A CompassPoint and Meyer Foundation study in 2011 found that only 17% of nonprofits surveyed had a documented succession plan. However, 67% of executive directors anticipated leaving the organization within the next five years. Further, the study found nearly a third of current directors (31%) had tenure of fewer than three years, which was more than the 27% of executives who had ten or more years of experience.
Clearly, as the economy continues to improve and the nonprofit sector evolves with the demands of the 21st Century, there is a great need for succession planning in order to groom and prepare new leadership. Today’s funders want to see sustainable nonprofit operations, and leadership planning is a key component for ensuring the viability of an organization.
5 Essential Steps to Succession Planning
When embarking on succession planning, nonprofit leadership need to bear in mind the following essential elements of the process:
Leadership Planning Extends Beyond the Executive Director – Oftentimes, nonprofit organizations that do consider succession planning think of only the executive director. However, a solid and comprehensive succession plan needs to include the executive director and key senior management staff. Organizations have been in situations where an unexpected legal or media crisis has left the organization without key leadership, or they have experienced the passing or surprise resignation of an executive director or other senior manager with no “second in command” in place. These situations obviously place the nonprofit at a significant disadvantage.
Salary Matters – With organizations who have an executive director or key senior management on staff for more than five years, there may be a disconnect between what the current executive is being paid and what the new going rate is for a competitive salary of a new person. As part of the succession planning process, nonprofits should become familiar with competitive salaries based on the organizational budget, nonprofit location and similar job titles within comparable organizations. Reputable organizations such as Charity Navigator, Guidestar, The Chronicle of Philanthropy and others publish excellent compensation studies.
Ensure Support for Strategic Planning – It is a fact of life that change tends to makes individuals uneasy. Strategic planning can cause anxiety among staff members who may perceive the proceeding as a threat to them or their position within the organization. Therefore, it is important that the board, in particular, work to ease any fears or anxiety about the process. In order for the planning to be successful, there needs to be trust and buy-in among board of directors, the executive director and senior management. Additionally, transparent communication about the whole planning procedure is critically important.
Retain Outside Counsel – In order for the succession planning process to be successful, it is highly recommended that an organization seek an impartial outside party to facilitate the work. An impartial outsider will not be perceived as having any agenda and will be viewed as an expert, lending credibility. It will also go a very long way toward ensuring a transparent process. Additionally, an outside expert with succession planning experience is able to bring their expertise and knowledge in working with a variety of organizations and infuse into the process new ways of thinking and interpreting issues.
Stay the Course – Succession planning may bring out very difficult and unforeseen issues, which is why it is essential to ensure trust, a high level of communication and transparency throughout the process. However, one of the most important aspects of the work is to continue it through to its conclusion. Sometimes when events become too uncomfortable, a danger is that the whole process can be derailed. This should not happen and it is critical for executives and the board of directors to work through the process to the end. No matter how difficult the work can be, it is in the best interest of the nonprofit to have a documented strategic plan.
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