Six Ways to Ensure that Nonprofit Succession Fails

The warning bell has been sounding for years, telling nonprofits that the sector will face an enormous leadership shift as baby boomers retire and new leaders take the helm. The 2006 Bridgespan Group study The Nonprofit Sector’s Leadership Deficit predicted that the sector would need 80,000 new senior leaders per year by 2016, and we’re reportedly on track. Yet too few boards, grantmakers and leaders are doing everything they can to prepare for leadership succession. Here are all-too-common practices that ensure failure.

1} Don’t talk about it

Succession planning is a deliberative process, and mistake No. 1 is never talking about it. Succession for all positions should be a continuous topic among managers, and boards would do well to request regular reports on how managers are developing employees and preparing for departures. A well-run nonprofit should plan for succession across all positions. It should encourage employees who seem eager and ready for new challenges and “stretch assignments,” and it should assess risks that could result from any single person departing. Board members from major corporations can help nonprofits by sharing leadership development and succession practices from the business sector, where HR departments often have well-honed practices in this area.

2} Don’t give the leader regular and disciplined performance feedback

Wise is the board that has a disciplined approach to performance feedback for a nonprofit’s chief executive. Beyond the obvious goal of helping the CEO succeed, in doing so boards generally seek input from internal and external constituents. These fresh perspectives can help boards understand the current CEO’s strengths and shortcomings, form relationships inside and outside the organization that will be helpful during succession, and engage in conversations that deepen their knowledge of the organization’s work and impact. These additional benefits make the CEO’s performance review an even greater imperative for the well-managed nonprofit.

3} Don’t engage the board in strategy and planning

Successful CEO succession requires an engaged board, and engagement is a practice and a habit that is best developed before necessity or crisis requires it. Boards that have been deeply engaged in strategy and planning will not only be well-positioned to carry the organization’s mission forward during a time of change, but also will be well-equipped to identify the characteristics of the leader they need to seek. Too often, strategy is developed at the senior leadership level and “presented” to the board, without the benefit of board members’ best thinking, involvement and experience. (See my earlier column, “Is Your Board Bored?” [bit.ly/1e0UlW6], about ways to make board involvement meaningful to an organization’s strategy and success.)

4} Don’t do anything to develop next-level managers

Both so-called “heroic leadership” and “hub-and-spoke” leadership styles define many nonprofit CEOs. In either instance the organization can then come to rely on the CEO to do anything and everything to keep the organization in motion. Maybe it’s the lifelong commitment to nonprofit causes that underlies so many nonprofit leaders’ willingness to play the hero. Unfortunately that often means forgoing a distributed leadership style that is team-based and less reliant on any single individual. CEOs and boards should give next-level managers and staff every opportunity to participate and excel in organizational leadership, and they should encourage them to enroll in professional development courses and activities that build their capabilities. As a further benefit to staff investment, one of these individuals may be a great candidate for the CEO role. Internal succession can be an effective way to ensure continuity and a smooth transition.

5} Don’t do emergency planning

At the very least, organizations should have an emergency plan for how they will manage in the event of an unexpected departure, including an illness, accident or disaster. This requires attention to both the people who may be asked to assume new responsibilities quickly and to organizational systems for information management. Key documents, passwords, calendars, contacts and process information should be centrally located, with documentation so that they can be retrieved quickly in an emergency. For certain bank accounts and financial data, password-protected information may be all but permanently inaccessible without the correct credentials. The well-run nonprofit has a documented emergency plan and a practice of updating it.

6} Don’t build a healthy balance sheet

Unrestricted assets, or money in the bank, give a nonprofit room to chart its own destiny and withstand the speed bumps that can result from a change in leadership. Donor loyalties may be tied to personal relationships that come to an end when the CEO departs, and other income streams may shift when leadership changes. Developing and maintaining a healthy balance sheet, with appropriate reserves, is a best practice at all times and critical during a leadership transition.

There are mountains of literature about succession planning. Among the most helpful is a book authored by Susan Kenny Stevens, formerly a Minnesota-based Clifton Larson Allen partner with deep interest in founder succession. Her book, Nonprofit Lifecycles: Stage-Based Wisdom for Nonprofit Capacity, is an important contribution to this subject. Beyond Stevens’ book, there are many resources compiled in an excellent list on the Foundation Center’s website. You can find it at foundationcenter.org/getstarted/topical/succession.html.

A CEO transition is not a question of whether it will happen, only of when. We’ll all benefit if Minnesota nonprofits get prepared.

Hiring a Nonprofit CEO

When "designed by committee" is not a bad thing

Originally published in Twin Cities Business Magazine, September 2015.

