Succession Planning for Nonprofits of All Sizes

The term "succession planning" brings to mind a large corporation with a long-time CEO first choosing, then grooming, a successor. But this practice is sharply declining even in large corporations and is even less relevant to most community-based organizations.

At the same time, more nonprofits are realizing that executive director transition is a crucial moment in an organization's life: a moment of great vulnerability as well as great opportunity for transformative change. Succession should be a topic broached even when no one is anticipating a change in leaders. And of course, illness and other events can lead to sudden and unanticipated departures.

Planning for executive director transition is called succession planning: thinking in advance about how to set the stage for a strong transition. In many cities, executive transition services are now available, including interim executive director placement, executive search, and transition management.

When to start? Now!

Succession should be a topic taken up now . . . whether or not you are anticipating a change in executives. Here are some questions and issues to be addressed now, and some that draw attention to longer-term planning. Taking steps now will increase your readiness for this inevitable occurrence and increase the likelihood of a positive transition.

  • If the executive is suddenly unable to serve, is it clear to everyone who will be the acting executive until the board can meet and decide? Who will speak to the press? Consider creating an emergency or contingency succession plan just in case.
  • Does the board of directors have the right mix for hiring the new executive? A board that has been grown to support a strong executive may not be well equipped to hire a new executive. For example, a board of all corporate vice presidents may raise a lot of money but may not understand the qualities that make for a successful nonprofit executive, or how to look for and screen candidates. One criterion for board recruitment should be: "Will this person be a good addition to a hiring process?" Executive directors should ask themselves: "Do I want this person on the board that hires my replacement?"
  • Is the executive director's job doable - that is, could the job be done by a regular human being? Too often a successful executive director has, over time, taken on so many responsibilities that it would be nearly impossible to find another such superhero. In a similar light: "Are management team members able to do their jobs?" Sometimes a broadly skilled executive will "carry" one or more management team members who can't handle their responsibilities on their own. If an organization can, for instance, transfer some finance responsibilities from the executive director to the newly created position of CFO, the executive director's job will become more doable and as a result, the board can hire from the pool of talented professionals rather than from the very small pool of superheroes.
  • Is the salary of the current executive director much lower than what you should pay a new executive? Sometimes a successful, long-time executive is being paid much too little. This ends up pushing other salaries down and makes it unlikely that qualified candidates would accept such a salary. On the other hand, sometimes an executive is making much more than is appropriate. Succession planning should include a longer-term effort to bring all staff salaries - including the executive's - into line with the market.
  • Can you get through a fundraising or income dip?  The chief money raiser and/or rainmaker in most nonprofits is the executive director. It will take time for his or her successor to develop the relationships with donors and paying clients that are essential to the incumbent's revenue producing success. Succession planning should include raising funds for the transition: one 25-year executive we know is in the midst of a "legacy campaign" to give donors a chance to honor his community achievements with gifts to an agency endowment fund. Fundraising and business relationships can also be institutionalized by bringing board members and other staff into relationships now held only by the ED.
  • Are there any obvious candidates for the job? In some cases an executive director may have been grooming someone internally for the job. In other cases it may be assumed that the associate director or program director wants and will get the job. There may be a board member who feels that he or she would be the best choice. The decision to hire is the board's and any such unspoken assumptions should be brought to the board. If, for example, it does seem appropriate to groom a particular individual, the board should be part of that process. At the same time, it would also be a shame if a valued staff or board member were to depart on the mistaken assumption that the job has been promised to someone else.

When was the last time that succession was on the board meeting agenda?

The executive director may worry that bringing up succession planning is a signal that she is planning to leave. At the same time, board members may worry that bringing up the topic will incorrectly send a message to the executive that they want her to leave. One easy way to broach the topic without either of these fears coming to pass is to begin the discussion with a distribution of this article, and a first focus on an emergency, contingency plan.

Putting a good succession plan in place reflects a commitment to an organization that goes beyond its strong leaders to serve its community for as long as it is needed.

