Why and how to increase executive transition readiness

More often than not, when I hear boards and their executive teams discuss executive transitions, it’s almost always about one of three things: creating a document called a succession plan, hiring a new executive, or really hoping that an executive transition doesn’t happen anytime soon. It makes sense – if you’re on deck when an executive leaves, it means you have a lot of stuff to do – important stuff! – to successfully navigate the transition.

Much has been written about executive searches (including about how not to panic when you find out your executive director is leaving and building an applicant pool) But executive transition readiness is about taking a step back from these starting points and assessing and then investing in long-term organizational sustainability and stability.

Luckily, no one need recreate the wheel – this topic has been studied well and we have a pretty good idea of what’s most important to have in place so that no matter when leaders move on, an organization is likely to navigate the change successfully. That said, studies have shown that most nonprofit board and staff members are neither aware of, working on, nor confident in their transition readiness. Let’s change that!

Why readiness matters

The most compelling argument for readiness is what can happen if you aren’t ready when an executive departs. Perhaps you have your own horror story of a transition gone bad: a disruption in services, emotional trauma experienced by board or staff members, loss of credibility among the organization’s key stakeholders, or even having to close the doors. Investing in transition readiness makes sense because it will increase the odds that you will successfully weather the departure of your executive director (or any key organizational leader for that matter) whenever it may occur without any of these scenarios playing out. And because we typically can’t predict when people need to move on in their careers and lives, one should treat executive transition readiness like firefighters approach their work: continual investment in the skills and abilities needed to fight a fire, anytime, anywhere! OK, maybe not the perfect metaphor, but you know what I mean.

Readiness de-mystified

In 2008, the Annie E Casey Foundation contracted with CompassPoint to study succession planning and executive transition management in the nonprofit sector. The resulting report, “Building Leaderful Organizations: Succession Planning for Nonprofits”, has become a bit of a standard-bearer for understanding what organizations need to do to navigate ED transitions well. In their report they break down succession planning into three parts: strategic leader development that’s on-going and integrated throughout the organization; emergency succession planning that’s about ensuring key organizational functions are capable of continuing in the event of a sudden departure; and departure-defined succession planning, which lays out the steps for preparing to replace a departing executive director. The report also provides a Succession Readiness Checklist to determine where an organization may be lacking in its preparedness. I’ve adapted this over time based upon my experience with primarily smaller nonprofit organizations.

A readiness checklist

Strategic plan: a current (3 to 5 year) strategic plan is in place, as well as associated implementation work plans that are used to guide the organization’s activities in 12 to 18-month timeframes.

ED performance evaluation: an evaluation is conducted annually by the board, that assesses both general performance and professional development as well as achievement of strategic goals outlined in the strategic plan. This is not only important in keeping the current ED well-supported and accountable, but it also ensures that the board has a deep understanding of the current strengths and challenges of this important executive function 

Senior directors and managers: the senior directors and managers, based upon annual evaluations, are each at least satisfactorily performing in their jobs and work well together, embodying the following characteristics:

  • They have a positive team culture comprised of people who support one another and are able to reach decisions as a group efficiently and respectfully.
  • Responsibilities are shared across the leadership team – with senior managers and directors having input into major organizational decisions
  • They have the authority to make and carry out decisions within their respective areas of responsibility 
  • They have the ability to lead the organization in the absence of the ED (e.g. on extended vacations or leaves)

External stakeholders: At least one other staff or board member, in addition to the executive director, is involved in stewarding each of the organization’s most important external relationships, including:

  • Institutional partners and funders
  • Major donors
  • Community/business leaders 

Financial health: the financial systems for the organization meet or are approaching best practice standards, including having:

  • Written fiscal policies and procedures
  • Budgets and financial reports that are up-to-date and provided to the board and senior managers regularly and used to guide organizational decisions
  • A financial reserve of at least 3 months

Board evaluation: an annual board self-evaluation is conducted by the board, with evidence that the board is performing at least satisfactorily in its key governance functions, including:

  • Fiscal and legal oversight
  • Community stewardship and fundraising
  • Organizational policy development and strategic planning
  • Executive support and evaluation

Key organizational documents: exist and are understood and shared by the appropriate individuals in the organization:

  • a board-approved succession plan that describes the process for replacing the ED in the event of a planned or unplanned, temporary or permanent departure of the ED
  • operational manuals, up-to-date and regularly referenced documents for key operational procedures for the organization, including such things as org charts, board and staff job descriptions, accounting procedures, new hire procedures, etc.
  • documentation of key program activities, such as program manuals that are up-to-date, including fundraising activities and events

Get the ball rolling: what you can do at your next board meeting

It can be hard to know how to get started, but in fact, it doesn’t have to be that hard. Here’s a simple way that will take no more than about 45 minutes at your next board meeting (with follow-up after that, of course…)

Step One: Hand out the Readiness Checklist and give everyone time to read it (4 minutes)

Step Two: Break up into groups of 5 or 6 and assign a facilitator and a note-taker. (1 minute)

Step Three: Discuss the following questions (25 minutes): Let’s imagine we have a crystal ball and we can see that our executive director leaves the organization in the next 24 to 36 months.

  • What key deliverables or capacities do we need to develop in that time in order to be more ready than we are right now? 
  • What should the board be focused on in its work over this timeframe? 
  • How might the board need to change or grow to be ready to run a top-notch executive search process and effectively support a new ED, especially in the first year of service?
  • What can we start doing to ensure we minimize the loss of our biggest supporters during the transition?

Step Four: Re-group and share key takeaways per question (15 minutes)

Step Five: Next steps (after the meeting)

Collect the notes from each group. Have the executive committee (or other appropriate committee or willing individual) type up the notes and share them with the full board. Then determine the highest priority activities to integrate into the annual work plan. Be sure to monitor progress in 6-months and 12-months, re-visiting the questions and fine-tuning work plans accordingly.

Readiness, set, go…

I hope this article provides some useful frames and tools for getting your organization thinking and talking about executive transition readiness before a transition is upon you.