Reprinted with thanks to the DRG Newsletter
As CEO’s around the nation step down from leadership positions at nonprofits, their boards are faced with the challenging task of finding their successors, but few are prepared.
According to a recent report by Third Sector New England, a Boston-based resource center for nonprofits, 64% of executives planned to leave their jobs within the next five years yet 60% of organizations did not have succession plans in place. While the findings are alarming, the lack of succession planning in the nonprofit sector is an issue that transcends the New England community.
New England leaders are, as Boston Globe reporter Sacha Pfeiffer puts it, “part of a looming wave affecting organizations of all sizes across the country: the expected exit of large numbers of veteran nonprofit executives, many of them baby boomers who shaped the charitable sector and whose departures create the risk of a widespread leadership vacuum.”
Various studies over the years have highlighted the lack of preparation for leadership transitions in the nonprofit sector, including DRG’s own 2006 CEO Survey. Nine years later, nonprofits are still ill-equipped for leadership changes, only today, the need for effective succession planning is even more pressing.
One of the most important responsibilities of the board is to recruit the CEO. The board must assert itself and take control of the transition process when the CEO decides to leave. That includes developing strategic planning about steps to keep the nonprofit stable during the transition as well as ideas about what your board hopes a new CEO will help your organization accomplish. Here are some tips to help your board take charge during a leadership transition.
- Set healthy boundaries with your outgoing CEO. Sometimes CEOs experience “seller’s remorse” when they make the decision to relinquish their title. If a board fails to set boundaries during the transition process with its resigning CEO, it can create tension and conflict that can derail their vision for the organization. That is why outgoing CEOs should generally play a limited role in the succession planning, unless there’s a specific area in which their guidance or input is vital.
- Take an aggressive and honest look at the organization’s current challenges and failures. How effective was your organization in achieving its mission under your resigning leader’s helm? Sometimes seasoned leaders do such a great job in their roles that the board stops paying attention to their performance. When this happens, boards lose sight of the things that organizations can improve on, such as meeting operational costs and getting more media coverage about the organization’s initiatives and campaigns. To get back on track, take a meticulous look at the role your leader has played in the organization’s strides and failures. Ask your board members this: Where has your organization experienced the most success and where is there room for growth? Identifying your organization’s challenges will help you to pinpoint what you’re looking for in your next CEO.
- Invest in your rising stars. Leaders don’t suddenly become great. It takes training, practice, mentoring and coaching for many executives to reach their full potential. Implement a professional development program for high potential talent in your nonprofit who have some of the qualifications, skills, knowledge and soft skills to lead and represent your organization in the near future. Are there skills that they don’t have that can be taught? From working with your board to budget development, your internal candidates should be given assignments in the areas that your outgoing CEO works in. Noel Tichy, author of Succession: Mastering the Make-or-Break Art of Leadership Transition, advises boards to “focus less on finding a superstar from the outside-one who is often riskier, costlier and far more disruptive-and more on guiding a process that ensures it has the right bench of well-groomed veterans who’ve been cultivated from the inside.” This is a great recommendation since an internal candidate’s connection to the organization might create a smoother transition.
- Outline major relationships that must to be maintained to ensure sustainability. Consider the special or unique relationships that your CEO has built over the years with funders, donors or governmental officials that must be transferred to your new leader. Once the board and incumbent CEO have developed a strategy to sustain these relationships, the outgoing CEO should meet with these key stakeholders and assist with the transition. Failing to identify, uphold and update stakeholders about the transition will not only get your inbound leader off to a unfavorable start, it can cause important supporters to doubt the successor’s fit, which may affect your fundraising outcomes.
- Determine the organization’s short and long-term objectives. Where do you see your organization going three to five years from now? What about ten years from now? Discussing tactical goals that your members have for the organization will allow your incoming CEO to lead with intention. Dissect your organization’s mission and examine how the organization is currently meeting the needs of those you serve. What does it need to do to better serve its target audience? It’s normal to start off with broad goals about your organization’s future in the beginning, but as your board becomes more entrenched in these discussions, your goals should become more specific and tangible.
- Quantify your organization’s goals. If your organization’s goal is to become bigger, stronger or more innovative, set up metrics or outcomes that will determine how you will know that you’re achieving that goal with your new leader. These metrics will also be useful when you’re developing a job description for the role or speaking with high potentials about what will be expected of them. Want to build upon your fundraising efforts? You can clarify that goal by asking your team precisely how much it would like to raise. If your board wants the organization to grow, a better question to ask your members is what growing means to them. Does it mean gaining 200 new volunteers? Opening another office? Hiring new employees? Specifying metrics for each objective will allow you to assess whether or not your organization is accomplishing its goals.
- Identify what you’re looking for in a CEO for the future. Aim to hire a CEO for the organization’s future and not one that will mimic the successes of its past or make adjustments where there is no weakness. Just because your leader was successful in advancing the organization’s mission years before or had a leadership style that worked then, it doesn’t mean that a similar leadership style or leader is what your organization needs to flourish down the line. As the nonprofit sector continues to evolve, you may find that another leadership quality or skill is essential for your organization to grow.
Your board’s ability to implement a successful transition plan is a harbinger of your future. It can have a profound impact on the search for your next CEO as well as your organization’s ability to attract and retain top talent.
David E. Edell, a Wexner Heritage alum (NY/Kekst), is the president and co-founder of DRG and a national leader in consulting with organizations undergoing leadership transitions. David can be reached at email@example.com.
Mary T. Wheeler is the senior vice-president of DRG. She specializes in conducting senior level assignments for social service agencies, foundations, educational, environmental and cultural institutions, as well as international non-governmental organizations.
Carmel Napolitano is a senior consultant at DRG with more than 10 years of experience in retained executive search in the nonprofit sector. Prior to her work in search, Carmel spent over 15 years in higher education fundraising.