An implicit dedication to the mission drives most social impact leaders. For founders, that commitment is often existential – a blurring of professional and personal vocation. This energy can inform almost every aspect of decision-making and spur extraordinary impact. Yet, as the founder – or a similarly long- term, iconic leader – becomes the face of the organization, their individual priorities, preferences and operating norms can become inextricably bound to the organization itself.
Good governance mitigates this, but when it comes time for a founder transition, the organization may find itself at its own existential inflection point. What is the organization’s brand, identity, relationship ecosystem, and voice without the founder?
Nonprofit CEO turnover declined 31 percent in the first half of 2020 compared to the previous three-year average, according to analysis of CEO transitions reported in the Chronicle of Philanthropy. This trend was likely driven by the uncertainty of the pandemic prompting many organizations into a holding pattern. However, as organizations find their footing in our new reality, we are now seeing increased CEO turnover.
Bets on stability in the early days of crisis were made thoughtfully in response to the extraordinary uncertainty of the moment. Yet, as time goes on, some organizations are yielding to the recognition that the leadership that has steered an organization towards the present moment is not necessarily the leadership that will get it through the next set of challenges. For organizations facing the departure of a founder, it is now more important than ever to ensure that the transition is well planned and thoughtfully executed.
NUMBER OF NONPROFIT CEO TRANSITIONS
January - June |
|
---|---|
H1 2017 |
205 |
H1 2018 |
246 |
H1 2019 |
193 |
H1 2020 |
148 |
In our experience working with nonprofits around the globe, we find five common areas of risk when these organizations seek to replace a founder or long-term iconic leader:
Engagement from donors, employees, volunteers or other stakeholders can be dependent on the charismatic draw of the iconic leader, leading to loss of funds or other forms of support
The organization’s image and brand is tethered to the iconic leader, leaving the organization struggling to define itself to the public
Boards of founder-led organizations may have deferred many of their fiduciary responsibilities to the founder and must develop new governance “muscles”
Decision rights and operating norms may have evolved around the preferences and style of the founder, but are not appropriate or sustainable for the next leader
Despite these very real risks, many organizations do not amend their approach when setting out to replace a founder, instead adopting the same processes and tactics of any other search for a new chief executive. Organizational inertia, or a fear of offending the founder, leads many organizations to avoid engaging in proactive succession planning until it is too late. As a result, few organizations consciously address these potential risks in advance, creating significant challenges for the organization in general, and the new leader in particular. Efforts to mitigate these risks are obviously motivated by the self-interest of the organization and its remaining stewards, but there is a moral motivation as well - if an organization falters or fails following the departure of an iconic leader, the vulnerable communities that they serve will ultimately suffer.
A founder’s legacy depends not only on what they have accomplished and built over their tenure, but also upon how the organization evolves after their departure. The best way for a founder and their organization to protect that legacy is to plan for and support a well-governed succession.
An effective founder succession requires the active participation of three important stakeholders: the board, the departing founder, and the incoming successor. Each has an essential role to play in ensuring a smooth transition that acknowledges and protects the founder’s legacy, while setting the new leader up for success.
In some cases, the board chair will lead the succession planning and transition process, but in most organizations this role may be filled by a specially-appointed succession and search committee. In either case, the board leadership tasked with facilitating the transition should consider the following actions at each stage of the process:
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.
Engage stakeholders to understand needs: Create a collaborative process through which diverse stakeholders — including staff, volunteers, beneficiaries and donors — can share perspectives on the current strengths and challenges of the organization, its future strategic direction, and the leadership that will be required to execute that strategy.
Resist automatically promising the founder an ongoing role: While it can be tempting to make such offers — particularly to founders for whom the organization is a part of their personal identity — the ongoing role of the departing founder can be one of the trickiest parts of the transition to manage, and should not be determined reflexively or without considerable board deliberation.
Don’t seek Founder 2.0 — or do a complete reversal: 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 is 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.
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. That said, we do not mean to suggest dismissal or disregard for the founder; they should be engaged productively for onboarding ahead. See box on page 7 for more guidance as to how to think about the founder’s post-transition role.
Determine if and how the board’s role will change: Founder-led boards are typically less involved in setting agendas, fundraising and recruiting members, so it is important to reach consensus as to who now owns these responsibilities. See box below for more details on strengthening the board’s governance responsibility.
