Baby boomers are turning 65 and nonprofits must be prepared for leadership changes.
As retirement nears for many commercial business leaders, businesses often develop succession plans that involve transferring the business to a family member, selling it or turning it over to key employees. Nonprofit organizations often fail to take this important business planning step. A good succession plan helps an organization maintain continuity during leadership changes.
When Your Organization's Leader Is Retiring
There are typically two succession issues that nonprofits face. The first is similar to what commercial businesses encounter: the retirement of the organization’s leader. Whether his or her title is executive director, president, CEO, or chief cook and bottle washer, having continuity over a transition period is critical to keeping the organization running smoothly.
A succession plan can ease the burden of executive level turnover at your nonprofit organization. If your organization is creating its first-ever succession plan, the process can seem daunting. But like any big undertaking, breaking things down into manageable steps is a good place to start.
The board of directors or a search committee should discuss the retirement wishes of the executive director and lay out a timetable of what needs to happen. Most leaders dedicate a significant part of their lives to an organization so they want the continued success of the organization as much as everyone else.
Once a timetable is developed, a job description needs to be created for the replacement. The job description might be the same as the current leader’s, or, the board might decide to rearrange some of the job functions. For instance, the current leader might be an excellent fundraiser, but the organization might have grown and now needs more of an administrator. This is an excellent opportunity to make the leadership role stronger and more relevant to the organization’s future plans.
Next, the search for a successor begins. It is a good idea to consider people who come from similar organizations, but don’t rule out those who have backgrounds that are different than the current leader. Many organizations get stronger by adding diversity to the mix. The key is finding someone who has a passion for the mission of the organization and the skills to follow through with required actions.
Once the search process is complete the search committee should make a recommendation to the full board and have a frank discussion about the final candidates. With small organizations we have seen this process take a few months and with larger organizations it has taken a year and a half. It all depends on the initial timetable and whether the current leader is willing to remain in the role during the search.
Again, the key is to decide up front. Be flexible if you need to change the timetable, but have the timetable in place so expectations are understood and realistic.
Hopefully the process goes well and a strong new leader comes on board, but it’s important to be sure that you have the right person. The board should be ready to say it does not have the right person. In this case the time it takes to extend the search might not work with the retiring leader’s plans; the organization might need an interim leader and more board involvement than usual in the day-to-day operations. Sometimes not making a selection is the best selection a board can make.
When Your Organization Is Facing Board Turnover
Nonprofits face a second succession issue that most privately-held commercial businesses do not encounter. In this respect a nonprofit is more like a publicly traded company because it has a board of directors that is typically not part of management, whereas most privately held companies’ boards contain mostly managers.
Because of this the nonprofit needs a succession plan for its board — in addition to the organization’s leadership role — to ensure diversity. The board should consist of people who have expertise in specific areas, such as programming, finance, fundraising and any other area critical to the continuity of the organization.
The board should be strong enough as a total unit that it maintains the direction of the organization. Typically one-third to one-quarter of the board should be up for reelection every year. The board should not change the direction of the organization simply because of new members unless external reasons mandate the change.
For instance, if the primary mission of an organization is running a soup kitchen to feed the needy, then it shouldn’t try to change its primary mission overnight to provide educational services to special needs children simply because it gets board members with that background. Any change in the mission of the organization needs to be in accordance with the governing documents of the organization and within the capabilities of the organization.
Need Help
Succession planning for a nonprofit can be time consuming, but a good succession plan helps ensure that an organization continues to carry out its mission. A great place to start is to watch our webinar, How to Supercharge Your Organization with a Strategic Plan. If you're ready to develop your succession plan now, contact us online or call 800.899.4623 to talk with one of our strategic planning experts.
