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utilize the attachment. explain why the article was selected, the limitation of research, advantages and disadvantages of the topic. Complete an annotated bibliography that addresses the topoc.

Journal of Organizational Behavior

J. Organiz. Behav. 27, 967–982 (2006)

Published online in Wiley InterScience

(www.interscience.wiley.com)

DOI: 10.1002/job

.417

*Correspondence to: A
Hall, Room 476, 1841

Leadership development in healthcare:
A qualitative study

ANN SCHECK McALEARNEY*

Division of Health Services Management and Policy, School of Public Health, The Ohio State
University, Columbus, Ohio, U.S.A.

Summary Challenges associated with leading a $1.7 trillion industry have created a need for strong
leaders at all levels in healthcare organizations. However, despite growing support for the
importance of leadership development practices across industries, little is known about
leadership development in healthcare organizations. An extensive qualitative study comprised
of 35 expert interviews and 55 organizational case studies included 160 in-depth, semi-
structured interviews and explored this issue. Across interviews, several themes emerged
around leadership development challenges that were particularly salient to healthcare organ-
izations. Informants described how the relative newness of leadership development practices
in a majority of healthcare organizations contributes to an overall perception of haphazard
practices throughout the industry. In addition, respondents noted challenges associated with
developing leaders who would be representative of the patient community served, and
commented on the pressure to segregate different professional groups for leadership devel-
opment. Framed by these challenges, I propose a conceptual model of commitment to
leadership development in healthcare organizations as influenced by three factors—strategy,
culture, and structure. These, in turn, influence program design decisions and can impact
organizational effectiveness. In the context of inherently complex healthcare organizations
where leaders must respond to multiple stakeholders and meet performance goals across
multiple dimensions of effectiveness, addressing these reported challenges and consider-
ing the importance of organizational commitment to leadership development can help
ensure that programs are effectively designed, delivered, and sustained. Copyright # 2006
John Wiley & Sons, Ltd.

Introduction

A sense of crisis is building about how healthcare organizations will meet their leadership needs in the

future (Institute for the Future, 2000; Mecklenburg, 2001; Schneller, 1997). Yet few healthcare

organizations have made substantial investments in developing their leaders. Although bombarded by

constant and rapid change within the $1.7 trillion industry (Smith, Cowan, Sensenig, Catlin, & Health

Accounts Team, 2005), healthcare organizations are frequently slow to adopt best practices from other

industries. Instead, the industry struggles to respond to crucial needs including reducing unnecessary

medical errors (Kohn, Corrigan, & Donaldson, 1999), increasing investments in information

nn S. McAlearney, Division of Health Services Management and Policy, The Ohio State University, Cunz
Millikin Road, Columbus, OH 43210-1229, U.S.A. E-mail: mcalearney.1@osu.edu

John Wiley & Sons, Ltd.

Received 30 January 2005
Revised 30 January 2006

Accepted 29 June 2006

968 A. S. McALEARNEY

technologies (Benchmarks, 2002), and addressing the glaring inequities and disparities in both access

to care and medical treatment (Kerr, McGlynn, Adams, Keesey, & Asch, 2004; McGlynn et al., 2003;

Smedley, Institute of Medicine, Stith, & Nelson, 2002). This article addresses the gaps in leadership

development within healthcare organizations and contextual factors that hamper closing these gaps.

Certain features of healthcare organizations are clearly unique to the industry (Ramanujam &

Rousseau, 2004). Although physicians play a central role in the delivery of healthcare services, they are

rarely employed by provider organizations, and are thus typically outside the purview of traditional

human resources practices and leadership development initiatives. In addition, the professional norms

and practice standards expected of physicians and other medical professionals create demands for

continued clinical education and development that the organization must facilitate, but that are rarely

linked to the education and development priorities of the healthcare organization itself. Further, the

multiple constituencies of healthcare organizations including patients, families, insurers, and

regulators that compete to influence healthcare have varied perspectives about care delivery and its

dynamics, and these divergent views contribute to considerable complexity around definitions of

organizational effectiveness and impact for healthcare leaders to interpret.

