The Nonprofit CEO Transition Playbook

Career TransitionsSuccession PlanningSocial ImpactBoard and CEO AdvisoryCEO Succession
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Jamie Hechinger
May 21, 2019
8 min read
Career TransitionsSuccession PlanningSocial ImpactBoard and CEO AdvisoryCEO Succession
EXECUTIVE SUMMARY
While the specifics of the process may vary by organization, boards should aim to work through these five broad phases.
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​Selecting and onboarding a new CEO is arguably the most important responsibility of a nonprofit board, yet when the time comes to do so, many boards feel overwhelmed and unsure of how to proceed. However, by breaking down the process into clear and concrete steps, with well-defined roles and decision rights for all involved, the experience can engender greater alignment and buy-in among board members and ensure that the new leader gets off to a strong start.

When executed correctly, the transition planning process offers organizations the opportunity to critically evaluate where the organization is headed and what’s needed from the next generation of leadership in order to get there. Moreover, the internal reflection and debate that the process requires will ensure that the next leader is set up for success, entering the role with a clear understanding of their mandate and confident that they are backed by an aligned board.

While the specifics of the process may vary by organization, boards should aim to work through five broad phases, each with its own important questions to be answered:

Forming the search committee

  • What is the mandate of the committee?
  • Which stakeholders and perspectives need to be represented?
  • How do we gather constituent input?
  • What will be the role of the outgoing CEO?
  • What are the norms for how the committee will work together (e.g., time investment, communication style, approaches to screening candidates, etc.)?

Aligning on the profile

  • How has our strategy changed since the last CEO appointment?
  • What does our organization need from its next leader?
  • What are the skills and competencies that should be prioritized?

Going to market

  • Where should we look for suitable candidates?
  • What is the value proposition for this role and organization?
  • How do we balance confidentiality and transparency?
  • How do we handle internal candidates?

Making the decision

  • What are the tradeoffs to consider between candidates?
  • How do we "sell" the opportunity?

Completing the transition

  • Who is responsible for onboarding?
  • How will important relationships be transitioned?
  • What are the metrics by which the incoming CEO will be evaluated?

Step 1: Forming the search committee

Objective: Establish a diverse, representative, empowered search committee with a clear mandate for action.

The first step once an impending transition has been confirmed is to establish a board committee that can guide the search and transition process. The exact size and structure of the committee will vary by organization but should be large enough to balance representation and efficiency, and it should reflect a diversity of stakeholders, perspectives and functions. It should also include sufficient representation from the "power center" of the board so that they can be confident they will be able to get the necessary votes when the time comes. While input from the outgoing CEO and/or staff is vital to the process, they should not get a vote in choosing the next leader.

This is also the point at which to clearly define the expected process and timeline—even the most established and sophisticated organizations can get tripped up by not planning the process itself clearly enough or by not establishing the working norms of the committee. This includes everything from preferred methods of communication to expectations around time commitments. Participation on the search committee requires a significant commitment of time and mental energy, and the specific responsibilities of the role should be clearly communicated to those being asked to join.

Board Dos:

  • Determine the search committee's mandate—ideally they will present a single recommendation to the board, rather than options.
  • Aim to strike a balance between representation and efficiency—the ideal size is five to seven members.
  • If possible, a significant portion of the executive committee should be part of the search committee.
  • Clearly communicate the responsibilities and time commitment of committee membership when recruiting members.
  • Consider launching a "listening tour" in partnership with a search firm to gather input from donors, volunteers, beneficiaries and other stakeholders.

Board Don'ts:

  • Include the outgoing CEO—exceptions may be necessary, but including current leaders on the search committee may complicate the process and reduce candor within the committee and from candidates. An outgoing CEO should not select their successor, but rather should enable good governance in the form of a search committee.
  • Keep staff in the dark about the process—while the search process and decision-making are the board's chief responsibilities, and confidentiality will be required throughout the process, assuring staff that a plan is in place will reduce anxiety and minimize the rumor mill.
  • 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 screening and scrutinizing 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.

Step 2: Aligning on the profile

Objective: Ensure that the board and search committee are aligned about the skills and competencies needed in the next leader.

When a CEO transition is on the horizon, it can be tempting to launch immediately into the search process, particularly if the departure is unplanned or an interim leader is required. However, investing time at this stage to align the board and build stakeholder buy-in around the skills and experiences needed in the next leader will save time in the long run and benefit the incoming CEO, who can trust that they have the full support of their constituents.

