NonprofitCEO Transitions

PRESENTED BY: NANCY K. RACETTE, PRINCIPAL &COO, DRI

SESSION OVERVIEW

- Learn how to prepare and set up an organization for a successful leadership change.

- Identifying key components to align Board structure with organizational culture.

- Understand staff roles in the transition and on boarding.

- Learn about organizational financial implications to transition.

- What do you want to accomplish?

◦ THINK ABOUT THIS:

10-15% percent of nonprofits hire a new executive every year. That’s 180,000 new executives per year!

CompassPoint and the Meyer Foundation identified that between 60 and 75 percent of nonprofit executive directors plan to leave their positions in the next five years.

Nonprofits are half as likely to have a succession plan

“In a 2011 Society for Human Resource Management survey, only 22% of all non-profit respondents noted they had a succession plan, compared to 44% of publicly-owned, for-profit organizations.”

… and about half as likely to promote from within

“Nonprofit organizations promote from within far less than for-profit enterprises (typically sourcing 30-40% of senior leaders through internal promotion versus 60-65% in the for-profit sector).”

The Bridgespan Group, “Building Leadership Capacity: Reframing the Succession Challenge”

Numbers point to poor alignment between organizational leadership, staff, and communities served.

➢9-15% Current Leaders are People of Color

➢21% Leadership Positions are Women

Key Elements of Costs of Executive Turnover

Financial Costs Productivity Costs

Recruiting (e.g., advertising, search fees)

Management/HR time spent recruiting/managing executive’s transition

Hiring Inducements (e.g. relocation) Productivity loss due to unfilled positions and ramp up time

New hire orientation (training, travel, coaching)

Lost expertise, institutional knowledge, organizational culture, morale

Payout to exiting leader (accrued time, bonus, etc.)

Lost relationships (funders/constituents)

Lost revenue Disruption to strategic direction

Will leadership development investments walk out the door?

“Recent for-profit research… suggests just the opposite. CEB, a provider of corporate best practices research and analysis, found that staff members who feel their organizations are supporting their growth stay longer than those who don’t.”

Libbie Landles-Cobb, Kirk Kramer, and Katie Smith Milway (The Bridgespan Group), “The Nonprofit Leadership Development Deficit,” Stanford Social Innovation Review

“Emerging leaders still may ultimately leave the organization to progress in their careers, but if an organization is able to delay that exit by months or years by offering greater development opportunities, they’ll reap the benefits in the meantime.”

Look Outside Look Within

Organization Needs a strategy shift or corporate turnaround

Organization is thriving

Succession planning and performance evaluations

Absent or inconsistent Consistent and transparent

Needed skills Not found within the organization

Specialized knowledge of organization or industry required

Organizational culture Open to multiple perspectives Hard to understand or fit into

Processes In place to support job training and onboarding

Few in place to support training and integration

To Hire Externally or Internally: Scenarios to consider

Strategic Questions

What kind of succession plan(s) does our organization need right now, based on where we are in our organizational life cycle?

What are our needs for leadership five and 10 years out? Are we consciously developing skills in our emerging leaders that align with those future needs?

When we hire (including the CEO), do our processes, and does our culture, truly encourage internal candidates?

Is our onboarding process as strong as it could be to ensure successful transitions and long-term relationships with our organization?

Strategic Questions

Do our assessment practices make individuals aware of their strengths and how to maximize them in their jobs?

Are there leadership career paths within our organization? Do we talk about them regularly?

Could we offer more “stretch” opportunities and challenging assignments to help people learn by doing?

Can we create a mentoring program, making it part of the mentor’s and mentee’s goals?

Leadership Transition Types

➢Identify Transition Type

➢Transition Type = What Issues

➢Key Challenges Addressed

Type 1 Sustained Success Key Challenges for the Board

✓ Organization is well led.

✓ Most or all components are performing well or at a high level.

