Perpetuating Your Mission: Succession Planning for Nonprofits

Over the last decade, much has been written about the changes that are beginning to affect the economy with the exit of the baby boomer generation from the labor force.  With the entirety of that generation entering the 55-years-and-older age group within the next few years, special attention has been paid to preparing the next generation of leaders for executive level positions in for-profit companies.  However, only recently has that same attention been brought to those positions in nonprofits. A survey study by Baruch College’s Center for Nonprofit Strategy and Management showed that only 16% of nonprofits have a formal succession plan for their executives. The lack of succession plans is particularly troublesome in light of the number of nonprofit managers that are projected to retire in the next two to ten years. This resource will address some practical ways that nonprofits can develop succession plans to ensure that their mission will continue uninterrupted.

Introduction

There are several methods of succession planning and each must be customized for your organization; however, there are three types of succession plans that have been proven to be effective across organizations.  These are:

1. Emergency Succession Plans.
2. Strategic Leadership Development.  
3. Departure-Defined Succession Plans.

The Giersch Group recommends that every organization create at least an Emergency Succession plan and begin outlining the basics of Strategic Leadership Development, which leads into a Departure-Defined Succession Plan.

1. Emergency Succession Planning

Succession planning is most obviously needed for cases in which an Executive Director is unexpectedly unable to fulfill his or her role for an extended period of time (three months to permanently).  In these cases, the Board of Directors should have a plan detailing who will take up which duties to ensure that the organization continues to run smoothly. Having this plan in place before an emergency mitigates many of the risks that come with the last minute, emotional decision making that may happen if a plan is not in place.  

A succession plan is typically created by the Executive Director or by the Executive Director and one or more board members. The steps to create an Emergency Succession Plan include:

1. Identify the Executive Director’s key responsibilities and identify a person or people within the organization who have the capacity to take up those responsibilities temporarily.  These people can be either staff or Board members. Refer to the Giersch Group’s resource “The Well-Rounded Executive” for a starting place for those responsibilities.
2. If some roles cannot be covered, identify a person or people who can be trained to fulfill those responsibilities.
3. Present findings to the Board and agree upon the following:
1. The functions to be covered by an acting Executive Director and which should be covered by others.
2. The extent and limitations to the acting Executive Director’s authority.
3. Who has the authority to appoint an acting Executive Director (Chairman of the Board, Executive Committee, full Board, etc.).
4. Candidates and standing appointees.
5. A training plan for the appointees and other candidates.
6. How the Board will support the acting Executive Director.
4. Create a communications plan to communicate with the necessary parties (appointee, Board, staff, legal team, constituents, donors, etc.) in the case of an emergency transition to an acting Executive Director.
5. Create plan for what happens if the Executive Director becomes permanently unable to fulfill his or her duties.

2. Strategic Leadership Development

According to the survey study by Baruch College’s Center for Nonprofit Strategy and Management, 48% of nonprofits believe that their preferred candidate for an executive position should come from inside the organization (vs. 16% from outside).  However, only 9% of nonprofits felt they had viable candidates for that position within the organization. Without proper development, most nonprofits will not find a strong candidate for an executive position within the organization.

Strategic Leadership Development focuses on developing people within the organization to be able to lead when the Executive Director leaves the organization. Having leaders identified and developed can help smooth leadership transitions when an Executive Director moves on. It is also an essential part of the strategic planning process that requires the involvement and oversight of the Board of Directors.

Steps to creating a Strategic Leadership Development program include:

1. Crafting a strategic plan for the organization that focuses on what changes the organization needs to make in the future, the skills required to implement those changes, and the training or hiring required to acquire those skills.
2. Defining the roles and responsibilities of the people involved in the strategic plan.
3. Creating a plan to train back-ups in those roles.
4. When possible, the current Executive can determine how the identified successor will perform by taking a short sabbatical or extended vacation.

In small organizations, it may be difficult or impossible to find a current employee with the skillset needed to replace the current Executive. In these case, it is important to either invest in staff development or clearly identify a job description and the specific attributes needed for a successor. This will help the organization be in a position of strength and unity as they search externally for a successor.

3. Departure-Defined Succession Planning

At some point, a long-tenured Executive Director will begin thinking about leaving the organization.  Perhaps he or she is ready to retire or maybe he or she is looking for a new challenge. Easing the transition and allowing the organization to smoothly move towards a new Executive Director is essential.  Therefore, in many cases, especially those in which a successor has not been identified and trained, a Departure-Defined succession plan is appropriate.

A Departure-Defined succession plan allows the Executive Director to give the organization a heads up that he or she is anticipating leaving and wants to leave the organization in a healthy place with strong leadership. Typically the time period between communication of intent to leave and actual departure should be between two and three years.  Anything less than two years generally does not give the organization enough time to prepare, and anything more than three years causes the organization to lose the sense of urgency required to correctly identify and train a successor.