Challenges for leadership in the healthcare industry

Complexity in the healthcare industry undoubtedly creates special challenges for leadership and

leadership development, stemming from a combination of both environmental and organizational

factors. Environmentally, healthcare organizations are faced with a myriad of regulatory influences

largely out of their control. For example, most hospitals receive a majority of their reimbursement from

public sources, including the Federally-sponsoredMedicare program and the co-sponsored Federal and

State-funded Medicaid program. Yet these provider organizations rarely have much power or influence

over reimbursement rates, and reimbursement for both hospital and physician services may be below

the actual cost of providing care. As a result, hospitals are challenged to manage fragile budgets and

often shifting reimbursement rates, while needing to deliver high-quality care regardless of payment

source or adequacy.

Organizationally, healthcare organizations are notorious for seemingly chaotic internal

coordination. Multiple hierarchies of professionals, on both the clinical and administrative sides

of the organization, generate special challenges for directing the organization and coordination of

work in healthcare. Often noted is the cultural chasm between administrators and clinicians (e.g.,

Friedson, 1972; McAlearney, Fisher, Heiser, Robbins, & Kelleher, 2005; Shortell, 1992). Even

within clinical ranks, divisions exist associated with professional distinctions such as between

physicians and nurses, pharmacists and physicians, and so forth. Such differences create

considerable challenges for leadership as organizations struggle to manage their varied employed

and contracted worker populations.

Competing organizational priorities create constant challenges for healthcare leaders charged to

direct and appropriately utilize financial and human resources to best serve patients, communities, and

other stakeholders and constituents. The needs of multiple internal and external stakeholders often

conflict. An oft-repeated phrase is the notion of ‘‘no mission, no margin,’’ reflecting the fundamental

importance of maintaining the healthcare organization’s financial viability in order to serve the needs of

patients and the community. Though goals may be clearer in for-profit hospitals or healthcare systems

in which shareholder demands mandate a focus on financials, such settings still require professional

commitments and face ethical concerns.

Managerial and organizational learning receive relatively little attention in health care

organizations. Management mistakes in healthcare are rarely acknowledged or examined as useful

sources of organizational learning (Hofmann, 2005; Hofmann & Perry, 2005; Jones, 2005; Kovner

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LEADERSHIP DEVELOPMENT IN HEALTHCARE 969

& Rundall, 2006; Russell & Greenspan, 2005). For example, the failed merger between Stanford

and UCSF Medical Center could have been predicted by a review of both general and healthcare-

specific management literature, yet several years and millions of dollars later, the two systems

separated to become independent systems once again (Russell, 2000). In healthcare settings, there

is often little attention given to how to improve management practice, increasing the likelihood that

previous mistakes will be repeated.

Conceptual Background

Healthcare leadership needs

Clinical and organizational challenges combined increase the need for strong leadership at all levels of

healthcare organizations. Considerable evidence supports the notion that leaders and their actions

affect organizational results (Fuller, Paterson, Hester, & Stringer, 1996; Lowe, Kroeck, &

Sivasubramaniam, 1996; Sashkin & Rosenbach, 2001; Smith, Carson, & Alexander, 1984). In

healthcare organizations, the impact of leaders extends to the lives and well-being of patients and their

communities. Features of healthcare delivery make these effects distinct. For example, in contrast to

other customers and consumers, the vulnerability of patients and the problem of asymmetric

information in healthcare delivery choices are frequently mentioned as contributors to patients’

position as a unique category of customers (Newhouse, 2002). The typically dual role of physicians as

both consumers of healthcare resources and controllers of organizational revenues in their ability to

direct patients and prescribe care, makes leader relationships with physicians fairly atypical in

comparison with key stakeholder relationships in other industries.

Further, researchers and authors have recently emphasized that great leadership must be

transformational, requiring leaders to be able to empower and motivate their workforce, define and

articulate a vision, build and foster trust and relationships, adhere to accepted values and standards, and

inspire their followers to accept change and meet organizational goals on multiple levels (Bass, 1985;

Bennis, 1989; Bono & Judge, 2003; Burns, 1978; Gardner, 1990; House, 1977; House & Shamir, 1993;

Kouzes & Posner, 1993, 1995). Yet a sense of how to best develop these great, transformational leaders

is far from established, especially in healthcare organizations.

Leadership development practices

Leadership development practices are defined as educational processes designed to improve the

leadership capabilities of individuals. These practices are rooted in the traditions of management training

programs designed to improve both individual managerial skills and job performance (Burke & Day,

1986), and can have important effects on both organizational climate (Moxnes & Eilertsen, 1991) and

organizational culture (Schein, 1985). Practices in leadership development are a variant of management

development practices which are defined as interventions that are intended to enhance effectiveness or

improve organizational culture by facilitating managers’ learning (Gray & Snell, 1985).