✓ Transition discussions are around “we can’t stop moving forward”

✓ Resist the temptation to find someone just like departing CEO

✓ Every new leader wants to be able to leave their mark – what can they bring

✓ Focus on future not on past

✓ Look at responsibilities – is the job doable

Type 2 Underperforming Organization Key Challenges for the Board

✓ Organization may be performing poorly or may have peaked

✓ Funders, members, and staff may be wondering if the organization is doing enough or is relevant

✓ Transition discussions are around business model and/or operating methods

✓ Diagnose the problems, both real and perceived

✓ Address as many issues as possible prior to bringing the new CEO on board

✓ Review type of CEO needed and redo job description

✓ Prepare organization to work more effectively with a new CEO – Board and Staff

Type 3 Turnaround Key Challenges for the Board

✓ Organizational performance is on its way to failure

✓ There has been a decline in support or a surge in demand for services that the organization can’t meet

✓ Mismanagement or scandal involving the organization may have caused crisis in confidence or morale

✓ Stabilize the organization

✓ Establish interim leadership

✓ Improve staff morale

✓ Avoid seeking complete opposite of last leader, focus on the right set of skills and attributes

✓ Be honest and positive about the future

Type 4 First Hire Key Challenges for the Board

✓ Organization is a start up

✓ Organization is a newly merged association or nonprofit

✓ Organization is shifting from Volunteer or Founder led to first outside paid CEO

✓ Clarify the job

✓ Look for start up or “build” experience

✓ Manage expectations

✓ In addition to on boarding of new executive, create an exit plan for volunteer or founder

✓ Understand culture and culture change

Type 5 Hard to Follow Executive Key Challenges for the Board

✓ Organization is facing departure of a well-loved, respected and long term executive

✓ Organization may be in danger of losing other long time senior leaders

✓ Transition conversation are around performance expectations, relationships, structure

✓ Ensure the organization is stable

✓ Will the organization lose key relationships/funders

✓ Rethink governance role and board-staff relationships

✓ Focus on future direction and opportunity created by change

✓ Understand culture and culture change

Transition Plan

Difference between executive transition & succession planning :

➢Transition is an event that is timeline driven and ends once the new CEO is in the role and is oriented to the organization

➢Succession Planning should be ongoing and create an environment for organizational success

Transition Plan

Executive Transition plans are comprehensive documents developed with an eye toward the organization’s future.

➢Created as a team effort among leadership team

➢Presented to the Board for approval and participation

➢Create a transition committee/team

Transition Plan

Engage Staff and Think Creatively About Leadership

➢One to two staff sit on Transition Committee

➢Senior Staff conduct meetings, interviews, online surveys to gather input from constituents and other staff

➢Internal Candidate – yes/no

opportunity for greater leadership roles

Transition Plan

Make the Transition a Defining Moment

➢Who would be the ideal leader over the next 5-10 years

➢What do staff do well now, what could you be doing better and what do you want to do more of

➢What are the “must haves”

Transition Plan

Clarify Staff Role in Transition with the Board

➢Staff should help define the most important attributes of a new leader

➢Provide an interim plan for keeping the organization operating at peak efficiency during the transition

➢Generate revenue for enacting organization-strengthening changes to set up a new leader for success

➢Create an onboarding plan to introduce the new leader to stakeholders both internal and external

Transition Plan

Create On Boarding Timeline and Activities

➢The timeline could be developed with activities and assignments as follows:

Activity Staff Lead

Board Lead

30 days 60 days 90 days 12 Months

Transition Plan

On Boarding Activities

Divide the Activities into sections such as:➢Welcome and Orientation➢Visibility➢Stakeholder Engagement➢Board➢Community➢Meeting Performance Expectations➢Mentoring and Support

Transition Plan

On Boarding Activities

Welcome and Orientation

➢HR Paperwork

➢Individual Meetings with Staff Leadership

➢Welcome Breakfast all staff

➢Provide all Financials and prepare finance briefing

Transition Plan

On Boarding Activities

Visibility

➢Create key messages and announcements

➢Create digital announcements for social media

➢Send announcement to key publications

➢Schedule appropriate public speaking opportunities

Transition Plan

On Boarding Activities

Stakeholder Engagement

➢Meeting with top funders

➢Calls with funders

➢Donor/Member Reception

➢Member Video Meetings/Calls

Transition Plan

On Boarding Activities

Board and Community

➢Provide Committee Descriptions, set up calls with Committee Chairs

➢Board Dinner(s)

➢Individual Calls with members

➢Introduction to key community groups

Transition Plan

On Boarding Activities

Meeting Performance Expectations/Mentoring

➢Set clear and measurable expectations

➢Schedule Board Chair Check in calls

➢Support new CEO internally and externally

➢Assign a Board Mentor and determine goals and objectives

Final Comments and Questions