The Nonprofit CEO Succession Playbook
Leadership StrategiesLeadershipSocial ImpactBoard and CEO AdvisoryCEO SuccessionExecutive Search
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September 30, 2020
14 min read
Leadership StrategiesLeadershipSocial ImpactBoard and CEO AdvisoryCEO SuccessionExecutive Search
EXECUTIVE SUMMARY
Organizations without a succession plan risk a chaotic and hurried search, reflexive successor criteria and delays in organizational momentum.
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Many nonprofit organizations are finding themselves caught flat-footed when it comes to the transition of their CEO. The impact of this reality is becoming increasingly apparent amidst the wholesale generational shift in senior leadership at the majority of nonprofits as CEOs who have led their organizations for 15 years or more face retirement. Moreover, in a high percentage of cases we have observed, these leaders are either founders or quasi-founders.

At the same time, the boards of these nonprofits—which have often relied heavily upon the outgoing CEO— are also experiencing generational shift and are needing to plan for the future health of the board itself. This confluence of events is playing out in the context of an increasingly complex political, social and economic landscape, creating a critical need for more careful long-term succession planning than ever before.

Although planning for the chief executive’s succession is arguably the most important role of the board, fewer than a third fulfill this responsibility by articulating a formal succession plan.1 Nonprofit boards that neglect this responsibility until a departure is imminent (or worse, has already happened), expose their organization to significant risks and challenges. Individual directors may also be subjected to reputational risk if the transition is fumbled and the organization is set back as a result.

Conversely, organizations that engage in proactive and long-term succession planning enjoy multiple benefits. For these organizations, succession planning is more than just an exercise in risk mitigation; instead, it provides an opportunity for the organization in general, and the board in particular, to engage in strategic selfreflection, establishing priorities for the future and setting up the new leader for success.

RISKS AND CHALLENGES FOR ORGANIZATIONS WITHOUT A SUCCESSION PLAN

Chaotic or hurried search
Abrupt or imminent departures leave little time for a thoughtful or strategic search process, reducing transparency and increasing the risk that important perspectives are excluded or the wrong successor is hired.

Reflexive successor criteria
The ideal profile of the successor is defined in response to the perceptions of the outgoing leader and current context rather than a future-focused assessment of organizational needs.

Delays in organizational momentum or progress
Without adequate warning or preparation for the transition, significant initiatives may be delayed as staff, board members and major donors are focused on the succession.

Heightened sense of uncertainty among donors, board and/or staff
Unplanned departures without a clearly identified successor leave stakeholders unsure about the organization’s stability and future direction, negatively impacting organizational culture and donor confidence.

Loss of institutional knowledge
Without a formal transition or onboarding process for the new leader to learn directly from the outgoing CEO, vital institutional knowledge may be lost.

Loss of high-potential talent
Retention risk is increased as internal successor candidates are not informed about whether/where they fit into future plans. In the absence of explicit planning, leaders may assume they are not under consideration or may make unrealistic assumptions about what is possible for them to achieve.

SUCCESSION PLANNING VS. EXECUTIVE SEARCH

But how does a succession planning process differ from a traditional executive search? Organizations may think of the terms as synonymous, but they actually refer to distinctly different processes, each with its own important outcomes.

Most organizations will be familiar with the traditional executive search process: Typically, a search committee is formed, a job specification and ideal candidate profile is articulated and the search is launched to identify and assess potential candidates, often with the help of an executive search consultant. A search is an intermittent event, usually launched in reaction to a departure or the creation of a new role. The process usually begins about six months before an anticipated departure and is led almost exclusively by the board-appointed search committee.