Conger and Benjamin (1999) outline four general approaches to leadership development that include

developing the individual leader, socializing company vision and values, strategic leadership

initiatives, and action learning (Conger & Benjamin, 1999). Within organizations, leadership

development practices commonly include activities such as 360-degree feedback, skill-based training,

job assignments, developmental relationships (e.g., mentoring, coaching), and action learning (McCall,

Lombardo, & Morrison, 1998; McCauley, Moxley, & VanVelson, 1998; Revans, 1980). Although

considerable variability exists across organizations and industries with respect to the balance and

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970 A. S. McALEARNEY

content of leadership development programs, program designs are generally consistent with the four

basic frameworks outlined above. This consistency presents opportunities to explore program

development challenges and decisions in a particular set of organizations, such as healthcare

organizations, rather than focus on program features and details.

Leadership development in healthcare

Anecdotal evidence suggests the healthcare industry lags behind other industries with respect to

leadership development practices and other human resources functions, but these issues have not been

systematically investigated. This exploratory study is designed to improve our understanding of

leadership development practices in healthcare organizations by asking experts and organizational

representatives to describe their views of leadership development in healthcare, and to propose future

directions for healthcare leadership

development.

Organizational Context

External Environment

The $1.7 trillion U.S. healthcare industry is both extensive and competitive, with nearly 5,000 hospitals

and 700,000 physicians nationwide. Most markets are dominated by not-for-profit hospitals and health

systems, yet these healthcare organizations are subject to strong pressure to adhere to rigorous business

principles in order to remain viable and realize their organizational missions.

Industry Factors

Several features of the healthcare industry are clearly unique. For instance, while physicians are rarely

employed by hospitals or health systems, they play a central role in directing and utilizing

organizational resources, creating challenges for organizational leaders. Similarly, external influences

from third parties including insurance companies, employers, and government payers drive strategic

organizational priorities around issues such as cost containment and quality improvement.

Organizational Factors

Inside healthcare organizations, internal coordination is often reportedly poor, leading to avoidable,

expensive, and often devastating medical and managerial mistakes. The cultural chasm between

administrators and clinicians contributes to a sense of chaos, with workers often identifying more

with their professional peers than with the organization. Further, human resources functions in

healthcare organizations have historically been limited in scope, and rarely valued for any strategic

role in contributing to organizational success.

Current Problems Faced

Enhanced focus on strategic priorities in healthcare has increased organizations’ attention to the

need to develop and improve their human resources capabilities. Yet, despite evidence from other

industries about the roles and opportunities for leadership development in organizations, our

understanding of leadership development practices in healthcare organizations was limited.

Time

This study was conducted in 2003 and 2004, during a period of rapid change in the healthcare

industry. Intensifying demands for new information technologies in clinical practice, error

reduction in medicine, and new capabilities among healthcare knowledge workers increased

pressure to better prepare leaders at all levels in healthcare organizations.

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LEADERSHIP DEVELOPMENT IN HEALTHCARE 971

Methods

Study design

I conducted 35 key informant interviews with individuals considered experts in healthcare leadership

on the basis of their national reputation, and studied 55 organizations reported to provide healthcare

leadership development training either in-house or as a vendor to healthcare provider organizations.

The combination of expert interviews and organizational case studies included a total of 160 interviews

conducted between September 2003 and December 2004. Table 1 shows the characteristics of study

participants across expert interviews and case studies.

I used standard, semi-structured interview guides including open-ended questions to both frame the

interviews and permit probing for additional information (Miles & Huberman, 1994) in the expert

interviews and case studies. The original interview guides were pilot tested with healthcare leaders and

provider organizations in the local area.

This qualitative design (Maxwell, 1996) enabled me to meet the objectives of my research,

permitting exploration of the different issues that emerged around the topic of leadership development

in healthcare. A qualitative approach was appropriate for this study because of the exploratory nature

of my research, and because I suspected that experts’ and organizations’ perspectives about leadership

development were multidimensional, making them difficult to examine quantitatively (Miles &

Huberman, 1994). In addition, my use of qualitative methods enabled me to explore both experiences

and predictions of experts and organizational representatives, and provided rich information about the

multiple facets of leadership development challenges in healthcare (Crabtree & Miller, 1999; Miles &

Huberman, 1994). No potential informant contacted refused to participate in the study. All participants

were assured that their voluntary participation would remain anonymous.

