Smart leaders – whether they’re running a business or a nonprofit – know that they’ll leave their job, even their career, at some point. They understand that every job and every career will end in a transition, eventually. It’s just a matter of when, how, and how well managed when that transition finally occurs.
When a CEO moves on – especially if they’re a founder, a long-tenured executive, or a transformational leader – their organization needs to devote time and resources to managing the transition. 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 their successor is likely to face. Regardless of the circumstances, an exit strategy can help pave the way for a smoother transition.
An exit strategy is a mindset and a set of plans to prepare yourself and your organization for your transition out of your role. Instead of one massive plan, an exit strategy usually involves several plans covering at least these three areas: prepare your organization, prepare yourself, and manage the communications.
Here are 10 actions you can take to shape your exit strategy.
1. Take 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.
Taking charge doesn’t mean handpicking your successor, manipulating the process, bullying to get your way, or riding roughshod over the board and their legal responsibilities. On the other hand, it doesn’t mean abdicating all responsibility and dumping everything in the board’s lap, either.
Taking charge means playing an active and vital role in supporting the board and staff and partnering with them to guide the organization through the transition to your successor.
2. Start your departure planning as early as practical
CEO succession takes time. A common problem is starting to plan too late and then rushing through the process. If you’re heading for retirement, begin planning at least a year or two ahead of your departure, if possible. More time gives you more options.
Starting early gives you the opportunity to ask big questions about your organization’s future. It also gives you time to work on building organizational sustainability, such as strengthening the board, adding bench depth to the executive team, or improving other critical aspects of your nonprofit 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 departure date yet, there are things you can do to prepare your organization without setting a specific date. In other words, planning that can be done in stealth mode, without revealing your departure intentions.
First, assess the organization’s sustainability and develop a capacity-building action plan. This will help you identify legacy issues and make sure your organization is ready to hand over to your successor with pride.
Second, work with your board to prepare a succession policy and a backup plan for the CEO position. The policy will give your board a roadmap for managing the transition. And the backup plan, among other things, will ensure that the CEO job description is updated. (My free Executive Succession Essentials planning guide will help you get these critical business continuity tools in place. Click here to get your copy.)
3. Set a departure date and stick to it
Once you set a date and announce it, don’t back-peddle. Waffling about your departure timing is a morale killer for your staff and potential internal successors.
4. Recognize that as a leader-in-transition, you have three jobs:
Job #1 — lead the organization, of course, but understand that the job will evolve as the departure date draws closer.
Job #2 — prepare the organization for the transition. Make sure the organization is ready to work effectively with your successor and everyone’s ready for the transition process.
Job #3 — prepare yourself for life’s next chapter. Ensure that you’re ready for the transition into post-career life or whatever is next.
This is a special time. Encourage the leaders around you to step up. Get the board to assume ownership of the transition. And prepare your senior management team to get themselves and the organization ready for the new executive, including plans and briefings to onboard your successor.
5. Engage your board as early as possible
How early you disclose your departure intentions to the board will likely hinge on the strength of your relationship with your board — your trust in the board and the board’s confidence in you.
Recognize that disclosure of your departure plans is going to be an “oh my” moment for the board. To set the stage, sketch out a modest exit plan before you tell your board. Sharing your ideas about how to prepare the organization will give them confidence about a way forward and signal your willingness to partner with them. And it will set them on a path forward.
Make sure the board understands that their job is to manage the transition, not just the search for your successor. To help them understand their full role in the transition process, get them to watch my YouTube video, The Board’s Six CEO Transition Tasks.
6. Manage the communications
Of course, telling your board is a part of a larger communications process. Typically, communications planning begins with private speculation on the part of the CEO. At this early stage there’s no or limited disclosure outside of your closest confidants and advisors, say your spouse/partner and business coach. This is usually followed by a confidential discussion with your board chair and then the board.
From here on, the disclosure becomes more public. Senior staff is next to find out, followed by the line staff. This should be quickly followed by critical stakeholders, such as major donors, other funders, and collaboration partners. This is followed by a broader public departure announcement, often concurrent with the announcement of the search for the successor.
Some retiring executives have “soft disclosure”-type discussions with critical stakeholders early on, when they begin the succession planning process. These are “heads up” messages along the lines of, “This isn’t public knowledge yet, but I want to let you know that I’m planning to retire in a couple of years. I’m not going anywhere soon, but the board and I are starting the succession planning, and I wanted to make sure that you heard this directly from me and not through the grapevine.”
7. Prepare your organization
Preparing the organization for the transition involves four areas: the organization overall, the board, the senior management team, and the CEO job.
The organization. Ensure that your organization is stable and ready to thrive with your successor in place.
The board. Well ahead of the transition, work to ensure that you have the right board in place going forward. Closer to your departure date, make sure that the board recognizes the importance of this transition and that they don’t just see it as a hiring exercise; ensure that they have a plan for the transition as well as the search.
Your senior management team. Ensure that you’ve got the right people in place and that it’s a team you’ll be proud to hand off to your successor. As your departure date draws near, prepare your team to help onboard the new executive.
The CEO job. Make sure that the job is doable for your successor. Before the board launches the search, get them to unpack, refit, and recalibrate the job.
- Unpack to understand the role in practice, not just what’s on paper.
- Refit to jettison or delegate old responsibilities that no longer fit and add what’s missing.
- Recalibrate to reflect the future leadership needs of the organization. Encourage the board to get clear about the organization’s direction and take that into consideration as they update the job responsibilities and qualifications.
8. Prepare yourself
If you’re planning to move 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:
- health and well-being — actively working to maintain health and well-being;
- an engaging post-career project — meaningful involvement in something that matters to you and tells you that you matter to your world;
- meaningful engagement with a social support network and having a “support convoy” of people who are “there for each other” when you need them, or when they need you;
- alignment with your spouse or significant other about retirement timing, how you invest your time, spending, etc.; and,
- 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 financials. 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’re going to pursue an encore career.
9. Manage the emotions
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.
Many of the retired executives I’ve interviewed say that the most surprising thing about the transition process was the emotional journey.
10. Leave gracefully (and decisively)
Arrange for an appropriate amount of overlap between yourself and your successor. Usually, a few hours or possibly a few days is sufficient. 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 and that your successor has control over the employment agreement, 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 take a seat on your organization’s board of directors, at least for a year or two.
Strive for closure – for yourself and those around you. Rituals, such as the much-maligned retirement dinner, serve a vital role in helping people come to terms with change and provide a psychological line of demarcation that enables people to move on.
The transition between chief executives is a watershed moment for an organization. Preparing an exit strategy can help ensure that you, your organization, your board, and your management team are ready for the journey and that they have a roadmap to follow. Speaking of roadmaps…
Is it time to create your exit strategy? Get a copy of The Nonprofit CEO Succession Roadmap: Your Guide for the Journey to Life’s Next Chapter. It’s a complete guide for soon-to-retire executives to prepare themselves and their organizations to flourish after they leave the CEO role. Available now from Amazon.