This begins with an open and honest conversation about the organization’s mission and future strategy, as well as the strengths and challenges of the organization to date. The type of leadership needed in a turnaround situation will differ from that needed by an organization anticipating significant expansion of programs. By engaging the board, senior leadership and other constituents in a discussion about where the organization is headed, it will become easier to prioritize the skills, competencies and experiences needed in the next leader.

Board Dos:

  • Interview the senior leadership to understand the vulnerabilities, opportunities and challenges ahead—this has value both for gathering vital perspectives the search committee might not otherwise possess and for ensuring that internal constituents are heard.
  • Discuss how the strategy has evolved under the outgoing CEO and determine at a high level what is needed from the new leader—continuity or change?
  • Build alignment within the board around the value proposition of the organization and the role—the board needs to be able to "sell" the opportunity.

Board Don'ts:

  • Automatically assume you are looking for version 2.0 of the outgoing 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.

Step 3: Going to market

Objective: Identify and confidentially approach relevant candidates from a variety of talent pools, looking beyond the usual prospects.

Once the board has aligned around the ideal profile, it is time to begin identifying potential candidates. The search committee should look to the ideal profile articulated in the previous step as their true north and remain focused on the prioritized competencies. This becomes especially important as the search committee seeks to diversify its candidate pool and considers qualified candidates from other sectors; by remaining focused on the prioritized competencies and competency-based interviewing, rather than specific titles or experience, the search committee will minimize implicit or even explicit bias and potentially surface exceptional talent that they might not otherwise have considered.

The search committee, either on its own or with the help of a search firm, must prioritize confidentiality when approaching prospects, many of whom will withdraw from the process if they cannot be guaranteed that their involvement will be kept in trust.

Board Dos:

  • Prioritize confidentiality—the best candidates will withdraw if they cannot be guaranteed that their interest will be kept in trust. For some, their careers may depend upon it.
  • Include competency-based interviewing in the process—past performance is the best indicator of future success.
  • Be committed to diversity—demand it from the search firm and/or make it clear to the search committee that it must be prioritized.
  • Consider having the search committee undergo implicit bias training to ensure that the selection process is fair.

Board Don'ts:

  • Look solely to candidates from organizations with similar missions—focusing instead on the essential competencies will expand the pool of eligible candidates and potentially surface exceptional talent that the search committee would not have otherwise considered.
  • Wait for applicants to approach you—you are looking for people who don't even know they want this job yet, so seek proactive outreach that persuades candidates to enter an exploratory process.

How to handle internal candidates

Internal candidates can offer significant benefits, preserving important institutional knowledge and maintaining stability throughout the transition. However, boards must be thoughtful about how they engage internals, both to ensure an equitable process and to prevent attrition.

Do:

  • Be open and enfranchising, and treat all candidates with dignity and respect.
  • Ensure internals are put through the exact same process as external candidates, but help them to see this is a good thing—they are being benchmarked against the top talent in their market, and if they succeed, they will be more credible as a result.
  • Be direct with aspiring candidates who have no chance—courtesy interviews only prolong a difficult conversation and usually lead to hurt feelings.
  • Provide coaching and development plans—just because an internal candidate doesn't have the skills now doesn't mean they can't develop them.

Don't:

  • Ask candidates to declare interest before they have seen the final position specification.
  • Assume what internals can or cannot do, as they may have been in the shadow of the outgoing leader—internal candidates must reintroduce themselves to the search committee.
  • Leave it to the search firm to "sign off" unsuccessful internal candidates—this must be done by a search committee member to maximize retention.

Step 4: Making the decision

Objective: Gain board alignment around the best candidate and extend a compelling offer.

After reviewing the relative strengths of the candidate pool, it is time for the search committee to make its decision. Whether presenting a single recommendation or multiple options to the board, the committee must be prepared to articulate how a candidate’s past experience, cultural fit and vision for the organization comport with the ideal profile and make the case for why their preferred candidate should be selected.

At the same time, the search committee must be able to successfully "sell" the opportunity to their preferred candidate, which requires an understanding of the motivations and incentives that will resonate. Particularly when seeking to attract candidates from outside the nonprofit sector who may have higher salary expectations, it is important that the committee understand and be able to articulate the role’s value proposition beyond compensation, including other motivators such as the mission itself. In some instances, the opportunity is a true calling.