Expert interviews

Expert key informants were purposely selected based on their reputation in the healthcare industry

using a snowball sampling technique. The original sample of key informants was generated by the

industry and academic members of the national Center for Health Management Research (Seattle,

WA), and the sample was extended by study informants who were asked to suggest additional experts

Table 1. Study participants

Description Number (%)

Experts interviewed Association leaders 15 (43%)
University faculty 12 (34%)
Industry consultants 8 (23%)
Total 35

Organizational case studies Healthcare provider organizations 43 (78%)
Leadership development program vendors 12 (22%)
Total 55

Organizational case study Executive-level Informant 39 (31%)
informants Director-level Informant 51 (41%)

Manager-level Informant 23 (18%)
Program participant 12 (10%)
Total 125

Total key informants 160

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972 A. S. McALEARNEY

for the study interviews. Experts had a variety of current and former affiliations, including with

healthcare industry associations, universities, consulting organizations, and provider organizations.

Data saturation was judged to be reached when informants’ suggestions about key informants were

repetitive, and when no new insights were emerging from the ongoing data analysis (Morse, 2000).

Interviews were conducted both in-person and telephonically, using rigorous ethnographic interview

techniques (Spradley, 1979). Interviews lasted 45–90 minutes, with an average duration of 1 hour,

consistent with the methods suggested for in-depth interviews (McCracken, 1988). Experts were asked to

describe their own healthcare leadership and leadership development experiences, and to comment on both

the current status of and program development opportunities for leadership development in healthcare.

Organizational case studies

Similar to expert informants, organizations were purposely sampled based on their reported experience

and reputation with leadership development in healthcare. The original sample was again produced by

the members of the Center for Health Management Research, and extended based upon conversations

with experts and other organizational informants. Fifty-five organizations were studied between

September 2003 and December 2004. Five organizations were studied in person in order to efficiently

complete multiple key informant interviews, while the remaining organizations were studied using

numerous telephone interviews. One hundred twenty-five interviews were held as part of the

organizational case studies. These case studies (Yin, 1984) consisted of interviews with key informants,

in addition to collection and study of documents associated with the leadership development programs,

and a review of publicly available program information accessible through formal publication or the

Internet. Interviews lasted 30–90 minutes, with an average of 45 minutes for each interview.

Organizations studied included both healthcare provider organizations with internal leadership

development activities and external organizations which provide leadership development programs to

individuals and institutions in the health services industry. Internal case study organizations consisted

of 43 healthcare systems and individual hospitals which had reportedly designed and implemented

healthcare leadership development programs, and respondents included executives, directors,

managers, and program participants. Twelve external case study organizations included both

healthcare associations and other vendors of healthcare leadership development programs, with

respondents including individuals leading the organizations and those developing and delivering

healthcare leadership development programs.

Questions addressed the structure and format of leadership development program activities,

including approaches to identifying and targeting individuals and groups for leadership development

opportunities. Similar to the expert interviews, an open-ended list of questions was used, including

questions probing for more information.

Analyses

Amajority of the interviews were audiotaped and professionally transcribed, with extensive field notes

used in the small number of cases (3) where taping was infeasible. This process yielded 160 transcripts

and over 1,000 single-spaced pages for analysis.

My analyses used the constant comparative method of qualitative data analysis (Glaser & Strauss, 1967),

and common techniques to code the data (Constas, 1992; Miles & Huberman, 1994). Using a grounded

theory approach (Glaser & Strauss, 1967; Strauss &Corbin, 1998), I read transcripts and discussed findings

with my research associates and professional colleagues as the study progressed. This iterative process

enabled me to explore new themes that emerged in subsequent interviews and case studies.

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LEADERSHIP DEVELOPMENT IN HEALTHCARE 973

I applied a combination of deductive and inductive methods in my analyses. Prior to coding the data,

I produced ideas about the themes I expected to find, and then closely read the transcripts to inductively

advance code development. This coding process permitted me to organize the data into categories of

findings, and allowed me to identify broad themes that emerged from the data (Miles & Huberman,

1994). I use the term ‘‘theme’’ to identify a cohesive category of responses, found across experts and/or

across organizations, that aggregates patterns observed in the data. In addition, throughout the study,

periodic discussions with professional colleagues and my research associates and an ongoing review of

the literature helped me to validate, compare, and extend my findings, where appropriate (Glaser &

Strauss, 1967). I used the qualitative data analysis software Atlas.ti (version 4.2) (Scientific Software

Development, 1998) to support these analyses.

