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Nonprofit Executive Succession Planning
An Israeli Perspective
ISTR 2014, Muenster
Shalom I’m Gil Bozer
In the beginning
• A key player in the economic & political
arenas.
• Growing size and importance in the Israeli
economy as well as in civil society.
• Increased focus on effectiveness & efficiency.
Israel Third Sector in Numbers
35,000 1,600 390,000
53 30 16 30
Israel Third Sector in Numbers
35,000 1,600
1. # of nonprofits
registered in
Israel 390,000
16 30 53 30
Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010
Israel Third Sector in Numbers
35,000 1,600
2. # of new
nonprofits every
year
390,000
30 53 30 16
Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010
Israel Third Sector in Numbers
35,000 1,600
3. # of
employees
390,000
30 53 30 16
Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010
Israel Third Sector in Numbers
35,000 1,600
4. Annual
turnover in
Billions (USD) 390,000
53 16 30 30
Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010
Israel Third Sector in Numbers
35,000 1,600
5. % of public
finance from
total sources
30 53 16 30
390,000
Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010
Israel Third Sector in Numbers
1,600
6. % of Self
income from
total funding
sources 35,000 390,000
30 53 30 16
Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010
Israel Third Sector in Numbers
35,000 1,600
7. % of
donations from
total funding
Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010
390,000
30 53 30 16
A deliberate and systematic effort by an
organization to ensure leadership continuity
in key positions, retain and develop
intellectual and knowledge capital for the
future, and encourage individual
advancement.
Source: Rothwell, 2001, p.6
What’s this all about ?
Importance of Succession Planning
Sustainability of an organization requires a
succession of high performers to fill key positions
and to meet future talent needs.
Evidence suggests that succession
plans are associated with higher
organizational performance via
smoother transitions
Organization can
rise to the height of
its people
Relevance increases with the size of the
organization…
“When you look at the fact that over 64 million workers will exit from the workforce by year 2010, this puts employers in a talent deficit
dilemma”
Bea Fields, “The Top 10 Strategies for Attracting Gen Y as Employees into Your Company
The
managerial
challenges of
the executive
leadership role
• Executive directors (EDs) have to maintain the
financial stability of their organizations (fund-raising).
• EDs have to manage the work of volunteers, who are
not employees in the conventional sense.
• EDs function in a vulnerable position between their
boards of directors and their organizations’ staff.
• EDs are pressured to satisfy the demands and fulfill the
expectations of multiple stakeholders.
The unique challenges of integrating the realms
of mission, resource acquisition, and strategy Herman, 2010, 157
Method • Data was collected using The Global Survey of
Executive Succession (GSES) in Nonprofit
Organizations (Santora, Sarros, and Cooper, 2009).
• 9 succession planning indicators were to assess the
extent to which our participant nonprofits plan
organizational transference of executive authority.
• The questionnaires were distributed to nonprofit
organizations identified through a range of Web sites
focused on the charitable and nonprofit sector.
• 100 questionnaires were received from Israeli EDs.
Profile of Executive Directors N % Mean SD
Gender
Male 38 52.8
Female 34 47.2
TOTAL 72 100
Mean Age (in years) 76 46.4 9.1
Educational Level
High School 1 1.4
Certificate/Diploma 2 2.7
Bachelor’s Degree 17 23.3
Postgraduate Degree 53 72.6
TOTAL 73 100.0
Founder of Organization
Yes 15 20.5
No 58 79.5
TOTAL 73 100
Tenure as ED in current organization (in
years)
73 6.4 5.1
Profile of NPOs N %
Service Type 77
Labor organizations 1 1
Environment 1 1
Civil society, law, social change, and politics 21 27
Health 6 8
Education and research 21 27
Philanthropy 2 3
Welfare 21 27
Culture and leisure 2 3
Infrastructure organizations 2 3
Full-time employees 75
1–5 21 28
6–10 10 13
11–20 9 12
21–30 11 15
31–50 6 8
51–100 6 8
101–200 5 7
>200 7 9
N % Mean SD
2011 operating budget
(in millions) 69 4.8 11.1
$100,000 or less 3 4
$100,001–$250,000 11 16
$250,001–$500,000 9 13
$500,001–$1,000,000 11 16
$1,000,000–$2,000,000 9 13
$2,000,001–$5,000,000 9 13
$5,000,001–$10,000,000 10 14
$10,000,001–$25,000,000 4 6
More than $25,000,000 3 4
Funding profile 76
Primary source government funding 13 17
Primary source donations 26 34
Primary source philanthropy 9 12
Primary source fund-raising 16 21
Primary source self-income
(membership/activity/service fees) 9 12
Combination 3 4
Profile of NPOs
Findings
• Most Israeli nonprofits do not plan for executive
succession.
• Only a third of the nonprofits have a policy regarding
internal applicants for senior management positions.
• 36% of respondents reported that their board is likely
to recruit an internal replacement.
Findings
• Previous EDs have been internal in only 34% of the
respondents to that indicator.
• 21% of the EDs reported that they advise their boards
of directors on succession planning often or always.
• 20% of the Eds are involved with board in the selection
process of their incumbent.
Succession Planning Indicators Succession Planning Indicators N n %
1. The organization has a succession plan. 70 11 16
2. The organization has a formal (written) succession plan. 70 5 7
3. The organization has a deputy. 73 32 44
4. The deputy will replace the executive director. 73 9 12
5. A policy exists regarding internal applicants for senior
management positions.
72 24 33
6. The board is likely to recruit an internal replacement. 67 24 36
7. Previous EDs have been internal. 52 17 34
8. The ED always or often advises the board on succession
planning.
62 13 21
9. The ED is involved with the board in the selection of an
incumbent.
64 13 20
Discussion
• Results provide warning data about the issue of
internal succession and manifest the lack of succession
planning structural practices in the Israeli third sector.
• Findings suggest that the role of deputy director in the
participating nonprofits is not perceived as crucial for
the governance of the organizations.
• It is evident that nonprofits do not look inside their
own organization for executive replacement.
Discussion
• These results echo those of previous studies of U.S.
nonprofit organizations (e.g., Froehlich et al., 2011;
Santora et al., 2011).
• Creating a strategic leadership development plan is
one of the greatest challenges for nonprofits which are
dependent on a single leader and cannot develop
prospective successors from within the organization.
• The significance of executive transitions will become
more urgently felt as the large baby-boomer
generation is now reaching retirement age.
You can predict the future by inventing it…
Future Research
• Further research on nonprofit succession issues at the
board level merits further consideration.
• Conducting comparative cross-country analyses to
determine similarities and differences among nonprofit
EDs and boards to determine their actions on
succession issues.
• There is a compelling need for nonprofit governing
bodies to connect succession to strategy. This will
allow the organization, its staff, and its constituents an
equal share in the benefits of a coordinated strategy.
Thank You!