How to Make Succession Strategic
Executive transitions can be uncomfortable for boards and CEOs alike. But they're also opportunities to think about an organization's future.
Nonprofits tend not to spend a lot of time talking about CEO succession, and there are some obvious reasons for that. No successful CEO wants to contemplate leaving, and no board that’s comfortable with its current CEO wants to dedicate its already scarce resources to thinking about a problem where none is seen to exist. After all, it’s hard enough to get a board to focus on the strategic priorities it’s working on—which the CEO likely had a hand in.
But perhaps that’s just the problem: Done right, CEO succession ought to be considered a strategic matter.
That’s a point that emerges in “Lessons From the Front Line for Nonprofit CEO Successions,” a article published last month in the Stanford Social Innovation Review. In it, authors Eben Harrel and Gali Cooks discuss their research into the (lack of) succession planning in nonprofitdom. Though their focus is on Jewish nonprofits, the findings are broadly applicable to nonprofits and associations.
First, they note that there are inherent risks in not addressing CEO succession: “Many CEOs outstay their welcome, either stymieing the ascension of a talented heir or dropping their level of performance and effectively retiring in—instead of from—the corner office,” they write.
In light of that, boards would do well not just to think about CEO succession, but to think about it in a spirit of support and transparency. It’s not a way to push a current CEO out of the position, though it may prompt a longtime executive to think about his or her role in an organization. With one group, Harrell and Cooks write, the CEO saw the wisdom of a transition and helped support the installation of a talented COO as her replacement.
Even if the succession conversation doesn’t directly lead to the CEO thinking about leaving, it can break open an important question: What does your organization need from its leadership? The authors point to the example of the nonprofit Bend the Arc, where a leadership vacancy prompted the board to encourage a woman COO, Stosh Colter, to apply for the job. Research shows that women can be reluctant to put themselves up for executive roles, and in this case Colter was actively courted. “The board’s stroke of genius was identifying Cotler as a possible CEO even before she saw the potential herself,” they write.
Association executives who’ve taken the lead on diversity know that women and people of color often benefit from that kind of direct engagement, and there’s no need to wait for a CEO vacancy to pursue it for staff and volunteer leadership.
But diversity is just one area boards would do well to consider as they talk about CEO succession. As Associations Now noted last month, a new report from MIT Sloan Management Review found that many current executives lack the leadership mindsets that will be increasingly important in the future. For instance, only 9 percent of the executives surveyed said they “had the necessary skills to succeed in the digital economy.” And the study found a general lack of engagement with more collaborative and non-hierarchical leadership structures as well.
None of which is to suggest that the succession conversation is intended to lay bare CEOs’ shortcomings with the goal of hustling them out the door. Think of it more like a performance review with a wider lens: It’s identifying not just skills gaps that the CEO might consider looking at, but the elements of successful leadership that the organization might need down the line. It’s an uncomfortable conversation no matter how you look at it, but it’s also one that falls under the duty of care—the obligation that boards have to look after the organization’s long-term success.
Does your organization have a CEO succession plan in place? What worked in making that conversation happen? Share your experiences in the comments.
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