Strategic succession planning is about creating new options for both the present and the future. It is a proactive, continuous process that dovetails with other strategic planning processes through which the organization engages a wide variety of stakeholders to understand its future strategy and the talent that will be needed to achieve it. As a result of this inclusive and deliberative exercise, internal successor candidates are identified and provided with the tools to develop the skills necessary for assuming the top position, and the board is provided with a sound infrastructure from which to launch any eventual CEO searches, should an external successor be necessary. Organizations will also find that their human capital and learning and development functions are strengthened as a result of the process, yielding ripple effects that extend beyond the C-suite leadership that is directly involved, resulting in a “pipeline” of talent that can ascend to the C-suite when needed. To be effective, the succession planning process must be launched at least two years, and preferably longer, before an anticipated transition.

TRADITIONAL EXECUTIVE SEARCH

STRATEGIC SUCCESSION PLANNING

OBJECTIVE

  • Choosing the next CEO among currently available options

  • Creating new options for both the present and the future

OUTCOME

  • Next CEO is identified

  • Inclusive process to understand future strategy and talent needs

  • Internal successor talent is identified and developed

  • Board has a sound infrastructure from which to launch future searches

  • Human capital and L&D functions are strengthened

TIMESCALE

  • Intermittent event

  • Reactive, timeline-driven

  • Six months before anticipated transition

  • Ongoing, continuous process

  • Proactive

  • Minimum two years before anticipated transition

MAJOR PARTICIPANTS

  • Search committee

  • Board, senior leadership (and other staff as needed), major donors, key partners

THE SUCCESSION PLANNING PROCESS

While the precise process will differ by organization according to the specific timeline, stakeholders involved and organizational priorities, most succession planning processes can be broken down into three core phases: preparation, evaluation and resolution.

 

PREPARATION

  1. Establish board and comittee roles and engage stakeholders

  2. Develop strategy-driven criteria and role profile

EVALUATION

  1. Assess internal candidates and initiate development plans

  2. Benchmark internals and conduct market scan

Once departure is anticipated...

RESOLUTION

  1. Identify and appoint new CEO

  2. Onboard and transition new CEO and top team

While anyone who has previously been involved in an executive search will be familiar with the “resolution” phase (namely identifying and appointing a new leader, then onboarding and transitioning them and their new team), it is the “preparation” and “evaluation” phases which yield the real value of proactive succession planning. These phases provide the board with forward-looking insight into the organization and its future leadership needs, as well as a comprehensive assessment of their current “bench of talent,” ensuring that the organization is prepared for when a transition is eventually necessary. The following pages provide more detail on the objectives and specific steps of this process.

ESTABLISH BOARD AND COMITTEE ROLES AND ENGAGE STAKEHOLDERS

Objective: Assemble a representative committee with clearly defined roles to manage the planning process and engage stakeholders on the strategic direction and resultant leadership needs of the organization.

Ideally, the board will have made clear to the current CEO from the start its expectation that she or he will plan for their own succession. Establishing this from the outset as an explicit responsibility of the chief executive enables a more productive and less politically charged conversation around succession and promotes a healthy dynamic between board and senior leadership. However, while the current CEO must view succession planning as an organizational priority, the process and ultimate outcome must result from a collaboration between the current CEO and the board.

Once the board is ready to launch the succession planning process, it must appoint a committee to lead it. The committee should be comprised of board members and at least one senior staff member (most often the sitting CEO), with special attention paid to ensure that the committee represents a diverse range of perspectives and personal histories with the organization. Clearly defined roles for the committee, the larger board, the current chief executive and the senior human capital leader should be articulated from the outset to ensure that all are clear on their responsibilities in the process. In some cases, trusted external friends of the organization may play a useful role on this committee.

One of the committee’s first tasks will be to gather input on the current strengths and challenges of the organization, its future strategic direction, and the leadership that will be required to execute that strategy. The committee should seek input from a diverse range of stakeholders, which, depending on the organization, may include the current CEO, senior leadership, other staff, major donors, volunteers and beneficiaries. As part of its commitment to conducting a transparent process, this step should employ a variety of channels to gather input (e.g., surveys, town halls, oneto- one interviews) and involve the current CEO in the communications strategy to ensure that the exercise is understood to be in support of the long-term health of the organization.

