Smart leaders – whether they’re running a business or a nonprofit – know that they’ll leave their role at some point. They know that every job and every career ends in a transition eventually. It’s just a matter of when, how, and how well managed that transition is when the time comes.
The longer an executive has been in place,
the more challenges the successor will likely face.
When CEOs move on – especially if they’re a founder, a long-tenured executive, or a transformational leader – their organization needs to devote appropriate time and resources to managing the transition, ensuring that it’s more than just a search and hiring exercise. The longer an executive has been in place, or the more significant their impact on the organization, the harder they are to succeed and the more challenges the successor will likely face. An exit strategy can help pave the way for a smoother transition.
Preparing to disengage from a nonprofit, which you’ve invested years into building, may be the biggest challenge of your career. Likewise, for the organization – staff, board, and volunteers – preparing to say goodbye to a central figure in the organization’s life and adjusting to a new leader is also difficult. For everyone involved, leadership transitions are some of life’s most poignant moments. While nothing will completely assuage the emotions involved, an exit strategy can guide the transition process and help ensure that both the organization and the executive thrive in life’s next chapter.
An exit strategy is a planning framework; a set of plans to prepare yourself – the departing executive – and your organization for your transition out of your role, as well as a plan to manage the communications process along the way. Rather than one massive plan, an exit strategy usually involves several sets of plans covering these three areas – organization, self, and communications.
Here are ten actions you can take to shape an exit strategy.
- Commit to taking charge of your exit. While the board has the responsibility for choosing your successor, you have the responsibility for initiating the succession process. Part of leading well includes leaving well, which means taking responsibility for your unique role in your transition out of the organization. It doesn’t mean handpicking your successor, manipulating the process, bullying to get your way, or riding roughshod over other people. On the other hand, it doesn’t mean completely abdicating any responsibility. Taking charge means playing an active and vital role in supporting the board and staff, and partnering with the board to guide the organization through a successful transition.
- Start as early as practical. A successful CEO succession takes time, especially if it involves a founder or long-tenured executive. A common problem is starting the planning too late and then rushing through the process. If you’re heading for retirement, beginning the planning two to three years ahead of your departure is best; one year is a minimum. Starting early gives you the opportunity to work on building the organization’s sustainability and strengthening your board and executive leadership team ahead of the transition.If you’re in the early or mid-stage of your career and a future job change is likely, or if you’re planning to retire and haven’t set a specific date yet, there are still some things you can do to prepare your organization without a particular departure date in mind. First, engage in ongoing organizational sustainability planning that involves a periodic review of the organization’s leadership needs, not just focused on financial sustainability. Second, work with your board to prepare a succession policy and a backup plan for the CEO position, and review the plan and policy annually. Periodic review of the succession policy will help assure the board’s “succession competency” when the need arises, plus it will provide them with a plan for managing the transition. Reviewing the backup plan will help ensure that the CEO job description is kept up-to-date and that it remains relevant to the current and future leadership needs of the organization. Free guides to sustainability planning and the policy/backup plans are available at this link.
- Set a firm date for your departure and stick to it. Once you have decided to retire, you’ll want to set a specific departure date and hold to it. Vagueness or waffling about your departure date is a morale killer for those around you. While some succession preparations can be made without a specific date, serious planning requires a firm date or, at least, a range, e.g., spring 2017.
- Recognize that a leader-in-transition has three roles. In addition to leading the organization, as the departing leader, you have two new roles: preparing the organization for the transition and preparing yourself for life’s next chapter. Also, you have to recognize that your leadership job will evolve as the transition unfolds. You may need to loosen your grip a bit and encourage the leadership around you to step up. For example, you may have to encourage the board to assume leadership and ownership of the transition. Similarly, you’ll have to prepare your senior management team for their role in onboarding your successor. Know that you’ll only be a lame duck if you act like one.
- Manage communication. Decide whom you will tell about your departure, when, how, and in what sequence. Communication is tied to the succession/transition planning stages. Typically, the process begins with private speculation on the part of the CEO where there’s no or limited disclosure outside of your closest confidants and advisors, say your spouse and business coach. This is followed by some limited disclosure to the board chair and/or board first. Senior staff is usually next, followed by the line staff. The communications process concludes with a broader public announcement later in the process, often concurrent with the announcement of the search for your successor.