Results

First, six distinct themes emerged from the data concerning the specific leadership development

challenges for healthcare organizations. Each of the themes was discussed across informants,

supporting the validity of these findings. A summary of these leadership development challenges is

presented in Table 2, and below I discuss each theme in greater detail. Second, I propose a conceptual

model for organizational commitment to leadership development in healthcare organizations. I present

this model and three propositions in the following pages. Verbatim quotations have been selected that

are representative of the data.

Table 2. Challenge themes in healthcare leadership development

Challenge Representative comments

Theme 1: Industry lag: The healthcare
industry is very behind

‘‘We’re 15 years behind’’
‘‘I don’t think we are doing very well at all.’’

Theme 2: Representativeness: Need to
make organization
representative of community
and patient population

‘‘Hospital leadership should be a reflection
of the demographics of the community that
the hospital serves.’’

Theme 3: Professional conflicts:
Pressure to segregate different
professional groups for
leadership development

‘‘I do think it divides the organization and
so I don’t know that that’s a good thing to
have your managers divided.’’

Theme 4: Time constraints: Challenge of
freeing time for
program participation

‘‘That’s an hour or two. . .that’s being spent
away from patient care in
a learning environment.’’

Theme 5: Technical hurdles:
Challenges of the
organization’s technical
capabilities

‘‘If I don’t have a sound card then what’s the
use of getting a teleconference or a
videoconference? Because then
I can’t even hear it.’’

Theme 6: Financial constraints:
Challenges associated with
budgets, organization type

‘‘It’s something that’s the first thing that
people cut in a tight budget situation.’’

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974 A. S. McALEARNEY

Challenges of leadership development in healthcare

Theme 1: Industry Lag—The healthcare industry is very behind.

Across informants, many respondents noted that ‘‘healthcare organizations are 10–15 years behind

other industries in the area of leadership development.’’ This characterization of the industry as a whole

was consistent, and perhaps reflective of the trouble and delays healthcare organizations have had

translating other industry practices (e.g., quality improvement techniques) into their own

environments. As one respondent explained:

‘‘I think they’re learning what industry learned 15 years ago. You’ve got to develop your own people

and you’ve got to fully pursue it. You’ve got to invest to do it and you might as well make it a rational

decision that’s matched to the business strategies rather than having these segmented areas wherewe

have OD [Organizational Development] doing some things here, we have nursing development

rolling out God knows what over there. I think they’re really learning what industry learned. You

know, it’s a classic curve. We’re 15 years behind in quality and we’re about the same amount of time

behind in training.’’

In addition, therewas a sense that commitments to leadership development by healthcare organizations

were generally rare, and often insufficient. As one individual reported, ‘‘I think a lot peoplewho get into it

are just going through motions.’’ Another respondent similarly noted, ‘‘I think that healthcare doesn’t

mandate enough leadership development from their managerial ranks in general.’’ In contrast, the

importance of senior leadership commitment, the designation of a highly visible and powerful program

director, and the need to align leadership development activities with other organizational goals and

strategies may be standard in other industries which have a longer history of incorporating leadership

development practices, but are only beginning to be recognized in healthcare.

Theme 2: Representativeness—Need to make the organization representative of the community and

the patient population.

A second theme that emerged involved the reported challenge of healthcare organizations to develop

a diverse group of leaders that was representative of both the patient population and the surrounding

community. As one informant explained, ‘‘As you develop your management staff I think you have to

look for an opportunity to bring the kind of diversity that’s necessary for your organization to be

responsive to the needs of the community that you serve.’’ Comments such as this were frequent across

respondents, and reflected the growing industry sensitivity to the needs of diverse populations, and the

critical issue of disparate healthcare provision in U.S. hospitals (Kerr, McGlynn, Adams, Keesey, &

Asch, 2004; McGlynn et al., 2003; Smedley, Institute of Medicine, Stith, & Nelson, 2002).

Theme 3: Professional Conflicts—Pressure to segregate different professional groups for leadership

development.