Steps to creating a Departure-Defined Succession Plan include:

1. Executive Director assesses personal and professional factors that would keep him or her from leaving the job such as:
1. Personal:
1. Future employment and employability.
2. Level of savings and ability to retire.
3. Identity meshed with organization.
2. Professional:
1. Will the staff or board resist the Executive Director’s decision to leave?
2. Are there key managers who are under-skilled?
3. Does the Executive Director hold key relationships with major donors?
2. In discussion with the Chairman of the Board, the Executive Director sets a departure date.
3. As part of a Board meeting, a Succession Planning Committee is formed and identifies and adjusts:
1. Key roles and responsibilities of the Executive Director.
2. The reasonableness of those responsibilities.
3. Job description of the Executive Director and any needed changes.
4. Executive Director compensation vs. the market.

Often, Boards will make use of an outside assessment of the organization, the specific responsibilities of the Executive Director’s position, and the Board to identify strategic challenges and opportunities.

1. After creating the job description and necessary strategic changes, the Succession Planning Committee presents its findings to the Board and creates a Succession and Training Plan.  The plan includes:
1. Candidate search.
1. Successor in organization.
2. Outside candidates.
3. Possibility of executive search agencies.
2. Transition of key relationships from Executive Director to Board members.
3. Build-up of operating capital to sustain organization through potential dip in funding.
4. Communication strategy.

Concerns and Items for Consideration

In succession planning, as in all strategic planning, there are key concerns and items that should be considered in the process.  Some of these include:

• New Executive Director vs. Interim Executive Director. When a long-tenured Executive Director leaves an organization, there is a measure of shock that accompanies a new leadership style.  The Board and staff will often feel frustrated with the new leadership style and be unsatisfied. This results in new Executive Directors sometimes only lasting one or two years.  For organizations that have had a powerful Executive Director, it is often wise to hire an Interim Executive Director who can help the organization transition and mitigate this risk.
• Administration Support vs. Leadership. When grooming a potential leader within the organization, it is essential to assess whether or not they actually have leadership potential or if they are just acting as administrative back-up for the Executive Director and do not have the proper mindset for forward thinking.
• Letting Go. When an Executive Director leaves the organization, he or she must actually leave, both physically and mentally. While some Executive Directors will want to continue to provide feedback, but this can make it very difficult for the new Executive Director to establish his or her leadership.  
• Replacing a Founder. Letting go can be particularly difficult if it is the organization’s founder that is being replaced. When a founder is involved, the board needs to uphold the best interest of the organization in finding the right successor, which may or may not be the successor the founder wants. Because this is such an important topic, the Giersch Group has written a separate resource addressing issues of Founder’s Syndrome.
• Organizational Stress. When introducing the idea of succession planning, the person introducing the idea (Executive Director, Chairman, etc.) needs to remain cognizant of the fact that even mentioning succession planning brings to mind the idea of that person leaving the organization.  If not framed correctly, the conversation quickly moves from strengthening the organization through this process to everyone being upset that their leader is planning on leaving, even if he or she is not.
• Organizational Support. When thinking of leaving an organization, the Executive Director must consider whether or not the organization’s staff and Board will support his or her decision to leave.  If not, the Executive Director must be careful in introducing the notion and use wisdom to not leave the organization hurting when he or she leaves.

Articles for Further Reading

1. Building Leaderful Organizations: Succession Planning for Nonprofits.  The Annie E. Casey Foundation. http://www.compasspoint.org/sites/default/files/docs/research/526_buildingleaderfulorganiza.pdf
2. Froelich, Karen, Gregory McKee and Richard Rathge. “Succession Planning in Nonprofit Organization.” https://www.baruch.cuny.edu/spa/researchcenters/nonprofitstrategy/documents/FroelichMcKeeRathge_SuccessionPlanninginNonprofitOrganizations.pdf
3. Brinckerhoff, Peter C. “Generations: The Challenge of a Lifetime for Your Nonprofit.” Saint Paul, MN: Fieldstone Alliance, 2007.
4. Masaoka, Jan and Tim Wolfred. “Succession Planning for Nonprofits of All Sizes.”  http://www.blueavocado.org/content/succession-planning-nonprofits-all-sizes
5. Nonprofit Executive Succession-Planning Toolkit.  Federal Reserve Bank of Kansas City. http://www.kc.frb.org/publicat/community/Nonprofit-Executive-Succession-Planning-Toolkit.pdf

For more information, please visit the Giersch Group at http://www.gierschgroup.com/ or contact us at prosper@gierschgroup.com