DOs

Take time to build trust and communication:
Succession planning must not be seen to undermine the current CEO’s position or as a way of forcing her or him out. Whether the need for succession planning is first raised by the board or the CEO, all parties must see the exercise as benefiting the long-term health of the organization. The board must also be fully apprised of the current CEO’s plans and expectations for their time in the role so that the committee can factor these into the ultimate plan.

View succession planning as an ongoing process:
When executed correctly, the succession planning process dovetails with broader strategic planning efforts and can become a tool for effective governance that interacts with multiple elements of the organization. It must be viewed as an integral part of the board’s work rather than an item to check off on an annual agenda.

DON’Ts

Blur lines of responsibility between the current CEO and the board–
The role of the chief executive is not to select their successor, but rather to enable good governance by providing the committee with a vital perspective into current organizational strengths, challenges and opportunities. The process must ultimately be driven by the board.

Presume that committee members share preferred working styles–
Reaching a consensus early in the process will save considerable time and headache in the long run. This should include discussion on substantive issues such as the methods for evaluating internal candidates and seemingly mundane issues such as communication style (email vs. phone vs. in person) and calendar alignment, especially when working with committee members across multiple time zones.

DEVELOP STRATEGY-DRIVEN CRITERIA AND ROLE PROFILE

Objective: Based on stakeholder input as to the future strategic direction and resultant leadership needs, develop the experiential and leadership criteria for the next CEO.

Once the committee has heard from a sufficient array of stakeholders as to the current strengths and challenges of the organization and its future strategic direction, they must reconvene to synthesize this input and determine its implications for future leadership needs. The centrality of the future strategy to succession is what enables the process to dovetail so neatly with broader strategic planning efforts—in essence, succession planning is a natural outgrowth of strategic planning. In this respect, it is important to ensure it is an “outside-in” process that starts with an acute appreciation of the external environment and how the organization is positioned.

By weighing the internal and external trends that it foresees impacting the organization in the future, the committee will begin to align around the experiential and leadership criteria that will be required of the next leader. This should include a mix of both hard and soft skills and, for most nonprofits, will include competencies related to strategic leadership, communications, fundraising and capacity development, collaboration and relationship building, innovation, operational acumen and commitment to the mission. At the top of the list should be the competencies needed to implement the changes called for in the strategic plan.

In building the leadership criteria and role profile based on the strategic direction of the organization rather than a backward-looking assessment of previous leadership, the succession planning process will ensure that the next leader is equipped to meet the challenges of the future rather than solve the problems of the past.

DOs

Discuss how the strategy has evolved under the current CEO–
Determine at a high level what is needed from the new leader– continuity or change?

Focus on the competencies required–
Rather than on the specific job titles and experience candidates must possess in order to ensure that the applicable candidate pool is as diverse as possible.

DON’Ts

Automatically assume you are looking for version 2.0 of the current CEO–
Equally, if the organization is in need of transformation, don’t automatically look for the exact opposite of the current leader. Seek evolution, not revolution.

Assume that any candidate will “have it all”–
The final selection will involve making tradeoffs, so it is important to align around the prioritization of the most essential competencies.

ASSESS INTERNAL CANDIDATES AND INITIATE DEVELOPMENT PLANS

Objective: Develop an in-depth understanding of the current “bench strength” by assessing internal successor candidates and initiating development plans to address competency gaps.

With the competencies of the future leader identified and prioritized, the committee is now equipped to assess the strength of its internal bench of successor candidates relative to those competencies. To do so, the committee should leverage a combination of assessment tools, including behavioral interviews, psychometric analysis (which may require the help of an outside assessment firm), a review of prior performance evaluations and gathering input from direct reports and other stakeholders who have worked closely with the candidate. If available, a recent assessment of the current CEO is another useful input to help form a baseline perspective around what has or has not worked to date.