The process of hiring a CEO can be an especially daunting task for nonprofit boards.

It’s time-consuming and requires wrangling disparate volunteer board members into a cohesive group that can interview candidates and agree on the right one to hire. Frequently, nonprofits cannot afford to hire a search consultant or firm to help them manage the process and instead have to dig in and get the job done themselves. With or without a search firm, it’s hiring by committee.

In fact, it’s the search committee that is the distinguishing characteristic of nonprofit executive search. “Nonprofits have a participatory culture,” Lars Leafblad tells me. Leafblad is one of two principals in Ballinger Leafblad, a one-year-old firm specializing in what they term “civic search,” working in the universe of foundations, nonprofits, associations and higher ed institutions.

“A lot of voices are engaged,” he says, “and the process is never streamlined. This is both a strength of nonprofit search and the challenge.” Cindy Chandler of the Chandler Group agrees. “The size of the search committee in nonprofits can be large, 12 or more people,” she says. “Nonprofits want not only board members but often other outside stakeholders involved in the search process.” Here’s some advice from these experts for nonprofits facing the CEO search challenge.

Recognize there is a difference

Board members accustomed to hiring in the business sector are likely to find the nonprofit hiring process cumbersome. However, effective nonprofit leaders must be able to relate to and engage with a very diverse set of people, including board members, staff, constituents, funders, government officials and program participants, to name a few. Search committees need a sense of how effective candidates are in front of these diverse groups. If you’re the candidate, “you should come into the job with your eyes wide open,” says Leafblad, “having met with the organization’s funders, partners and donors.” Further, boards should plan a multifaceted input process to see all sides of a candidate’s strengths. “Don’t just interview,” Leafblad suggests, “but also see the candidate’s writing ability, their group and one-on-one interactions, and be sure to do a deep check with multiple references who know the candidate well.”

Get aligned

Nonprofits should spend time carefully developing a job announcement and agreeing on the competencies needed. Often this requires one-on-one interviews with staff, board members and stakeholders who weigh in on the organization’s current status and future needs. Chandler says that it’s not unusual to interview two dozen people or more to inform the development of a position announcement. “This alignment should never be cut short,” Chandler says. “Where we see failure in these processes are times when getting to alignment in the beginning—before the search began—was incomplete.”

Watch out for the echo chamber

Nonprofits and the people in them tend to operate within known networks of people, and it’s among these networks that organizations typically look for candidates. But, says Leafblad, “you have to figure out how to tap into new pools of talent. This requires intentionality about how broadly the search will be conducted.” Leafblad urges organizations to think through all of the possible connections they can make to inform as many people as possible about the job opening. The right candidate may not be within the known network; plus, the process of reaching out to new people and groups has long-term benefit.

Draw on available resources

Free and low-cost information and workshops are available from places such as Minnesota’s MAP for Nonprofits, the national BoardSource project and websites such as GuideStar. They’re full of resources for nonprofit boards involved in succession planning and executive searches. Boards do not need to reinvent the wheel in terms of ideas and templates for the search or the interviewing and hiring process. It’s also helpful to talk to other volunteers who have been through the process recently and can share their perspectives and lessons learned.

Don’t stop with hiring

“Whatever you do, don’t stop with hiring,” Leafblad warns. “Successful onboarding and supporting the leadership transition is hugely important.” Search firms often provide independent onboarding support, something that organizations working without consultants may not consider. Making sure a transition committee is in place is one approach. Forming a “kitchen cabinet” for the new leader is another.

A significant difference between the business sector and nonprofits is what Leafblad calls the difference in “succession methodology.” Businesses, in his experience, “are more likely to consistently think about succession in all leadership positions across the organization.” He suggests an annual or even quarterly analysis of key leadership roles and identification of who in the organization is being prepared for new responsibilities. Adopting a succession mentality can help organizations prepare for the inevitable transitions that can be destabilizing when they’re not anticipated.

What’s the reward for a well-run executive search process? “A search is really an engagement strategy that allows nonprofits to connect with key people, align around the organization’s future and create a transformational moment. Then everyone benefits—the nonprofit and the community it serves,” he says. For those going through this process or planning to, there’s a lot of help available. Establishing a careful, broad-based and inclusive process is the essential first step to hiring well. TCB

Help from Search Firms

Three Minnesota-based foundations recently contracted with search firms to assist them in finding successors for retiring top executives. The new leaders of the foundations are:
Ben Cameron | President | Jerome Foundation | St. Paul
Eric Jolly | President | Minnesota Philanthropy Partners | St. Paul
Tony Sertich | President | The Northland Foundation | Duluth