David Hutchinson from recruiting firm Hutchinson Group spoke at an event yesterday about succession planning for the CEO and other mission-critical roles. He shared a sobering statistic that only 34% of boards have a written succession plan. I have written about CEO succession planning before (Nonprofit CEO Succession Planning) but since it’s such an important part of risk planning for the organization, I thought it was worth spending a bit more time on. Here is what I learned yesterday:
Succession planning is leadership.
Succession planning is a display of leadership at its highest level. It is not just setting the direction and guiding people along but inspiring and focusing the organization and each individual toward their ultimate goals.
Succession planning can soften the impact of current demographic realities.
Baby boomers are retiring in record numbers. There is a looming talent gap because there are not enough people in the pipeline to fill all the vacant positions. If an organization develops internal candidates at all levels, it will save itself from having to recruit in a very tough market.
Succession planning is strategic.
The CEO has key relationships with funders, donors, staff and volunteers that need to be transitioned well. Whether the transition is planned or unplanned, internal and external relationships are an important part of achieving an organization’s strategic plan and need to be managed with care to avoid funding gaps or a run for the door during uncertain times.
Succession planning is a risk management issue.
David told a story about a CEO who decided he was going to retire in two years and then passed away suddenly two weeks later. The board cannot assume it will have the luxury of time to develop internal talent or do a fulsome search. It needs to be ready to hit the ground running and have an action plan in place.
Succession planning is measured in years, not months or days.
To develop talent at the senior level, candidates need time to take courses to strengthen weak skills, to move through various internal positions to gain a variety of experience and to acquire outside experience – such as serving on a nonprofit board!
Succession planning should take place at all levels of the organization.
From the mail room and reception to the CEO, a succession planning mindset helps staff reach their full potential and stay goal-oriented. If the board can foster this kind of culture the organization has a better chance of being successful.
Succession Planning Requires Trust
The board needs to ensure that discussions about succession planning are not threatening to the CEO. It is a good opportunity to offer the CEO training and development for their own career as well. On the other side of the table the CEO needs to trust that the board is acting in the best interest of the organization when developing a plan. The best time to start is when trust levels are high and things are going well. Trying to put a good succession plan into place during times of tension or poor relationships will be extremely difficult.
A question was raised about what to do if there are two excellent internal candidates since there is only one CEO position. David recommended that expectations be managed and counselled participants not to use this kind of scenario as a reason to avoid succession planning. If an organization is fortunate enough to have more than one candidate, there are creative ways to give the unsuccessful candidate new opportunities or challenges within the organization. If they choose to leave then it’s important to manage the recruiting and hiring process well so the organization gains an advocate and partner in another organization.
Succession planning is highlighted in Board Policy Manuals for good reasons. A board that spends time with the CEO on this topic each year will protect itself from external and unforeseen forces while creating a great place to work. This provides a solid foundation on which the organization can achieve its vision and mission.