The assessment process will enable the committee to identify each successor candidate’s development gaps, evaluate retention risk and assess culture fit. With the help of the CHRO or human capital leader, the committee should estimate each candidate’s future growth potential and likelihood to address gaps in time for any anticipated succession. Successor candidates who are determined to have sufficient potential should be provided with an actionable development plan to address any gaps and be scheduled for regular check-ins to review progress against this plan with the CEO, human capital leader and any other stakeholder who will support the development process.

This is also the point in the process when the committee should take up another parallel goal of the succession planning process: “replacement planning,” identifying who would become the interim CEO in the event of an emergency succession such as an unexpected departure or major illness. The designated interim leader might be an internal successor candidate who is determined to already have high potential for succession or another stakeholder who has significant ties to the organization, such as the board chair. While the key competencies and role profile defined in the previous stage will help inform the discussion around the interim leader, ultimately the skills and expertise needed in an emergency successor will differ from those needed in a permanent chief executive.

DOs

Allow enough time before the expected transition–
For the internal candidate(s) to have sufficient opportunity to engage in meaningful development activities to address any gaps.

Provide internal potential successors with meaningful roles–
In task forces and other strategic initiatives to help them develop and create opportunities to assess their growth.

Be direct with aspiring candidates who have no chance–
Involving them in succession planning as a courtesy will only delay a difficult conversation and usually leads to hurt feelings.

DON’Ts

Assume that the internal candidate cannot behave differently in a different role–
Sometimes leaders are restrained by their current role and responsibilities and must “reintroduce” themselves to the board.

Assume the current CEO’s preferred candidate is necessarily right or wrong–
The purpose of the succession planning process is to ensure that all relevant stakeholders have input into the decision.

BENCHMARK INTERNALS AND CONDUCT MARKET SCAN

Objective: Compare the relative progress of internal candidates and benchmark against representative external candidates to understand how “bench strength” compares to the market.

After an agreed-upon period of implementing the development plans created in the previous step (typically six to 12 months), the committee must reconvene to assess the progress against those plans and benchmark their internal successor candidates against the external market. To do so, the committee should launch an external market scan to identify representative candidates in the market against whom to compare the internal bench.

Using the strategy-driven criteria and ideal profile outlined in step two, the committee should identify leaders in immediately relevant or adjacent sectors who meet the criteria to serve as a “control” against which to measure the internal candidates. Based on publicly available information, advice and counsel from appropriate advisors and the committee’s own knowledge, the committee should prepare profiles of these benchmark candidates, noting career history and any relevant observations on track record, leadership style and “recruitability.” An outside consultant can be helpful for this stage, particularly if the board or HR function has limited in-house capacity. It is important to note that at this stage no outreach is made to external candidates to test their interest in the role; the purpose is solely to serve as a point of comparison for assessing the internal bench strength against what is theoretically “available” in the market.

The committee will now have two important inputs for their decision-making process: assessment of how internal candidates are progressing against their development plans and a review of the caliber of talent that they would be likely to pursue if a formal external search were launched. Based on these inputs, the committee should determine which internal candidates are “ready now” in the sense that they could step into the CEO role today, which of them could benefit from additional development support and which (if any) have proven unqualified for the CEO role.

The committee should align around one or two “heirs apparent” who will continue to be groomed for succession. The current CEO should take steps to involve these potential successor(s) in relevant strategic planning discussions and begin to facilitate relationship building with any board members with whom they are not yet familiar. Those not determined to be immediate successor candidates should receive clear communication as to the reasons why and also a commitment from HR leaders to continue to support their ongoing development.

DOs

Overcommunicate with potential successor candidates about this stage of the process–
The assessment and benchmarking step can either engage and motivate or alienate and frustrate internal candidates. Taking time to clearly communicate the process and goals of each step will go a long way toward ensuring that this process is positive for all involved.