Another theme emerged around the issue of bridging the gap that exists between administrative and

clinical leadership in healthcare organizations. Across the internal programs I studied, there was

considerable debate about the best way to develop clinician leaders, with a number of the proposed

approaches having only recently been implemented. For example, many organizations reported tension

around the issue of nursing leadership development. Opportunities are growing for nurses to participate

in leadership development programs that are separate from both organizational programs and other

clinical leadership programs (e.g., the Health Care Advisory Board’s Nursing Leadership Academy),

yet not all respondents believe this approach is best for the organization as a whole. As one respondent

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LEADERSHIP DEVELOPMENT IN HEALTHCARE 975

explained, ‘‘there’s been some resistance in terms of sending nursing managers because I think [nursing

leadership] feels they are responsible for the nursing management development so why should they go

to the Leadership Institute when [nursing leadership] can give them everything they need.’’

Specific concerns also emerged about the best way to develop physician leaders. Consistent with the

oft-reported ‘‘culture clash’’ between physicians and administrators, many informants commented on

the special challenge of physician leadership development. As one respondent summarized,

‘‘Administrators are from Venus, physicians are from Mars, because you’ve got a clash of cultures

and a clash of different perspectives. So I think leadership development in this setting requires

more—because it’s a mix of different cultures—requires more competency in what would be cross-

cultural communication. So I think it is a little bit different. I’m sure there’s other settings where

those issues come up, but that strikes me because there’s clearly two very different ways of looking

at the world.’’

Reported challenges of physician leadership development ranged from basic issues such as getting

physicians to participate to philosophical issues surrounding physicians’ different training and

orientation towards change, decision-making, and focus. Across settings, organizations were as likely

to incorporate physicians in their leadership development programs as not, and there appeared no clear

consensus about which approach would ultimately be best.

Theme 4: Time Constraints—Challenges of freeing time for program participation.

A fourth theme that emerged across study participants was the difficulty for organizations to free

people’s time to participate in leadership development activities. Although this challenge was

admittedly not unique to healthcare organizations, the nature of work being ‘‘missed’’ by program

participants was noted as ‘‘different.’’ As one organizational informant explained, ‘‘If you have a class

of 20 people, all nursing staff, you know, that’s an hour or two of their salary that’s being spent away

from patient care in a learning environment.’’ Where such developmental activities were reportedly

more accepted organizationally, this challenge was less acute, but respondents still noted issues

associated with participation. Several organizations recognized these issues, but solutions or

suggestions to manage the problem were absent.

Paralleling organizational concerns, individuals also commented about how hard it was to find time to

participate. Rarely were developmental experiences and opportunities built into existing jobs. Most

respondents, instead, described leadership development activities as something they had to make time for in

addition to their regular responsibilities. Many reported that, if they participated in a program, short-term

disadvantages such as falling behind inwork or learning things that seemedminimally relevant overwhelmed

any long-term potential to be gained fromdevelopment. Further, non-hospital-employed physicians choosing

to attend a program typically lost revenue because they were not using their time to see patients.

Theme 5: Technical Hurdles—Challenges of the organization’s technical capabilities.

Additional challenges associated with leadership development in healthcare organizations were

reported in the context of organizations’ technical capacities. The ability to deliver web-based training

was typically limited by non-universal access of employees to computers, much less the Internet. As an

informant pondered,

‘‘Dowe need computer kiosks that are dedicated to this kind of thing? How are we going to structure

it to bring the product closer to the staff so they don’t have to leave the unit? Dowe do something in a

break room? Dowe have a mobile computer that we can move around?We’re just not sure. And it all

looks different depending on the site. So part of our next year is doing that kind of inventory so we

can have a handle on what kind of capital investment we might need to make.’’

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976 A. S. McALEARNEY

Further, even in hospitals where there were sufficient numbers of computers available, there were no

guarantees that the information systems capabilities were sufficiently advanced to permit options such

as audio content delivery or video-conferences. Technical issues appeared especially challenging for

some of the smaller, non-system-based hospitals, and this was likely related to the financial challenges

reported by many organizations, and described next.

Theme 6: Financial Constraints—Challenges associated with budgets, organization type.