Institutionalize relationships: Be thoughtful and intentional about how important relationships, particularly with donors, are transferred from the founder to the board or new CEO.
Visibly support the new leader and their agenda: The successor is likely to make changes, some of which may frustrate senior staff or other stakeholders; the board must own their decision in appointing the new leader and visibly support these changes.
STRENGTHENING GOVERNANCE MUSCLES FOR FOUNDER-LED BOARDS
It is common for founder-led boards to be composed of friends of the founder and other individuals who may be less inclined to challenge the founder’s wishes. As the organization prepares for transition, it is vital that the board look closely at its own governance function, and ask whether any work is needed to strengthen its ability to serve as fiduciary stewards.
Common questions boards should ask themselves:
Have we planned for our own succession? While board turnover is natural and necessary, the organization needs some degree of continuity while it adjusts to the new post-transition leadership. Board members should be upfront about their plans to serve, so that board succession can occur gradually and in response to the changing needs of the organization.
Do we have clear rules as to how we govern? It may have been a while since the board reviewed its bylaws, some of which may need to be amended to reflect the post-founder reality.
Is our board culture conducive to working effectively with the new CEO? Founder-led boards are notoriously deferential to the chief executive. This means the board may need to rethink its operating norms and cultural dynamics to ensure that it can serve its primary governance role effectively, and that there is room for the next CEO to bring in new perspectives.
It can be particularly hard for founders to relinquish control of the organizations they have built, leading some to seek a post-transition role or other means by which to stay involved. Regardless of their continued level of involvement, departing founders should keep the following best practices in mind as they prepare for and navigate their transition:
Be honest and realistic when setting boundaries: Take time to reflect on the post-transition role that can best serve the mission, taking into consideration the strengths, opportunities and needs of the organization as a whole as well as the future leadership team. Founders must be honest and realistic with themselves about what they can commit to, as well as what is in the best interest of their successor’s ability to lead.
Empower, rather than encumber, the board: This is the moment that “governance” truly transitions from the founder to the board. The board may not be used to contradicting or disagreeing with the founder or making decisions without them. The experience should not be contentious, but rather a conscientious enabling of good governance. The founder can be a generous and enfranchising part of this.
Provide the gift of expertise: Educate and inspire the board and search firm on the culture, opportunities, challenges, strategy, business and operational model, and more. This education should occur upfront via a careful needs assessment and taken into profound account (but not as the reflexive mandate) for the search committee’s understanding of the role, competencies, and search strategy ahead.
Respect the search committee’s work: Express confidence in the process to constituents, respect the integrity of process, enable space and offer support (but not pressure) on the committee. The committee will ideally be spending energy on process and outcome, rather than managing egos.
Be “the closer”: The committee may call upon the founder as finalist(s) are selected. The founder is best positioned to “sell” the opportunity and demonstrate that they will be a productive partner across the transition ahead.
Create a period of distance (yet stay connected): Regardless of whether the founder remains involved in any capacity after their transition, it is important that the successor is given time to establish their authority and dynamics with their new stakeholders and team. While the founder may eventually resurface, this initial period of visible distance is vital for enabling the successor to emerge from the founder’s “shadow”. Yet founders should still “be there” as needed, for incoming leadership and the board to ensure smooth and substantive transition.
Reinforce the boundaries that have been set: While the board and founder will have reached consensus as to the boundaries that will govern any ongoing role, not everyone in the organization may agree with or abide by those terms. It’s the founder’s job to shut down staff who go behind the successor’s back and reinforce that the successor is now in charge.
Proactively transition external relationships: Ideally the founder will have begun to institutionalize donor relationships as soon as they began planning for their succession, but once their successor is officially appointed the founder should engage proactively in transitioning relationships to the new CEO, and help to build trust in their leadership.
