

In higher education, the turnover rates of university presidents/chancellors, chief financial officers (CFOs), and chief academic officers (CAOs) are already notably high and predicted to increase even more in the coming years. And last year, the turnover rate of hospital CEOs was 20 percent, the highest since the American College of Healthcare Executives (ACHE) began tracking them in 1981.

Why so high? As Scott Watson, a Senior Partner at Wheless Partners, specialists in recruiting high-caliber, top-level executive and board leaders, described to me:

"Increasingly, talent that resides at the top of the bell curve is becoming more difficult to find and to secure. One reason is pure demographics. Baby Boomers are becoming eligible to retire at the rate of 10,000 per day, resulting in a rapidly shrinking pool of highly experienced and difference-making talent. The numbers in the generation that follows are much smaller, thus setting up a perfect storm in the war for talent. So identifying and securing brand equity-building contributors is clearly going to become more challenging going forward."

At the same time, both the health care and higher education industries are grappling with internal and external forces that present significant challenges and are driving dramatic change across the sectors. In addition to the two megatrends already noted, there are economic pressures, technological advances, new government policies, increasing demand for measurable return on investment, demographic shifts in both student and leadership populations ... These are but a few forces institutions in both fields must navigate. In fact, the increasingly challenging operating environment is very likely an additional driver for higher turnover. These jobs are not easy.

But they are critical. And finding the right people to fill them is certainly among the most important tasks facing health care and higher education institutions today. In fact, not finding the right people may be the limiting factor to the success of these ventures.

It is increasingly challenging in these transformative environments to identify capable and experienced leaders who can not only navigate, but actually thrive in, an environment where uncertainty is greater, governance and organization are morphing, cultural heterogeneity is higher, and reporting lines of authority are less clear. Below are highlighted two specific challenges: the effects of enterprise reorganization and of matrix reporting.

Reorganization Effects

Many systems have responded to the external and internal forces experienced with structural changes--integrating, consolidating, and merging--that result in organizations that are larger, more heterogeneous, and more complex, and that often combine two or more institutions that start with little in common.

I am president of one such organization, Georgia Regents University (GRU), established last year through the consolidation of two separate and disparate entities to create a greater single university with a fully aligned health system. Moreover, this consolidation of universities followed yet another complicated reorganization--the creation of a health system, and the integration of distinct corporate entities including hospitals, outpatient facilities, and a physicians practice group.

The complex, heterogeneous enterprise we became after integration and consolidation required a new way of managing, particularly as we moved to develop an enterprise-wide system of shared administrative services, e.g., IT, HR, Legal Affairs, etc. Our cultural and operational divides were significant, the largest of which were those between a liberal arts primarily undergraduate university and a primarily graduate and professional health sciences university; and between the academic and clinical enterprises.

Matrix Reporting

In a traditional hierarchical management model, authority is linear, lines of authority are clear, and each person reports to one "boss." While this has the advantage of clarity, it rarely allows for required flexibility and optimal use of staff talents and strengths required in these larger, more complex organizations.

In a matrix organizational model, individuals are grouped by function as well as by product, and cross-functional teams are frequently employed to accomplish particular tasks. Reporting lines generally include many dotted lines, where an individual executive or staff member may report to a number of other units or leaders, although always with one single solid line denoting hiring/firing authority.

Clear advantages of matrix reporting include fostering an organization-wide focus among leaders, aligning interests and efforts, breaking down siloes, increasing communication, streamlining processes, eliminating duplicative work, and using resources more efficiently. However a distinct disadvantage can be blurred lines of authority--and worse, responsibility-- and the need for leaders and staff to embrace greater responsibility with less defined "authority."

Identifying and Attracting the Right Talent

Finding people with the skills needed to navigate and lead in such an environment and leaders who can bridge the divides can be immensely challenging. Broader enterprises with more heterogeneous stakeholders and less clear lines of authority require leaders who understand, respect, and provide support for the many and various component parts and who understand, and feel comfortable using, influence rather than blunt authority. And team members must also be able to do so. That takes a particular talent and skill set that, as it turns out, is in short supply.

For example, research by Hay Group in Boston identified four leadership traits needed in matrix organizations: empathy, conflict management, influence, and self-awareness. When they used emotional intelligence measures to gauge the prevalence of these traits among a database of 17,000 individuals, they found them sorely lacking.

So just as the raw number of potential candidates is shrinking, the set of talents and abilities needed to succeed leading today's complex, heterogenous, and matrixed environments is both more specialized and less prevalent. Organizations that are facing significant change or transformation (most of us) will have to work hard to identify, develop, and retain these unique leaders.