Four years ago, the health plan I work for was on the brink of disaster. What was once a profitable organization, lost 53 million dollars in a single quarter. Due to a succession of bad decisions made by senior leadership – the first of which was to purchase insufficiently tested claims processing software. The second was to convert the existing claims processing system over to the new software without the necessary backup causing delays in payment, fines and penalties. More bad decisions followed an attempt to correct and/or conceal the decisions made that cost the company 53 million dollars in a three-month period. The situation impacted service to the health plan members and the providers, tarnishing the company’s reputation in the community and in the industry. Multiple VPs and directors jumped ship, before they could be associated with the financial debacle and fired. The organization’s parent company took a detailed look into the issues leading up to the financial loss and arrived on scene firing everyone involved, including President and CEO.
After the parent organization “cleaned house” firing everyone involved, the company clung to life with a series of interim leaders. The CFO, CMO and COO were replaced within a year. The search for a CEO proved daunting. Trying to find a CEO that would accept the challenge of turning a failing organization around was not an easy task. The search continued for two years. Finally, senior leadership managed to persuade a CEO with a reputation for “turning small health plans around” to take on the challenge. That CEO (Mike) has now been with the company for two years. It has been two years fraught with uncertainty, extreme change, and challenges that are too numerous to cover in detail here. The short version of this story leads me to my observations of situational leadership in action over the last two years. I have had the pleasure of watching Mike exemplify situational leadership at its best and turn a failing company around.
When Mike first arrived, he was met with uncertainty and fear. The company had been struggling for some time, with no real plan of action or leadership in place. Everyone was fearful that the company would not survive and everyone would lose our jobs. Mike had studied our company and the problems that had brought us to the point of needing his intervention. He came armed with a plan of action and a can-do attitude that was contagious. The very first week Mike was officially in charge, he called a meeting to present the first stages of his recovery plan. He was charismatic, friendly with a warm approachable demeanor. He was everything we needed to restore our faith in leadership and the company. Although, he was personable he also had a strong “get down to business” attitude that demanded respect. He initially used a directive approach (S1) giving clear instructions on what goals the company needed to achieve and how those goals were going to be met (Northouse, 2016). The first few months he supervised everyone directly assessing their competency to complete the tasks necessary to achieve the goals he had outlined for the organization’s success. Some people did not share Mike’s vision and/or did not display the competency to achieve the goals set for the company’s success and they were fired. With every “refresh” of staff, Mike called a company meeting and shared with everyone why the action was taken. He always vowed total transparency as he worked to achieve the goals he had set for the company.
As people were replaced and a cohesive team of competent leaders formed, Mike moved to a coaching approach (S2) (Northouse, 2016). He communicated freely with staff, offering encouragement while maintaining final approval of all action items (Northouse, 2016). Weekly reporting meetings were held to closely monitor the progress of the plan and gather input. After all the company and staff had been through, reassurance was needed that we were on the right track and Mike was always there pointing out how far we had come already and were we were headed.
Once the company turned the corner and was again in the black, Mike switched to a more supporting approach (S3) asking for input and opinions regarding the company’s five-year growth plan (Northouse, 2016). He instituted monthly meetings to discuss the shared vision for the future of the company, gather opinions and offer recognition for a job well done. Everyone started to breathe a sigh of relief, regaining confidence in the company under Mike’s direction.
It has now been two years, since Mike took on the challenge of saving a failing health plan. In those two years he has firmly established goals for the company’s future growth and success, as well as turn a profit. The company now earns 30% of the parent organizations revenue. With the proven success of the company and confidence in the leadership team’s abilities to achieve the goals set, Mike has taking a delegated (S4) approach to leadership (Northouse, 2016). He is there to support and guide, but takes a hands-off approach to daily tasks and responsibilities. He leads our organization forward with an eye on the future of healthcare.
Reference:
Northouse, P.G. (2016). Leadership: Theory and Practice. Seventh Edition. Thousand Oaks, CA: SAGE.