- Engage your board chair, and then board, as early as possible. How early you disclose to the board will probably hinge on matters of trust and confidence, and the strength of your relationship with your board – your trust in the board and the board’s confidence in you. Recognize that your disclosure is going to be an “oh my” moment for the board. To set the stage, consider sketching out a modest exit plan before you tell your board. Your initial plan will give them a confidence-building way forward and signal your willingness to partner with them to have a successful transition.
- Prepare the organization. Preparing the organization involves four areas: the organization overall, the board, the senior management team, and the CEO job.To prepare the organization, work to ensure that the organization is stable and, ideally, sustainable before handing it off to your successor.To prepare the board, work well ahead of the transition to ensure that you have the right board in place going forward. Closer to your departure date, ensure that the board recognizes the importance of this transition and that they don’t just see it as a search and hiring exercise; ensure that they have a plan for the search and the transition.
To prepare your senior management team, ensure that you’ve got the right team in place, and that it’s a team you’ll be proud of handing off to your successor. As your departure date draws near, ensure that they’re prepared to help onboard the new executive.
To prepare the CEO job, make sure that the job is doable for your successor – not overly complicated or idiosyncratic because of your particular interests. Before they launch the search, encourage the board to be clear about the organization’s direction and calibrate the CEO’s job to the future, not to how you did it or what’s in your job description, which is most likely sorely out of date. Get the board to unpack, refit, and recalibrate the position description and their expectations for the new executive.
- Prepare yourself. If you’re moving to another organization, give yourself the gift of completing your current job before jumping to the new one. Consider whether you want to or can take a breather in between. Get a copy of The First 90 Days by Michael Watkins and develop an entry plan. If you’re retiring, decades of research on retirement success points to five key areas: (1) health and well-being; (2) engagement in something that matters to you and tells you that you matter to your world; (3) meaningful engagement with a social support network; (4) alignment with your spouse or significant other about retirement timing, how you invest your time, spending, etc.; and, (5) sufficient post-retirement income. To prepare yourself, focus on maintaining health and well-being, start creating a magnetic post-career project, build your social support network, ensure that you and your spouse/significant other are on the same page, and figure out your retirement numbers. Consider if you want to start lining up a bridge job (a reduced hours/low-stress job that provides a bridge between full-time work and full-time retirement) or if you want to pursue an encore career.
- Manage the emotions and drama. Transitions stir the emotions; some of it is inevitable. Solid planning, communication, and listening can go a long way to provide your constituents with empathy and reassurance that will reduce stress and dial back the emotional climate. Engage a coach, advisor, or your support network to process your emotions.
- Leave gracefully (and decisively). Plan a thorough handoff, but let your successor lead it. In most cases, a “hand off and ride off” approach is best, but if you plan to have an ongoing role in your current organization, know that it has to work for your successor. Make sure that the role is clearly defined, that your successor has control over the employment arrangement, and include a check-in process to make sure that the arrangement continues to work. If not, you should be prepared to move on. Do not, under any circumstances, take a seat on your organization’s board of directors, at least not for a year or two. Also, neither expect nor reject acknowledgment; if offered, accept it gracefully. If not offered, don’t demand it. Strive for closure – for yourself and those around you. Sometimes the rituals, like the dreaded retirement dinner, are an important part of that closure process.
The transition between chief executives is a watershed moment for every nonprofit. These transitions involve an arc of events that begins with the incumbent executive’s decision to depart and doesn’t conclude until the successor is fully on board and settled in the position, which is usually at least six to twelve months into their tenure. The entire process spans many months – perhaps several years.
Far too many boards and executives
see the transition as solely a hiring problem.
Far too many boards and executives see the transition as solely a hiring problem. Their view of the transition is limited to the challenge of hiring a successor. For sure, searching for and hiring a talented new executive is a major piece of the work. However, the new executive’s success is often dictated by the pre-search planning and the post-search follow-through. This planning ensures that the organization is ready overall, that the board is prepared for the entirety of the transition process and not just the search, that the senior management team is ready, and that the CEO job has been recalibrated to address the present and future leadership needs of the organization. Similarly, this planning ensures that the board and senior management team follow through to ensure a welcoming introduction of the new executive to the organization and the community, and provides a solid onboarding process that helps the new leader get off to a fast start.
Do you think it’s time to create your exit strategy? See the signup box on the right for a free eBook on how to take charge of your exit and make the most of this leadership change – for yourself and your organization.