It Is Important To Have A Succession Plan For Your Nonprofit CEO And Executive

Executive Director/CEO Succession Planning for Nonprofit Organizations

The executive director or CEO is the cornerstone of every nonprofit organization. As trusted, strong leaders, CEOs give nonprofits a sound footing that extends to all other arms of the organization in one way or another. The departure of an executive director or CEO, whether planned or unexpected, can shake the very foundation of an organization. Executive succession planning is a part of the core organizational process—an important part that should not be overlooked.

Executive succession planning is the process of identifying and developing new leaders to succeed the current executive director or CEO. Just as a ship needs a good captain to steer the ship during both calm and rocky seas, intentional and thoughtful succession planning helps to meet the needs of the organization during leadership changes.

According to BoardSource, a nonprofit board planning organization, there aren’t enough nonprofit organizations taking succession planning seriously. BoardSource cites that only 27% of nonprofit organizations have a written plan for executive director or CEO succession currently in place, as reported in Leading with Intent.

While CEOs often lead their organizations for many years, the time for them to depart eventually comes. A change in senior leadership affects every facet of the organization, including the board, employees, volunteers, donors and other stakeholders. Effective succession planning helps everyone involved in, or connected to, the organization make the transition with as little disruption as possible.

Effective Executive Succession Planning Leads to Nonprofit Sustainability

Many nonprofit organizations enjoy a long and steady relationship with their CEOs. On the flip side, a 2006 national study by CompassPoint and the Meyer Foundation showed that 10% to 15% of nonprofit organizations hire a new executive every year. The study also showed that about 60% to 75% of nonprofit executive directors had a plan to leave their position within the next five years. The percentages are high enough for all nonprofit organizations to take notice.

When executive directors leave, they typically take a vast amount of institutional knowledge with them. When that knowledge doesn’t transfer to the new executive director, an organization can experience serious consequences. Loss of strong and effective leadership can slash morale, reduce productivity, result in lost donations and even threaten the organization’s mission.

Nonprofit organizations must always be prepared for unexpected executive director departures. Change can be a good thing when organizations actively plan for it. Planning will make the process cleaner, smoother and more transparent.

Assigning Responsibility for Executive Succession Planning

Succession planning falls under “duty of care,” which is a fiduciary duty of all board directors. Board directors are responsible to ensure the long-term sustainability of the organization. Recruiting and maintaining effective leadership at the top is a major part of the board’s fiduciary responsibilities.

Many nonprofit boards find it helpful and expedient to delegate the responsibility for succession planning to a board development committee or governance committee. The committee does the groundwork of identifying and planning the succession process. In the event of an executive director or CEO departure, the committee can reconvene to identify prospective candidates and submit them to the full board for consideration.

The duties of the committee in charge of succession planning include identifying new talent internally and externally. The committee may extend their reach to developing the talent and skills of existing employees or volunteers to prime them to be candidates for leadership.

Planning for Nonprofit Leadership Transition  

The first step for nonprofit organizations that don’t have an existing succession plan is to place the item on the board’s upcoming meeting agenda. For boards that aren’t familiar with the succession planning process, it helps to review templates of questionnaires that other nonprofits have used.

Board discussions should include answering questions such as:

  • What risks do we face if our executive director or CEO leaves or resigns?
  • What will the impact of an executive director or CEO turnover be?
  • Will we need an interim leader? Who can/should fill that role?
  • Can we cross-train staff to delegate certain duties temporarily?
  • What is the best way to delegate authority on a temporary basis?
  • How do we fill any leadership gaps?
  • What leadership needs does the organization have?
  • What is our preferred timeline for completing the recruiting and hiring process?
  • Are our hiring and onboarding processes sufficient for a quick succession?

Senior leaders are a valuable resource in succession planning. Their experience is a valuable asset in helping the board to set expectations and put processes in place that are efficient and effective. Board directors can also look to senior leaders to hold them accountable for following through on developing a succession plan.

Foundations and grant-makers are also valuable resources that can help in training board directors on how to develop a succession plan. Philanthropists want nonprofit organizations to succeed, so many of them offer formal board development programs. Grant-makers want assurance that the nonprofits they support have solid long-term leadership.

Smooth transitions send the message to donors and grant-makers that the organization is sustainable even through major leadership transitions, and may positively influence their gift-giving.

Final Stages of Executive Director or CEO Succession Transitions and Follow-up

The final stage of succession planning is to welcome the new executive director or CEO to the organization with the goal of setting them up for success. Onboarding and orientation are important parts of the transition. New leaders will be appreciative of solid support. The succession planning committee can aid the transition processes by helping the new executive director or CEO with defining goals and setting up opportunities for any needed training. It’s often helpful for new executive directors or CEOs to have access to ongoing coaching or mentoring.

Boards will need to communicate news of the leadership transition soon after the decision is made. Various communication methods may be appropriate, including press releases, newsletters, emails or formal communication on the organization’s letterhead. Timely communication tells stakeholders that the board chose the new executive leader carefully and thoughtfully. Communication assures stakeholders that the transition process is complete and the organization continues to move forward.

It’s appropriate to help the departing executive director or CEO leave on a good note. Arrange for some time for the outgoing executive to brief the incoming executive on important matters.

Some type of formal closure helps everyone to complete the transition process. This can take the form of a retirement or farewell gathering so that board members and others have the chance to wish the former executive well. It may be appropriate to offer small tokens of appreciation such as cards, gifts or flowers as a formal thank-you for service rendered.