A sixth theme emerged around the challenges associated with tight budgets and financial constraints

in healthcare organizations. Although healthcare organizations may not be the only type of

organization struggling with this issue, organizational respondents frequently made comments such as,

‘‘You know we’re working on these paper-thin margins.’’ In the context of leadership development,

these thin margins often put program activities at risk. One informant explained how, ‘‘The money is

getting tighter and tighter and our workload is getting larger and larger and so often education is one of

the ones that is cut back or even cut out.’’ Across organizations studied, a majority of respondents

reported a sense that leadership development programs were perpetually at risk, and noted that this

inability to count on the future of the programs contributed to skepticism about the organizations’

commitments to development, as well as job insecurity for those tasked with designing or delivering

leadership development programs. Finances appeared more problematic in healthcare organizations

owned independently as opposed to system-owned. Hospitals that were part of a healthcare system

were reportedly more likely to be able to build and sustain leadership development capacities than their

free-standing counterparts, and often promoted leadership development activities as part of the

corporate support function.

Conceptual Model of Organizational Commitment to
Leadership Development

Considering these data, I propose a conceptual model of commitment to leadership development in

healthcare organizations as being influenced by three factors: (1) organizational strategy; (2)

organizational culture; and (3) organizational structure (Figure 1). In turn, this commitment influences

the program design decision process, resulting in broader or narrower leadership development

opportunities for individuals. Further, these program design decisions correspondingly affect

organizational effectiveness, depending on program scope, reach, and impact. Changes in any of the

three factors can shift organizational commitment to leadership development, potentially influencing

both the design decision process and overall organizational effectiveness.

In the following section, I discuss three aspects of the model in greater depth: (A) the perceived value

of learning and growth; (B) the dynamic nature of the program design decision process; and (C) how

leadership development may promote organizational effectiveness.

A. Perceived value of learning and growth

Proposition A: The more the organization’s senior leaders value learning and growth, both of

individual employees and of the organization, the more likely leadership development is to be

supported and sustained within that organization.

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Figure 1. Conceptual model depicting influences on and impacts of organizational commitment to leadership
development in healthcare organizations

LEADERSHIP DEVELOPMENT IN HEALTHCARE 977

Organizational leaders who believe in the value of learning and growth are likely to invest heavily in

leadership development activities and commit to sustaining the program over time. For instance, one

executive describing a strong program declared, ‘‘wewould never shut this down.’’ Another respondent

summarized the importance of this perception: ‘‘The organization has to value development in general.

Whether it’s developing their staff for clinical competence or leaders for their leadership competencies,

you have to have an organization that values development. And ongoing development. You can’t stop

and say, ‘‘okay, we’re there,’’ because you’re never there.’’ In several health care organizations studied,

the hiring of a Chief Learning Officer provides evidence of this organizational value, and demonstrates

commitment to leadership development within the organization.

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978 A. S. McALEARNEY

In contrast, leaders whose interests in learning and growth are more reactionary are unlikely to invest

in long-term leadership development initiatives or senior hires. Within these organizations, leadership

development activities are assigned to lower-status directors within the larger human resources

function, and budgets are typically limited and at constant risk of future cuts.

B. Dynamics of program design decision process

Proposition B: The nature and conceptualization of leadership development programs will affect

how organizations support such programs because of how the design decision process is viewed.

In several organizations with strong commitment to leadership development programs, such

programs were well integrated within the organization, reflected by comments associating leadership

development with strategy, culture, or structure. One interviewee described leadership development as,

‘‘really a culture question. If you have a culture that has a history of valuing these kinds of things, the

uphill battle is long gone.’’ In another organization, a leadership development program director

described the need to ‘‘[make] sure that I’m aligned with the strategic plan.’’ However, shifts in any of

the three factors, strategy, culture, or structure, may affect program commitment. For example, a

change in leadership involving hiring a new CEO could affect all three factors as the new leader makes

organizational decisions that have a corresponding impact on commitment to leadership development.

Similarly, a strategic decision to invest more in information technologies may restrict resources

available for development, thereby affecting program commitment, design, and potential impact.

C. Leadership development affecting organizational effectiveness

Proposition C: Organizational decisions to invest in leadership development can affect the

organization’s overall effectiveness by improving employee motivation, reducing turnover, and

building organizational resilience to change.

