Nonprofit succession planning — sound risk management practice

Thomas C. Johnson, ESCC Volunteer Consultant
Owner, A. O. Consultants, LLC

As a kid growing up in rural Iowa, I got to school via the bus. On at least one occasion I climbed aboard and was surprised to see an unfamiliar face behind the wheel. “Ike isn’t feeling well, I’m your bus driver today.” Straightforward enough, but as I found my seat I noticed that this guy drove with a little less confidence than good ol’ reliable Ike. Does he know the route? Does he know that you have to pull into the Johnson place and backtrack to the Andersons? Will he get us to school on time? Will he know that Jenny gets picked up at her grandmother’s house on Fridays? I sat close to help him navigate through the fine points of our journey to school.

For nonprofits, a change in leadership has the same type of anxiety producing moments, but also in a more real sense a change in leadership has the potential of greater opportunities as well as catastrophic outcomes if not handled well. In the article, “Building Leaderful Organizations – Succession Planning for Nonprofits” three approaches to succession planning are described and discussed.

The case for succession planning

 Succession planning is a sound risk management practice critical to ensuring the viability of an agency in the event of a key manager’s unplanned absence. Large organizations can sustain services through the temporary loss of one or more administrators due to sickness or emergency. However an organization that gives ongoing attention to talent-focused succession planning can be more nimble and flexible, having the skills and capacity at hand to meet whatever challenges may arise. Instead of an angst producing exercise, leaders, boards, and organizations who can overcome initial reservations about succession planning ultimately find that this work generates unforeseen opportunities and excitement for the future.

 Three views of succession planning

 Strategic leader development – an ongoing practice based on defining an agency’s strategic vision, identifying the leadership and managerial skills necessary to carry out that vision, and recruiting and maintaining talented individuals who have or who can develop those skills.

 Emergency succession (or leadership) planning – ensures that key leadership and administrative functions, as well as agency services, can continue without disruption in the event of an unplanned, temporary absence of an administrator.

 Departure-defined succession planning – is recommended when a long-term leader has announced his or her departure date two or more years in advance. It includes identifying the agency’s goals going forward; determining which tools a successor will need to have in his or her skill set to achieve those goals; and devoting significant attention to building the capacity of the board, managers, and systems to sustain funding and programs beyond the current executive’s tenure.

 These three approaches discussed in the article are situationally based rather than hierarchical. With that said, a forward-looking agency recognizing the merit in “home grown” talent will take actions to build the skills of the executive and management levels to provide flexibility and strength to undertake planned and unplanned scenarios. At the very least emergency succession planning should occur to ensure continuation of service. This type of planning (overly simplified here) requires naming and training employees to take on assigned roles in the absence of incumbents. Finally, nonprofits are not exempt from the departure of the “baby boomers”. This last approach would hopefully be initiated at the executive level, but may be initiated by the board.

 To determine agency readiness, the authors provide the following checklist:

 A Succession Readiness Checklist

• A strategic plan is in place with goals and objectives for the near term (up to three years), including objectives for leadership talent development.
• The board evaluates the executive director annually on general performance and achievement of strategic goals.
• The board, based on its annual self-evaluation, is satisfactorily performing its major governance jobs—financial oversight, executive support and oversight, policy development, and strategic planning.
• The executive’s direct reports, based on annual evaluations, are judged as solidly skilled for their positions.
• The top management cohort, as a high performing team:
  • Has a solid team culture in place in which members support one another and can reach decisions as a group efficiently and harmoniously;
  • Shares leadership of the organization with the executive in having significant input to all major agency decisions;
  • Can lead the organization in the absence of the executive; and
  • Has authority to make and carry out decisions within their respective areas of responsibility.
• Another staff person or board member shares important external relationships (major donors, funders, community leaders) maintained by the executive.
• A financial reserve is in place with a minimum of three months’ operating capital.
• Financial systems meet industry standards. Financial reports are up to date and provide the data needed by the board and senior managers responsible for the agency’s financial strength and viability.
• Operational manuals exist for key administrative systems and are easily accessible and up to date.
• Top program staff have documented their key activities in writing and have identified another staff person who can carry their duties in an emergency.

When these conditions are in place, an agency can expect a relatively smooth transition to new leadership whenever it might occur. An agency might determine which elements are lacking in its current operations and then create a “succession plan” or “capacity building plan” that prescribes activities and timelines for filling the gaps. The agency is then ready for leadership transitions, foreseen or unforeseen.

 Change will occur and it is an unwise organization that does not plan for that inevitability. When it comes to nonprofits, the organization must consider not only what would happen to the organization if key leadership is no longer available, but also the organization must consider the people in the community that rely on the services of the nonprofit and how this change will affect them. Like the replacement bus driver, our clients and communities are counting on us to be there for them regardless of who’s driving the bus.