Tim Wolfred, Psy.D., is the author of  Managing Executive Transitions, which looks thoughtfully at all aspects of executive director departure (buy here) and helped lead the development the Next Steps program for long-term and founding ED’s.  He is a Senior Project Director at CompassPoint Nonprofit Services in San Francisco, and consults across the country to nonprofits and funders in leadership development.  He is a former executive director, former interim executive director (in 16 positions), and former elected official. When he meets with executive directors who are weeping, he usually picks up the check. :-)

Jan Masaoka is the Blue Avocado editor-in-chief.

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Comments

If those reading this article are not familiar with the series of monographs funded by the Annie Casey Foundation on nonprofit executive transition at http://www.aecf.org/KnowledgeCenter/PublicationsSeries/ExecutiveTransiti..., they should immediately search for them online and download them for free. Written in clear, prescriptive language suitable for board members and executive staff, they offer cogent thinking and strategy for all. Sadly, one problematic point of executive transition is when the board is weak -- without clear understanding of the organization's mission, landscape of stakeholder and constituents, the current strengths/weaknesses of its executive, and other internal management systems and externalities, the board may not use a consultant or even this advice effectively, to the detriment of the transition. A missing piece in the literature at this point is a disorganized, uncommitted board faced with needing to plan for executive transition.

In the past 5 years I have been watching a number of non-profits handle executive transition in a manner that suggests that the board does not have a real understanding of the needs of the institution. In my case, the institutions are between the ages of 25-45 years old, and are trying to "re-make" themselves. It seems that there is no clear agreement or understanding at the board level on the steps and length of the "transformation" process, and thus, what skill sets the executive director need in order to manage this process. These "organizations in transition" change executive directors every few years. I am new to this field, but it seems that there is a gap in the literature in terms of distinguishing between executive planning under "normal" conditions versus when the organization itself is in transition.

Regarding Jan and Tim's first question/issue (if the executive director is suddenly unable to serve...) - aside from provoking a discussion about succession planning, this possibility should also push organizations, no matter what their size or issue, to establish a good crisis communications plan. You never know what's going to happen. And the absolute worst thing in a crisis is to be caught flat-footed when someone sticks a microphone in your face. Even a simple crisis communication plan can help.

Terrific article, Tim! Thanks for the suggested questions to ask. What you're talking about is quite simple: prepare for the predictable. All the surveys show that executive transition is foreseeable in all nonprofits (more so in smaller ones), so there's really no excuse for nonprofit organizations not being prepared for the departure of their executive.

I look forward to the day when succession planning is as much standard operating procedure for a nonprofit as strategic planning is for most. We're certainly not there yet. But I agree that boards must start the discussion! There are very good templates out there (CompassPoint has one) that will get folks started in creating the right plan for their organization. And once the document is created, it is a lot easier for the board to visit it regularly and update as necessary.

In my experience, many boards delay succession planning because they think they have a good read on how long the current executive director will govern; they rarely do. Oftentimes, executives themselves are ambivalent about whether to stay or go, thus impacting decisions about when to go. For most nonprofit executives, their work is their life. But what does that mean for how boards approach succession planning?

A few years ago, much was written and discussed about the leadership deficit that would result from the large numbers of baby boomer executive directors who would retire. It seems that the economy has caused many of those directors to delay their plans of retirement. I worry about those nonprofits who have allowed the individual future plans of their executive--longtime or not--to dictate what organizational plans they do or don't need in place.

The board of directors–not executive director–is ultimately responsible for an organization’s succession planning. This is based on the board's core duty to ensure the continuity of the organization for as long as the mission is unfulfilled. Fulfilling this duty doesn't ensure success during an executive transition, but not fulfilling the duty--and trying to manage an executive transition without a plan--is sure to expose the organization to unnecessary risks. And who needs those?

CarolynS
www.newchaptercoach.com

Your answer was just what I nedeed. It's made my day!

Excellent article. Thanks!

Helpful article.

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