Leadership Change: Here's How to Make It as Painless as Possible
Running a successful nonprofit is difficult enough under ideal circumstances, let alone when the organization embarks on a change in leadership. Yet as we all know, staff turnover, including at the CEO level, is especially high in the nonprofit sector.
The reasons vary — everything from stagnant pay grades to improper conduct, health issues, new strategic direction and the desire for something new. But no matter the reason, leadership change is an all-too-common occurrence for nonprofits in particular, and if a charity is not prepared, it could cause a lot of stress, pain and unnecessary turmoil.
To avoid the common pitfalls that often come with a leadership change and make the transition as painless as possible, nonprofits should carefully consider the following.
The succession plan
The first order of business for any organization undergoing a change in leadership is to never be caught off-guard.
“The most important thing nonprofits can do to ensure a successful change in leadership is to have a succession plan in place,” says Steve Nardizzi, CEO of the Wounded Warrior Project.
Given the turnover numbers at nonprofit organizations, you’d think having a succession plan in place for the president and/or CEO would be standard operating procedure. However, this is often not the case, says Atul Tandon, founder and CEO of the Tandon Institute.
“We find that almost two-thirds of boards [we work with] don’t have a succession plan in place for the current CEO,” Tandon says, whose institute works with nonprofits on strategy, solutions and staffing.
That’s a vital mistake, as Nardizzi can attest to. When he took over as CEO for Wounded Warrior Project, the organization did not have a succession plan in place, which made it difficult as a young, growing organization to keep things moving quickly. Thus, the decision on a new leader did not go at a swift pace, and the organization learned the hard way that it needed to be better prepared in the future.
The best succession plans are the result of a dual effort. The board of directors and the current CEO should team up to lay out a succession plan, Tandon says. That means thinking through what is needed in a successor.
The succession plan should have clear objectives and goals — long- and short-term — and include a detailed job description. It should lay out the steps for transition when there is a change at the top, and the plan should include what the organization needs and expects three to five years down the road in addition to immediate concerns. It should also lay out potential internal candidates or the qualities internal candidates should possess to be considered as future leaders.
The plan should be so airtight that the organization can run efficiently no matter the state of the C-suite.
“A very important quality, and what I try to do, is to make sure the organization runs smoothly if the CEO wasn’t there,” says Lucy Morillo, president and CEO of the Miami Children’s Health Foundation. “… Some organizations fall apart when leaders leave. Good organizations run by true leadership are set up to run without the leader.”
It’s the job of the board to perform the search for the ideal candidate. Many times, that person is in the organization already.
“Insiders with the right capabilities have historically been more successful than bringing in an outsider as a new leader,” Tandon says.
“Studies have shown that compared to internal candidates, outsider CEOs have more than double the turnover rate, the turnover of other senior management increases dramatically and the organization is less likely to perform successfully relative to its peers,” Nardizzi adds.
There are several reasons this is true. For starters, outside candidates lack familiarity with the organization and the culture, which can cause problems. That results in a steeper learning curve to understand the organization’s strategy, programs and operations. Couple that with the time it takes to build relationships with board members and key staff, and outside candidates are more than a step behind.
However, that does not mean a nonprofit should neglect potential CEOs outside the organization. The ideal candidate very well may not be right underneath the board’s nose.
“The search for a new CEO should always start with culture and strategy, in that order,” Nardizzi says. “In my view, the two critical components to organizational culture are mission and core values. Ideal candidates will be both dedicated to the organization’s mission and aligned with its core values.
“If they’re not, they will struggle to gain the buy-in and commitment they need for their team to realize their vision and may make decisions that are not in line with the organization’s purpose,” he adds.
If your organization has the budget, both Nardizzi and Tandon suggest using an outside search firm to help with an executive search. In fact, if you can use two independent resources to help the board — a search firm and an internal search committee or third-party background firm — it’s even better. And don’t forget to include senior staff members in the search process. They can offer valuable insights.
Ultimately, however, the decision is the board’s to make, and the board must hold itself accountable to land the most qualified candidate. The board must choose someone whose passion and priorities match the ideals and mission of the nonprofit, and it must take into consideration what it envisions for the organization in the future. Then the board must make sure the people it interviews meet the needs of today and tomorrow … and it should never rush into making a decision.
Onboarding … and offboarding
Once a new CEO is identified and hired, only half the battle has been won.
The most painless leadership transitions occur with a strong onboarding plan for the new CEO. Often, the most important step in the onboarding process is making sure there is an offboarding plan in place for the outgoing CEO. In an ideal scenario, there is overlap so the new CEO can sit down and learn the lay of the land from the outgoing leader. That way, the new CEO can get firsthand advice to ease the burden.
“It’s unfortunate, but more than half of CEO transitions are not well-managed in my mind. The current CEO drops off, and a new one drops in,” Tandon says. “Nonprofits are not like a Navy ship, where one commander can just jump in because they all follow the same protocols.”
The first 90 to 100 days for the new CEO are the most critical for success, Nardizzi and Tandon agree. The first 100 days are spent learning the basics of the organization, especially crucial for someone new to the organization. The next 100 days are spent in a deep dive of the what exactly the CEO is there to do — where he or she came from and where the organization would like to be. Then, the next year is when the new CEO can really begin to make an imprint on the nonprofit.
Nardizzi suggests the new CEO begin onboarding with the board of directors, meeting individually with each board member to gain insights into board members’ interests and expectations, as well as meeting with the entire board regularly to establish priorities and discuss progress over the first 90 days.
The new CEO should also spend significant time with senior management to “learn their management styles, gain perspective on what’s working and not in their departments, get to know what motivates them personally and professionally,” Nardizzi says.
“More time should initially be spent asking than telling. If you don’t understand the how and why things are working now, you’ll lack the buy-in and support you’ll need to affect positive change,” he adds.
Then, the new head should meet with other members of the organization to create an open dialogue and foster a true culture of philanthropy. The key is to promote collaboration, not stifle the systems already in place.
“You want to lead a group, the organization and the staff with minimum disruption,” Morillo says.
That means avoiding what Tandon calls the “white knight attitude” — coming in with all the answers before even understanding what the issues are.
It helps to have a mentor in the organization as well, whether it be a board or staff member, as a sounding board and teacher.
The more help within the organization the new CEO can solicit, the more painless the transition will be. Once again, it all comes back to preparation.
“Good endings have good beginnings,” Tandon says. “… Most successful CEOs were there in their own time thinking about what they’ll leave behind at the organization. Find that kind of person to lead, and you know they’ll be successful and the organization will be successful.”