Fall 2019 Insider


Managing Leadership Transitions

Nov 20, 2019 4 min read

Managing Leadership Transitions
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Change—especially in executive roles—is a part of nonprofit life. According to BoardSource, 50 percent of nonprofit leaders expect to leave their positions within the next five years. 

This turnover rate is alarming enough, but nonprofits have additional challenges compared to the private sector. Few have the administrative or managerial bandwidth to operate at full capacity in times of transition. This means that the organization’s mission—or the funding that supports it—may suffer the consequences until the board selects a new leader.

Considering these challenges, nonprofit boards and senior management should make succession planning a priority in their strategic considerations.

Preparing for a Planned Transition

A planned transition—when an executive retires or leaves on his own accord—is certainly preferable to an unplanned transition, but it also has its own challenges. Many organizations depend on one individual—typically the president or CEO—to be the chief fundraiser, program director, and ambassador to outside audiences. These are big shoes to fill, and it takes time to find the right individual with the right combination of skills.

Secure early involvement by the board. Succession planning should begin early with a conversation between the board and the departing executive. In an ideal scenario, initial discussions would begin one to three years before the transition. This gives the board time to consider its options and develop a process.

Reevaluate. Hiring a new leader gives the organization an opportunity to consider its needs, review the impact of current programs, and re-envision the future. The board’s first step is to review and revise a three-year strategic plan with the leadership transition in mind. This will not only clarify thinking about the type of leader the group needs, but also give the incoming executive a road map to guide his or her future decision-making.

Form an ad hoc committee. Many nonprofits establish a committee to oversee the transition, encourage accountability to the process, and facilitate communication to various constituencies. The committee establishes the timeline for the transition and decides what the board is seeking in the new leader. It also develops a plan to communicate details to the staff and the public at the right time. Finally, the committee reviews and revises the job description, engages an executive search firm, interviews candidates, and recommends finalists to the full board. 

Define the departing executive’s role. The board should identify what role, if any, the departing executive will have. Long-serving leaders or founders often have deep relationships with donors, long institutional memories, prestige in certain issue areas, and many connections that are valuable to the organization. However, the departing executive’s role must not impede or overshadow the work of the incoming leader. It is always advisable to ask the departing executive to take a hiatus before assuming new duties so that the new leader can become firmly established. 

Prepare for challenges. The most common problem with a planned transition is that the departing CEO may never really depart. This often happens when the board is relatively weak and afraid to cut ties with the former executive for fear the new leader is not quite up to the challenge. A better plan for the board would be to commit the time necessary to orient, guide, and mentor the new executive so that his tenure is successful. 

Managing an Unplanned Transition

Sudden, unplanned transitions—whether brought on by illness, death or some other reason—are particularly stressful for nonprofit organizations.

This is “go time” for the board. This is a time when the board needs to be highly engaged as leaders and decision-makers. This type of institutional upheaval requires patience, time, and wisdom. Further, the board may have to assume a more significant operational role in the short run to assist with management, programs, or fundraising.

Decide on message and messenger. No one wants the organization’s dirty laundry or discord posted online or printed on the front page of a national newspaper. Therefore, it is critical that a unified message be created and communicated to board members, staff, and outside constituencies. Further, boards should select a point person who will answer questions and share approved language. 

Be formal, not contentious. It is said that the best departure is a friendly handshake, meaning that the employee and employer come to an agreement and put aside their differences for the good of the organization. If serious personnel matters are at stake, the board should prepare a separation agreement to protect the group’s interests. 

Take stock. Depending on the nature of the departure, the board should work with staff to perform an organizational operations inventory to locate and catalog key documents such as the IRS determination letter, board minutes, all financial information, current vendors and contracts, insurance policies including directors’ and officers’ insurance, funding commitments, and passwords. 

Show stability to key constituencies. Consider how this departure looks to outside audiences. Donors are naturally concerned about the stability of their investment in a nonprofit during a time of transition. Many groups act quickly to name an interim CEO, communicate that their mission is unchanged, and highlight the staff who will carry out the work.

Prepare for the future. A 2017 BoardSource study of nonprofit board practices found that only 27 percent of boards had written succession plans in place. Nonprofit boards often ignore this part of strategic planning until the organization is faced with a transition. The best time to work on succession planning is after the new leader is selected and established.

Prepare for the Unexpected

Anticipate an adverse financial impact. It is not uncommon for donors to hold back on gifts until they are assured of the organization’s stability. Nonprofits should develop more conservative budgets during this time and shore up reserve funds.

People are not paper. A written succession plan is valuable, but humans are unpredictable and rarely follow a script. Therefore, anticipate the need for adaptability and flexibility throughout the process. This will require more frequent meetings by board members and senior staff.

Take care of the team. In the stress of an unplanned departure, it is easy to forget to inform key constituencies about the change. Staff, in particular, often feel confused and disoriented by the change in management. They need to be reassured and given time to adjust to a new leader.

It is important to remember that a nonprofit’s personnel may come and go, but its mission endures. During an executive transition, the board and remaining staff should protect the institution, keep a positive outlook, remind each other of the group’s strengths and accomplishments, and strive for the future. 

There is nothing wrong with change, as Winston Churchill said, if it is in the right direction. 

Ms. Fitzgerald is founder and president of AC Fitzgerald, a national consulting firm partnering with nonprofits to accelerate growth.