CEO succession — planning for and managing the change from one chief executive to the next — is one of the board’s most important responsibilities but possibly their least understood job. This isn’t surprising. Executive transitions happen infrequently, and managing them requires skills that fall far outside routine governance roles. Plus, succession projects are complicated and time-consuming. On top of that, succession planning is still a touchy topic in far too many organizations.
This article outlines some of the frequent mistakes of CEO successions, what drives those mistakes, and how good preparation helps you avoid them.
MISTAKE #1: Living in denial about leadership succession
Executive turnover is inevitable, but many organizations live in a state of denial about it. Executives and boards avoid the topic for a variety of reasons. But in sidestepping the topic, they miss prime opportunities to do some advance preparation.
There’s no steering around the inevitable. The reality is that every job or career ends in a transition. It’s just a matter of when, how, and how well-managed the process is when that transition occurs. And good management starts with good planning.
How to avoid it:
Break the ice on the succession planning conversation by putting Succession Essentials in place.
Succession Essentials consists of two documents: a board adopted succession policy that outlines how the board will handle the transition when their chief executive decides to leave the role. And a backup plan for the chief executive position, which ensures that there’s a cross-trained person to step in for the CEO in the event of the chief executive’s absence.
Together these documents ensure leadership continuity; they’re good management tools that every nonprofit should have in place.
But the process of developing these tools is as valuable as the product. This sort of planning can open up a dialogue about the executive’s job responsibilities, management bench depth, streamlining the responsibilities for overburdened CEO, organizational sustainability, and a host of other capacity-building opportunities.
To get these good management tools in place in your organization, get a copy of my free Succession Essentials planning guide. Click here: dontebbe.com/succession-guide.
MISTAKE #2: Seeing succession as just a hiring challenge
Many boards have a “replacement” mindset when it comes to leadership succession. They think, “What’s the big deal? When our executive leaves, we’ll just hire her replacement.” They see succession primarily as a hiring challenge.
They fail to recognize that their hiring decision comes wrapped inside a large set of organizational changes. Turnover in the CEO position involves changes that reach well beyond who sits in the CEO’s office. And it’s a big-deal change for the organization’s #1 resource, the staff.
This miscalculation is compounded if the departing executive is a founder or long-tenured executive. Transitions involving these “hard-to-succeed” executives need to be especially carefully planned.
How to avoid it:
First, make sure the board recognizes that their job is to manage the transition as well as the search for the successor.
Second, ensure they understand this is a major change for the organization and its people involving changes that must be planned and managed.
Third, besides finding the successor, an important part of their job is to make sure that the organization is ready to work effectively with the new executive, and that the CEO job is successor-ready.
MISTAKE #3: Rushing the process
When the executive lets the board know that she’s leaving, the board immediately leaps into search mode, skipping the planning and job prep that should precede the search.
Maybe the executive didn’t provide a lot of notice, and the board is understandably concerned about a gap in leadership. But, rushing the process and cutting corners is a surefire path to a failed transition.
How to avoid it:
First, if the departing executive is planning to leave before the transition is complete, then the board needs to appoint an interim or acting executive. That bridge leadership will give the board time and breathing room for a thorough search, selection, and transition.
Second, that succession policy we talked about in the section on Mistake #1 can speed things up by laying out a good transition process in advance. So, when the transition time comes, the board will already have a plan, a timetable, a charge for their committee, and so forth.
While the transition may be foreign territory, they’ll have a roadmap to guide them.
MISTAKE #4: Not making the CEO job doable for the successor
Many executives in place now, especially the long-tenured ones, grew into their roles as their organizations grew up around them. As a result, many CEO jobs are overly complex and sometimes idiosyncratic. Without some job redesign, the weight of current responsibilities might crush a successor, or it might be difficult to find candidates to fill an eclectic role.
How to avoid it:
Take the time to unpack, refit, and recalibrate the job.
Unpack means digging into and understanding the job in practice, not just what’s on paper.
Refit means getting rid of what no longer fits, which might mean delegating some duties to other senior managers, and possibly adding management team capacity, if necessary. And, it means adding those duties being done that aren’t reflected in the current job description.
Recalibrate brings us to our next mistake…
MISTAKE #5: Facing the rear-view mirror instead of the windshield
Instead of taking the time to plan and calibrate the CEO position to the future, the board merely dusts off the current job description. Job descriptions are rarely up to date. They usually reflect leadership qualities that got the organization to where it is today, but those qualities may not be the best leadership specs to guide your nonprofit into the future. Or worse, the board shapes the job profile in reaction to the current CEO. If the executive is beloved, trying to match their assets. And if the executive is disdained, trying to reverse their liabilities.
How to avoid it:
In addition to unpacking and refitting, the job needs to be recalibrated to reflect the future leadership needs of the organization. The board should have an in-depth discussion about the organization’s future direction and what kind of leadership is needed to get “there.” Then they can use that knowledge to shape a fresh set of job requirements. That might involve updating the strategic plan or, at least, having an in-depth discussion about the strategic priorities for the next 3 to 5 years.
MISTAKE #6: Overestimating the board’s ability to execute the search and manage the transition on their own
Your board members may have hiring experience, but hiring a nonprofit chief executive is different than hiring for just about any other post. First, too often, boards don’t recognize what they don’t know about the CEO job. They see a sliver of the job around board meetings, but not the rapid-fire, day-to-day environment, the gear-shifting between leadership and management, or the range of responsibilities involved in the job and the mental bandwidth required to cover them all. Second, the transition is a complicated organizational change process that requires deft political skills, good communications, and project management capability.
Even the best, most engaged boards rarely understand the full nature of the CEO’s job without some serious preparation and support. Moreover, the search and selection process and the transition management are unique and taxing responsibilities for a part-time volunteer board.
How to avoid it:
Make sure the board chair appoints the best leadership on the board to the planning committee. Encourage the committee to consider their capacity for managing the project carefully. Ensure that they have appropriate support to manage this complicated set of processes. Insist that they get outside counsel to guide them if necessary. (RESOURCE SUGGESTION: The Alliance for Nonprofit Management has members who are skilled at leadership succession, executive search, and transition specifically for nonprofits. Click here for a link to the member directory. TIP: In the “Group” field, select “Executive Transition and Leadership Continuity.”)
These free guides will help you avoid those and other succession mistakes.
Here are two great (FREE!) tools for making sure your organization is ready for when the transition comes.
- Sustainability planning can ensure that when heading into the succession process the organization is as stable and sustainable as possible before the successor takes over. Click here to download a free Sustainability Planning Guide.
- Executive backup planning — putting in place a board-adopted CEO succession policy and a backup plan for the executive position — can break the ice on leadership succession and ensure that the board has a plan when the executive eventually decides to leave the role. Click here to download a free, step-by-step Succession Essentials Guide, which includes fill-in-the-blank templates for these two critical tools and a companion video that will walk you through the process.
A sustainability plan and a succession policy are good management tools that every organization should have in place, and good management practices that any organization can undertake at any time.