Organizations heavily committed to leadership development tend not to differentiate between

leadership effectiveness and leadership development program success. As one executive explained,

‘‘You’re investing in the people, the managers whomake you successful.’’ Instead of using metrics such

as program attendance, employee satisfaction with programs, and credit hours accumulated, these

organizations measure success on the basis of organization-wide metrics including employee

satisfaction, employee turnover, physician satisfaction, financial performance, and so forth. The move

beyond program process evaluation to acceptance that leadership affects the organization’s ability to

realize its strategic goals is reflective of a broader view of leadership impact and underlying

assumptions. In several organizations, this was described as ‘‘a development mindset,’’ where the

committed organization viewed leadership development as critical for organizational success.

Discussion

This exploratory investigation finds evidence that healthcare organizations experience major

challenges in designing and delivering leadership development programs. Given the circumstances

DOI: 10.1002/job

LEADERSHIP DEVELOPMENT IN HEALTHCARE 979

associated with a complex external environment and time-pressured employees, it is perhaps not

surprising that developmental concerns and opportunities seemed absent from the strategic priority list

of many healthcare organizations. Yet the challenges to improve healthcare leadership development are

not insurmountable. Recent literature emphasizes the importance of strong leadership development

practices (Conger & Benjamin, 1999; Day, Zaccaro, & Halpin, 2004; Fulmer & Goldsmith, 2001;

Giber, Carter, & Goldsmith, 2000; McAlearney, 2005; McCauley, Moxley, & VanVelson, 1998; Tichy,

1999), and healthcare organizations can incorporate many evidence-based practices such as using

developmental assignments, creating job rotations, and tying development to performance evaluations

that have strengthened organizations’ leadership across industries.

Although many individuals in healthcare continue to emphasize the uniqueness of the industry, this

insular thinking has tended to limit healthcare organizations’ abilities to improve their management

capabilities. Looking outside healthcare can provide examples of program design decisions and best

practices that can be adopted within healthcare organizations. For instance, university settings provide

environments where faculty often have more clout than administrators in determining strategy and

defining organizational mission, similar to the disproportionate influence of many physicians on

hospital direction. Study of university leadership development programs may provide insight that is

transferable to healthcare organizations. In addition, recruiting individuals with relevant experience in

other industries into healthcare organizations may be an effective way to improve leadership

development healthcare. Thus despite healthcare organizations’ reluctance to consider evidence-based

management in the same favorable light as evidence-based medicine (Kovner & Rundall, 2006),

healthcare organizations can apply lessons learned about leadership development to make important

strides to accelerate leadership development in healthcare, and to better position themselves for the

future.

Limitations of this study

For this qualitative study, participation was very high, but the use of a snowball sampling technique to

select interview targets limited my ability to focus on organizations that might be considered to have

best practices in leadership development a priori. Further, since the proliferation of leadership

development programs is relatively new in many healthcare organizations, some of my interviews

focused more on plans for the future rather than evidence from the past. Future research targeted to

study model healthcare leadership development programs and their program design decisions would be

invaluable, as well as studies which incorporate data collection to permit testing of my conceptual

model, and formal comparison of leadership development programs across industries.

Conclusion

In healthcare organizations, as in other industries, the leadership challenges are immense. Similar to

other organizational leaders, healthcare executives are expected to lead their organizations and their

employees with integrity, honesty, energy, and enthusiasm. However, healthcare leaders must also

respond to the distinct features of their industry as they attempt to promote excellence in quality of

care, patient satisfaction, and relationships with physicians and communities. Considering the nuances

of the different leadership development challenges and aspects of organizational commitment to

DOI: 10.1002/job

980 A. S. McALEARNEY

leadership development described in this paper can help healthcare organizations striving to develop

better leaders and attempting to maximize overall organizational performance.

Acknowledgements

The study reported in this paper has been supported by a grant from the Center for Health Management

Research. I greatly appreciate the help of all study participants, as well as the research assistance

provided by Katrina Buchholtz, Sarah Hoshaw, Viktorya Pelts, MindyMarcum Slenn, Stacy Baker, and

Diana Lau, all affiliated with The Ohio State University during the study. In addition, I am indebted to

both the editors of this journal special issue and to two anonymous reviewers for their invaluable

suggestions to improve this manuscript.

Author biographies

Ann Scheck McAlearney is an Associate Professor in the Division of Health Services Management

and Policy in the School of Public Health at the Ohio State University. Her research focuses on

organizational change and development; health information technology innovations; population health

management and improvement; and leadership in health care organizations.

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