Managing the Nonprofit CEO Transition: The Board’s 6 Tasks

A nonprofit CEO transition is complicated, with plenty of opportunities to make mistakes along the way. But, the biggest mistake made by many nonprofit boards, by far, is seeing the transition solely as a hiring problem. Often, board members are so eager to identify the new CEO that they fail to recognize that wrapped around their hiring decision is a complicated organizational change process.

nonprofit CEO transition title graphic

Turnover in CEOs involves a bundle of changes that has implications both inside and outside the nonprofit’s walls. Plus, transitions are complex and fraught with risk. These are changes, complexities, and risks that are the board’s responsibility to understand and manage. If the board focuses solely on the search, it’s ignoring these other responsibilities and leaving the organizational change process largely to chance.

Wrapped around the hiring decision is a complicated organizational change process.

A board’s compulsion to quickly jump into search mode is understandable. Hiring and supporting the chief executive is one of a board’s primary responsibilities. When confronted with an upcoming turnover in the CEO position — perhaps even a potential gap in leadership — it’s understandable that they would want to “avoid the void” by finding a successor as quickly as possible.

But, this rush to hire often results in unintended consequences that only become apparent after the transition has failed: Failed, because the board hired the right person for the wrong job, since the board didn’t refit and recalibrate the CEO job before filling it. Failed, because the board didn’t adequately prepare the organization to work with the new CEO or they were unaware of (or ignored) circumstances that would smack the incoming executive in the face. Or failed, because the board didn’t follow through after the search and effectively onboard and support the new CEO.

Rushing to hire often results in unintended consequences that only become apparent after the transition has failed.

Boards facing a CEO transition should expand their focus beyond the search and embrace six tasks, which we will outline below — all of which are integral to a board’s responsibility for hiring and supporting a new chief executive. (The figure below outlines how these tasks fall along the three phases of the CEO Succession Timeline, discussed in a previous post.)

nonprofit CEO transition - board's 6 tasks

Task #1 – Understand and guide the transition.

Regardless of whether the executive’s departure date is off in the future or if the executive has already left, the board’s first task when facing a CEO transition is to look beyond the search and recognize, understand, and guide the transition process.

  • Recognize – embrace the reality that a CEO transition is a multi-month process that begins with the incumbent executive’s decision to depart and doesn’t conclude until the successor has been fully onboarded, typically 90 to 100 days into their tenure. It’s a process that involves many changes other than just who occupies the CEO’s office.
  • Understand – recognize the scope, nature, and dynamics of the transition, and take those into account in planning and guiding the change process. This will require some assessment, reflection, and planning.
  • Guide – manage the entire transition process – as outlined in the figure above – from planning for a leadership change through the conclusion of the new executive’s onboarding process, making sure the new executive is properly introduced, oriented, onboarded, and supported by the board.

A variety of factors can influence the nature and dynamics of the transition. Some of the key factors include the organization’s size, operating condition and outlook, the executive’s departure circumstances, how long the executive has been in the role, and his/her impact on the organization, to name a few. Below are several classic transition types that summarize some of these influences.

  • Sustain Success. Typically, this type involves a high-performing organization that is well led. The foremost challenge for the board is to resist the temptation to try to hire someone just like the departing executive. Often transitions of this type involve a hard-to-follow executive, outlined below.
  • Underperforming Organization. This type involves an organization that is performing poorly, or it may have peaked, and it’s at risk of decline without a change in direction or strategy. In other words, the organization has gone stale and needs to be revitalized. The board’s typical challenges involve diagnosing the problems, reorienting the organization, and reimagining the executive’s job. Depending on the scope of the changes called for, the board may want to consider purposely hiring a transition executive – someone who will come in for, say, 12 to 24 months – to shepherd the organization through an intentional change process.
  • Turnaround. This type involves an organization whose performance or operating conditions have reached a perilous state. In short, the organization is in crisis or on the edge of a crisis state. The situation might be further complicated by mismanagement or a scandal leading to a loss of confidence and decline in morale. The board’s first order of business is to stabilize the organization, and most likely appoint a skilled interim executive to help stabilize the situation and guide the organization back to health following some thorough assessment. The board’s challenges include calling a timeout to stabilize the organization and avoiding the magical thinking that “if we just get the right person in here, our problems will be solved.” The work undoubtedly involves reassuring stakeholders and addressing staff morale. During the search process, the board must avoid the temptation to overcompensate for previous deficiencies in the selection of its new executive. The board may face the challenge of attracting quality candidates for an organization whose star may be tarnished. Good communications is paramount in every transition, and even more so with this transition type.
  • Hard-To-Follow Executive. This type involves a departing executive who is a founder, a long-tenured leader, or an executive who has grown or reshaped the organization in very significant ways. In short, an executive who is leaving a major imprint on the organization. The board’s key challenges may involve a combination of careful communication about the departure, unpacking and reshaping the CEO job to ensure it’s doable for a successor, and rethinking the board and executive’s respective roles.
  • First Hire. This type involves an organization that is hiring its first executive, because it is just starting up or it is shifting from all-volunteer management to a paid executive. The board’s key challenges involve clarifying the executive job, reimagining the board’s and volunteers’ roles vis-à-vis the executive, and managing everyone’s expectations “now that we have staff” to avoid overloading the executive’s role.
  • Internal Promotion without an Executive Search. This type involves the promotion of an internal successor without conducting an external search. It’s not an exclusive type, as it could be in combination with any of the first four transition types. The key challenges for the board are, first, to not use a promotion as a shortcut to avoid the work involved in conducting a proper executive selection process. Second, to rigorously review the internal candidate(s) to ensure that there’s a good fit and that the board thoroughly understands who it is hiring and why. Also, the board must make sure it doesn’t overemphasize internal candidates’ familiarity with the organization at the expense of critical skills.