Be clear about the differences between this step and a formal search–
And that an external search may still occur, even if there are strong internal candidates.  Help internal candidates see the value

Help internal candidates see the value of external benchmarking–
They are being assessed against the top talent in their market and, if they succeed, they will be more credible as a result.

DON’Ts

Promise to follow outside experts’ recommendations in all circumstances–
Honesty and transparency are critically important to retain the trust and motivation of all leaders involved in the succession process.

Overpromise on the role–
Ensure that internal candidates are clear about the likely timeline for succession, as well as the realities and limitations of the role they are seeking to assume.

At the end of this stage, the board will have completed the succession preparation process and should have everything it needs to either appoint the next CEO or launch an external search when the time comes. For more information on best practices for launching a search and onboarding a new leader, please see Russell Reynolds Associates’ Nonprofit CEO Transition Playbook.

If a departure is not imminent, the board should ensure that the following documents remain up to date and accessible so that they are ready when the board needs to act:

SUCCESSION PLANNING DOCUMENT CHECKLIST

  • Experience and competencies required of the next CEO

  • Up-to-date assessments and professional development plans of the various internal candidates

  • Parallel documents assessing external candidates

  • A succession timetable (if the current CEO has an anticipated departure date)

  • An emergency succession plan

Proactive succession planning can serve to strengthen multiple aspects of a nonprofit organization’s leadership team, strategic planning efforts and operational dexterity. Employees gain a clearer sense of potential development paths and can see possible ways to advance professionally. In particular, organizations with long-tenured CEOs will find that succession planning can address the negative side of leadership stability, namely high turnover at mid- or senior-team levels because of a perceived or actual lack of opportunities for advancement. Similarly, some boards become too comfortable neglecting good governance and cede too much authority to the CEO. This makes a change in leadership at the top even more disruptive, especially when a transition has not been anticipated and pragmatically planned for. With increasing numbers of nonprofit leaders set to retire within the next five years, it has never been more important for boards to engage in meaningful, strategic succession planning to ensure the sustainability of their organization’s future impact.

Succession Planning in the Era of COVID-19: Urgent for Some, Critical for All

One of the reasons that many boards aren’t very focused on succession planning right now is that they are so consumed in the moment of crisis management, and a CEO succession or transition seems like a far off need that can be addressed at some later time. In normal circumstances, we recommend to our clients that they begin long-term CEO succession planning two to five years away from the potential transition. This provides ample time for multiple internal candidates to be rotated through several senior assignments, in the process developing a multitude of leadership attributes they could then bring to the CEO role. But the current situation is different. The reality is that there are many scenarios that might require a CEO transition much sooner:

Near Term:

Some boards may realize they are already facing challenges with regard to their CEO’s performance or tenure. They may have just announced a CEO transition right before the pandemic occurred and want to support the incoming executive, or were planning to do so soon but now wonder if they should wait for beer days. At the same time, many boards may be faced with an unanticipated need to transition a senior executive. Their CEO may become ill or step down to take care of family or other personal concerns, or a board may assess that a healthy CEO is simply unable to lead effectively during this challenging period.

Medium Term:

If an organization is geing along without a current challenge, boards still need to worry that one might be right around the corner. They might have a CEO who doesn’t need to be replaced immediately, but who clearly isn’t as strong as they seemed when times were beer, and may not be suited for future organizational needs. Alternatively, they might have a wellperforming leader who had planned to stay in the role for several more years, but is now reevaluating that decision and wants to step down sooner.

Long Term:

Regardless of how well your organization is doing right now, and how strong your succession planning process seems, this period of turmoil will most likely have a lasting impact on your operating model and theory of change, and this is the time to adjust planning to accommodate new realities: What it takes to be a successful CEO will be different in the future than it was in the recent past. The internal candidates you were relying on may no longer be up to the task, and your external prospects may no longer be available. The jobs you thought were on the critical path to the corner office may no longer be essential. Ultimately, your leadership pipeline may not be as strong and resilient as it once was.