Board Dos:

  • Remember that the ideal profile reflects not only the current requirements, but also where the organization is going.
  • Consider the range of incentives that might attract a candidate—compensation will always be a factor, but don't forget the less tangible motivators like personal fulfillment.
  • Embrace the opportunity to clean up or professionalize employment terms, including legacy benefits which may no longer be appropriate for the organization.

Board Don'ts:

  • Lose sight of the fact that recruitment is a two-way street—the board must see this as a courtship and determine how to best "woo" their preferred candidate.
  • Determine compensation in a vacuum—what you pay the new CEO will become the ceiling for anyone else the organization hires.
  • View outgoing CEO's salary as the ceiling or even out of reach for the successor—the outgoing CEO may have built up to their current salary over many years; however, all candidates will be privy to publicly available compensation data and will be informed by market comparables and their own sense of worth. Tenure sometimes, but not always, drives decision-making.

Step 5: Completing the transition

Objective: Engineer a successful onboarding program to set up the new CEO for long-term success.

Often the most overlooked yet most important step of a CEO transition, a robust onboarding program is vital to the long-term success of a new leader. Multiple stakeholders must be involved in order to clearly define the new CEO’s responsibilities, mandate and metrics for success. The board must also think carefully about how to transition important relationships with funders to the new leader.

Board Dos:

  • Form an onboarding committee—this should be a small group, ideally composed of members of the search committee and other board leaders, who can oversee the creation and implementation of the plan.
  • Establish goals and metrics by which the new CEO will be evaluated and schedule quarterly check-ins during the first year to discuss progress against those goals.
  • Make a plan and schedule for introducing the new leader to important stakeholders, particularly funders.

Board Don'ts:

  • Micromanage or undermine the new CEO—the board must resist the urge to "step inside" the organization or get involved in day-to-day operations during the transition; once the new leader is in place, it is important for the board to step back and visibly demonstrate their confidence in the new CEO.
  • Overload the new leader—to ensure that the new CEO has time and space for the proper onboarding, the board needs to make it a priority. This may require keeping some of the day-to-day duties off the new leader's plate at the beginning so they are not immediately drawn into "firefighting."
  • Make unrealistic promises to the outgoing CEO about their continued involvement—while every organization will differ in their transition needs, the board should think carefully before promising any outgoing CEO a seat on the board, office in the building or continued role.

Replacing an iconic leader

The departure of a founder or long-term leader can add additional complications to an already delicate succession. Boards must adapt their process to account for these factors:

Before the search kicks off

Acknowledge and reflect on the disruption: Recognize the significant impact the outgoing leader has had and that their departure presents challenges but also significant opportunities. Allow time and space for both grieving and celebration of what the outgoing leader accomplished, and remind staff that the organization’s mission and values are not bound to a single person.

Resist promising the outgoing leader an ongoing role: While it can be tempting to make such offers (particularly to founders for whom the organization can be a part of their personal identity), it actually leads to more confusion, as staff are unclear about the chain of command, and prospective CEO candidates will be less attracted to a position if they suspect they will be forever in the founder’s shadow.

During the search

Don’t seek Founder 2.0—or do a complete 180: Depending on the circumstances of the departure, it can be tempting to seek a carbon copy of the founder or their complete opposite. Instead, reflect on the organization’s strategy and future direction in order to determine the skills and competencies that will be required in the next leader.

Keep the founder off the search committee: While it’s important to acknowledge the influence and perspective of the founder, they should not sit on the search committee. Instead, look for other ways to enfranchise them throughout the process, including involving them in discussions about the ideal profile of the next leader.

After the appointment

Clearly communicate expectations and boundaries: It is critical that the new CEO’s authority is not undermined by the lingering presence of the founder. Articulate the expectations and timeline for the founder’s ongoing role (if any), and set clear boundaries— in most cases, the founder should not retain a seat on the board or an office down the hall.

Determine if and how the board’s role will change: Founder-led boards are typically less involved in setting agendas, fundraising and recruiting members—it’s important to reach consensus as to who now owns these responsibilities. '

Institutionalize relationships: Be thoughtful and intentional about how important relationships, particularly with donors, are transferred from the founder to the board or new CEO.

Additional Authors

Emily Meneer is the Global Knowledge Leader for the Nonprofit Sector. She is based in Boston.