These are just a few broad examples of the types of circumstances your board may face and the related challenges, which extend well beyond just the selection of a new executive. It’s critical that the board understands the scope, nature, and dynamics of the circumstances surrounding the transition. Your transition type will influence all aspects of the process, including how the board prepares for a leadership change and guides the transition process, and it may influence the type of leader you end up hiring.

TASK #2 – Prepare for a leadership change.

The first of two watchwords for the preparation stage is “readiness.”

  • Organizational readiness, which means the organization is stable and ready for a new executive to assume the leadership role. Depending on the circumstances, this may involve investing time in some serious assessment, planning, and prep work.
  • CEO job readiness, which means the chief executive role is ready for a successor to step into the position and effectively accomplish the job. The job has been refitted — brought up to the needs of the present — and recalibrated to the future direction of the organization.
  • Team readiness, which means the entire transition team — the board, the board’s transition committee, the departing executive, and the senior managers — are ready to play their parts in the transition process, and they are clear about their roles.

The second watchword is “plan.” A plan for the executive search, of course, but also for the transition, including onboarding the new executive.

TASK #3 – Ensure leadership continuity.

An often-overlooked area is the departing chief executive’s role in the transition work. If the incumbent will be in place for the duration of the transition, the board should make sure the executive is clear about his/her role in the transition work, and that he/she prepares a handoff plan. The board should also clarify how much overlap there will be between the incumbent and the successor, and if the incumbent will have an ongoing role with the organization.

If the board is facing an abrupt departure, either because the incumbent is leaving before the successor search is complete or if the board is terminating the executive, the board needs to appoint an appropriate acting or interim CEO. Hiring a temporary bridge leader will give the board the time it needs to carry out the transition process. Trying to forestall the gap by rushing through is never an effective strategy.

Leading an organization going through a CEO transition is not just about caretaking. Whether it’s the incumbent or a temporary executive, a significant part of the job of the leader-in-transition is to prepare the organization to work with the new CEO and ensure that he/she is launched well.

TASK #4 – Manage communications (and ensure positive closure with your current executive).

Communications play an important role in the success of the transition. How the departure announcement is handled, how communications updates are provided along the way (or not), and how the successor’s appointment is announced have an impact on the organization’s stakeholders and reflect positively or negatively on the board’s professionalism in its handling of both the search and the transition.

Key stakeholders (major donors, coalition partners, etc.) will want to hear the transition announcement directly from the organization and not through the grapevine. Staff should be kept appropriately apprised as the transition progresses. And, all may need some reassurance if the executive departure circumstances were rocky.

Coming to positive closure with the current executive is an often-overlooked portion of the communications process. How the board comes to terms with the departure of its current leader and the sendoff that they give the executive into his/her next chapter of life say a lot about the board and can reflect positively or poorly on the organization.

TASK #5 – Search for, select, and hire the new CEO.

Of course, the search for a successor and the process of hiring a new CEO are central to the transition process. The board will need a solid plan for posting the job, recruiting and screening candidates, conducting the interviews, making the final selection, and, finally, sealing the deal with the new executive.

TASK #6 – Onboard and support the new executive.

Onboarding means ensuring that the new chief executive is appropriately introduced to the community and the organization, that the new executive receives a good orientation, and that he/she is provided with the information and support that they need to settle successfully into the role.

Being “new” has a short shelf life. The golden time of onboarding is the first 90 to 100 days of the new executive’s tenure. This early stage of the tenure is all about learning about the organization and the community and building critical relationships. The transition committee, senior staff, and the departing executive should make sure that there is a handoff plan and a ramp-up plan for the new executive – developed by the new CEO or with his/her substantial input.

The board’s task of supporting the new executive certainly begins during the onboarding stage, but should extend throughout the executive’s tenure.

A critical element in the support process is what I call the “board-executive social contract.” Drawing from the political science literature, this “contract” frames the board-executive partnership. Rather than being a literal contract, it’s a set of understandings between the board and executive that frame their work together. It involves clarity about (1) strategic priorities; (2) roles, responsibilities, and boundaries; (3) expectations that the executive and board hold for each other; and (4) the process and criteria for performance evaluations.

The board and executive relationship is the most critical relationship in the organization. The greater the clarity and mutual understanding you can introduce into this relationship, the stronger your organization will be.

These tasks don’t add significantly to the time commitment, but increase the odds of success enormously.

Often boards exhaust themselves trying to find the “perfect” executive, so when they reach the post-hire stage, they are tired and ready to put the search behind them and get back to business as usual. But, onboarding and supporting the new CEO is a critical part of the process, and attention and energy in this phase leverage the investment the board made during the previous stages.

Conclusion

Embracing these six tasks doesn’t add significantly to the board’s time commitment to manage a successful nonprofit CEO transition, but it enormously increases the odds of a successful outcome. The slight additional investment of time will pay huge dividends in strengthening the organization and avoiding the risk of a failed transition and the need to potentially do the process over again in a few months.