Succession Planning: Mitigate the Burn for When the Torch Is Passed

Across the spectrum of nonprofit boards all share a few essential responsibilities. These include ensuring that the organization stays focused on its mission, has a strategic plan guiding its priorities, is in good financial condition, and has a positive culture. 

The organization’s leadership impacts all of these areas, so the board’s role is also to ensure that an ethical and effective CEO is leading the organization.

Succession Planning Search

While nonprofits often pride themselves on a “broad” or “national” search for a CEO or other key positions, far too many fail to allocate resources into what often is a much more effective procedure — succession planning. 

“Succession planning is the process of identifying the critical positions within your organization and developing action plans for individuals to assume those positions,” according to the University of Washington.

CEO succession planning requires healthy, confidential and frank conversations between the CEO and the board on when the CEO will retire or seek other opportunities. Avoiding this conversation could mean a disconnect between the board and the CEO. 

“There are different levels of succession planning,” Sally Bryant, president and CEO of Bryant Group, an executive search firm for mission-oriented organizations based in Irving, Texas, said. “One is a CEO taking someone under their wing, and the CEO and board taking time to ensure that the person has the knowledge and experience to be the CEO.” 

Internal Development for Succession

A second path is mentoring others in your organization so that they can step into key roles when needed. 

“If an organization is constantly having turnover and not preparing people, you are not having consistency,” Bryant said. 

While it might make sense to hire from outside the organization to make radical changes or resolve conflict when things have gone haywire, developing and promoting people from the inside often is the best approach, Tommy Thomas, founder of JobfitMatters, a Franklin, Tennessee-based executive search firm for Christian nonprofits, said. 

“There is pride, in a good sense, that the organization has developed people from within,” Thomas said. “One-third to half of our candidates end up being internal. We counsel clients to throw internal candidates in the deep end and see if they can survive a national search.”

Thomas advised everyone on the senior leadership team to have a successor written down somewhere.

“That would at least give the board or CEO a recommendation,” he said.

Joe Scarlett, former chairman and CEO of Tractor Supply Company and founder of the Scarlett Family Foundation, also recommends ongoing succession planning that paves the way for internal opportunities for promotion.

“If people think they aren’t going anywhere, they are less engaged,” Scarlett said. “If you work for an organization with opportunities to get ahead, it means everything. If you think there is not an opportunity, you tend to not be such a great employee and begin looking.

“When you go outside to hire,” he added, “you think you know what you are getting, but sometimes you hire a counterfeit and don’t realize it until it is too late.” 

He added that organizations are twice as successful in promoting a CEO from within as hiring from outside, Scarlett said. When it comes to employees, nonprofit leaders should always ask themselves, “What is our plan to help them get ahead?” 

“We tried to prepare people first so they could move in and be successful,” Scarlett said. “Throwing people in too quickly can undermine the transition.”

Succession planning is an important part of risk management, Frank Parsons, principal of Parsons Consulting, a Nashville-based executive search consultancy, said. He suggested that organizations need a 12- to 18-month blueprint for effective succession planning, and that, when possible, hiring from within is often the way to go. 

“The size of a nonprofit can limit its ability to have succession planning,” Parsons said. “Smaller organizations have less capacity to cross-train. But with internal candidates, you know their strengths and weaknesses.”

The quality and commitment of a nonprofit’s staff has a direct impact on how successfully the organization’s mission can be fulfilled. Therefore, it’s incumbent on nonprofits of any size to have purposeful plans to help each team member fulfill their potential and to outline procedures for succession planning, including when it will include a search process. 

While many nonprofits may lack the capacity for planning, most firms that conduct searches also can be engaged to guide succession planning. 

Thoughtful and organized succession planning indicates a commitment to stable leadership that engenders public trust and resonates with many donors. 

Donors will look to a nonprofit’s CEO and senior staff to gauge the organization’s stability and its ability to fulfill its mission. Some donors will want a personal relationship with the CEO before making a significant gift. Planning for the inevitable transitions and investing in your people will strengthen your performance and culture, and give donors greater confidence that your organization can deliver on its mission and plans.