New Australian research provides insight into why the top job turnover is increasing in hospitals around the country.
Stress and work-related pressure are the top reasons reported by Australian hospital CEOs for departure from their jobs, a new report has revealed.
The La Trobe University-led study was published in the Australian Healthcare and Hospitals Association’s journal Australian Health Review. The researchers embarked on the study in response to increasing turnover rates of Australian hospital CEOs.
Just under half (51) of the estimated 112 CEOs included in the study responded to a survey seeking information on reasons behind turnover and methods for retaining CEOs.
The top five reasons reported for CEO departure were:
- Stress or work-related pressure (82.35%)
- Challenges linked to managing healthcare organisations with limited resources (68.62%)
- A lack of support from the board (66.66%)
- Internal and external criticism (58.82%)
- Opting for retirement or a peaceful life (52.94%).
Very few cited ethical breaches (9.80%) and market decline (3.92%) as reasons for turnover.
Co-author of the study, Associate Professor Hanan Khalil from La Trobe’s School of Psychology and Public Health, told Health Services Daily it was an important issue.
“Over the last two decades, it has been noted that CEO turnover rates are increasing at an alarming rate and it was reported that the CEO turnover rates have augmented from 14% in 2008 to 18% in 2017 in the private sector,” she said.
Professor Khalil said a similar trend has been noted in the non-health care sector as a shareholder advisory firm tracked CEO turnover rates of nearly 500 companies listed on the major European, UK, and US indexes over the period 1 January 2019 to 30 June 2020.
“It was reported that almost a third (29%) of all the CEOs were forced out from their roles due to poor performance, a scandal or a strategic disagreement,” she told HSD.
“Further, 7% of executives were formally dismissed and remaining 66% of them quit.”
The paper’s authors said this was the first study in Australia, to their knowledge, that identified reasons for CEO turnover and retention in a healthcare setting.
“Organisations should prioritise setting up support systems that consist of mentorship programs and resources for managing stress,” they concluded.
“This ensures that CEOs are equipped with the resources to navigate the challenges of their roles effectively. From a research standpoint, the study highlights the importance of investigating how organisational culture and leadership dynamics impact the tenure of CEOs.”
The participants for this study were hospital CEOs who had been working in health care across Australia for a minimum of 12 months, they wrote. The 112 CEOs estimate was based on an average management scope of 12 hospitals per CEO.
“This estimate accounts for the organisational structure where single CEOs oversee several hospitals, aiming to ensure our sample is representative of leadership distribution across various hospital networks in the country,” they wrote.
Running an under-resourced healthcare facility could be challenging for CEOs as they were constantly required to make decisions with limited resources.
“This can lead to levels of stress and the risk of burnout. The demands of upholding quality patient care, combined with scrutiny and accountability, only add to the complexity of the situation.
“This demanding setting frequently leads to challenges in planning, affects staff morale, and increases ethical pressures ultimately playing a role in CEO turnover.
“The mention of ‘poor remuneration’ highlights the subjective nature of compensation perceptions among hospital CEOs. Some may find their pay inadequate, while others are satisfied, underscoring the need to consider individual and contextual factors when addressing CEO turnover and developing retention strategies.”
Criticism, from both external and internal sources, was cited by more than half of respondents to be influencing CEO turnover. According to the literature, some criticism may be constructive, however, persistent criticism could undermine a CEO’s morale and job satisfaction.
“External negative publicity can also harm the organisation’s reputation intensifying the CEO’s stress and potentially speeding up their departure,” the authors wrote.
“Many CEOs, as per the study, often struggle with support from their board. This lack of support can manifest as disagreements on strategy, insufficient funding, and doubts about the CEO’s abilities.
“It places CEOs in a position where they face barriers to implementing changes and achieving objectives, potentially resulting in dismissal by the board or resignation out of frustration and a lack of progress.”
Additionally, almost half of the CEOs surveyed expressed concerns about being ousted by the board for underperformance.
“This highlights the board’s role in overseeing management and meeting organisational objectives. If a CEO shows leadership or fails to meet targets, it can result in their dismissal by the board as they are accountable to stakeholders,” the authors wrote.
“These findings highlight the challenges faced by hospital CEOs – from operational demands and limited resources to scrutiny, from both the public and the board – all of which significantly impact their job tenure and turnover rates.”
Professor Khalil told HSD the results had been surprising as they had not had any recent data on this issue before.
“We were surprised by how many CEOs were quite interested in our study and were happy and willing to share their views on the topic,” she said.
“I think this is telling of how much support they need and how much they need to be heard and get this word out.”
The authors said future research endeavours could gain insights by conducting an in-depth examination of how CEO satisfaction, organisational performance, and retention rates intersect.
“By exploring these areas researchers can offer nuanced perspectives that enable organisations to customise their leadership development and retention strategies to address specific needs and obstacles ultimately contributing to a more stable and efficient executive leadership environment,” they wrote.