DESIGNING THE FOUNDER’S POST-TRANSITION ROLE
While convention has long held that founders must make a clean break with the organization, our experience has shown that there is no “one size fits all” solution. Regardless of the specific nature of their ongoing role, all involved should abide by a few guiding principles:
Allow for an initial period of distance to give the successor time to establish their authority and working relationships
Transition donor relationships early and intentionally. Once transitioned, the founder should defer to their successor to maintain the relationship
Limit the founder’s new role to very specific objectives or parameters, and clearly define what the role is and is not
Do not allow for back-channeling. Change is hard. Sometimes it is as hard for the staff as it is for the founder. If staff members come to the founder with complaints (assuming not ethical or egregious), they should resist enabling or solving, and defer back to the new CEO. A founder’s confidence in new leadership sets the right boundary and leadership culture. “Letting go” can be the hardest part. The founder may never “let go” of the mission, but must relinquish leadership control. The staff may always carry the founder’s legacy forward, but must also “let go” of the founder-as-leader.
Don’t try to be the founder – be yourself: Feel confident in the fact that you were hired because you are seen as the right person for what comes next. Do not try to emulate the founder’s style or priorities, but rather stay focused on your agenda for the organization and the type of leader you want to be.
Maintain boundaries: Respect who the founder is and what they have accomplished – but be strong enough to say “this is what I need and this is where we are going” when necessary.
Nurture external relationships: While the sheer number of new stakeholders with which to engage may be overwhelming, be thoughtful about relative priorities to maximize the impact of your time and attention. Stay particularly close to long time funders who may have been looking for an excuse to disengage once the founder departs.
Reset relationships with the senior team: Invest time in building relationships with new direct reports so that they understand the new vision and where you seek to take the organization. Recognize that for many, your succession presents both opportunity and risk. They may also be looking to come out from under the founder’s shadow. Incoming leaders will be tempted to focus their attention on external stakeholders, particularly significant donors, but do not prioritize external over internal.
Remember that the “what” and “how” of change matter equally: As a new CEO, you may have identified the operational and strategic priorities, but it’s equally important to define and explain the cultural changes that will enable the transformation to materialize. Relationships and influence matter. Even if change is the mandate, bring the institution along – “evolution, not revolution” tends to pace and posture the transformation in ways that the organization can absorb rather than reject.
The unexpected loss of a founder — whether due to death, personal circumstances, or termination for cause — is a traumatic event. Board members, who are often personal friends of the founder, may need to process their grief or the difficult professional decisions that were made. Staff may feel particularly unmoored, particularly if blindsided by the news due to legal constraints on what the board can and cannot reveal. Social media and public scrutiny can compound this pain.
For these reasons and more, it is vital that the board have in hand a succession in-a-crisis plan that designates an interim chief executive in the event of an unplanned transition. Depending on the organization, this may be the board chair, a senior staff member, or even a trifecta of staff members – the point is to have already identified someone who is familiar with the organization and its work. Without this predetermined plan, organizations may be forced to appoint someone from outside the organization, which can be even more traumatic as the new appointee comes up to speed. Having a “plan B” in place ensures that in moments of intense grief and passion, the board and executive leadership are making dispassionate and informed decisions.
Once the organization is ready to launch the search for a permanent successor, the search committee must ensure that it is devoting attention to gathering the institutional insights that will guide the search strategy and eventual candidate requirements, while also facilitating organizational healing. Without this concerted dual effort, the committee risks prioritizing the wrong requirements or setting the successor up for failure. Particularly in the case of a founder’s death, it is common for stakeholders to put even more of a “halo” around the founder than may have already existed. This can blind the committee to the genuine needs of the organization, or the necessary qualities that the founder lacked. In cases where the founder has been asked to leave, organizational dysfunction may have been building for quite some time, causing stakeholders to distrust the board members tasked with leading the succession. In these instances, it is important that the committee acknowledge the need for healing and take steps to prove their commitment to authentic change.
While founder departures inevitably result in some degree of disruption to the organization, they should be approached as an opportunity. By acknowledging the unique circumstances and adjusting their process and approach accordingly, boards and founders can facilitate a smooth transition that both celebrates all that the founder has accomplished and sets the incoming leader up for success. In doing so, all parties can help preserve and protect the founder’s legacy and ensure that the organization continues to effectively advance its work in support of the mission.
AUTHORS
JAMIE HECHINGER leads Russell Reynolds Associates’ Global Social Justice practice. She is based in Washington, DC.
EMILY MENEER leads the Social Impact sector knowledge team. She is based in Portland.