The term “succession planning” can mean different things to different people. Some think it results in an “insurance policy” that ensures continuity when a leader is unexpectedly unavailable. Others, especially corporate board members, think it’s about leadership development — a plan to groom a single leader or a program to create a pipeline of leaders. Still others believe it’s an exit strategy for a soon-to-retire executive. All three of these interpretations are correct.
There are three types of succession plans that do all these things plus a lot more. This article outlines those three approaches, when to use them, and what they can do for your organization.
To set up that discussion, let’s start with a brief definition: Succession planning is a systematic process for ensuring the availability, continuity, and appropriate development of an organization’s leadership talent.
- Systematic means that there’s a proactive planning process. Appropriate plans are in place, and they’re kept up to date. The plans keep pace with the organization’s evolving leadership needs and team changes.
- Availability means there’s a forward-looking approach to staffing the organization. People are available for critical leadership positions — ready to step in as backups for a colleague in an emergency and prepared to step up into new or expanded roles. And the organization has a robust talent forecasting and recruitment process.
- Continuity means people are designated as backups for mission-critical jobs so there’s minimal disruption and downtime when a key person is unexpectedly absent or decides to leave their position. And the organization has good handoff and onboarding procedures to get new staff up to speed quickly.
- Appropriate development means the organization encourages staff and leader development. And it’s done in a way that’s appropriate to the organization’s size, scale, and resources.
Before we dig into the “what” and “how” of succession planning, let’s talk about the “why.”
Why Plan for Executive Succession?
How your organization handles turnover in its key positions — especially its leadership roles — has enormous implications for its performance and ongoing sustainability. But, getting the succession planning conversation started can be difficult, particularly when it involves the CEO role.
As we talked about in the “Six Biggest Nonprofit Executive Succession Mistakes” article, executive succession is inevitable. It’s just a matter of when, how, and how well managed when the executive transition finally occurs, but many organizations live in a state of denial about it.
Executives avoid the topic for personal and professional reasons. Personal — maybe because it smacks of admitting one’s mortality. Professional — because they might fear it signals that they’re looking for a new job. Or they fear that the board might react badly, such as trying to push them out prematurely or, if their departure date is near, relegating them to lame-duck status.
Boards have their reasons for avoiding the topic as well. Some avoid it because they fear it signals that they want the executive to leave. But, more often, it’s because they have a “replacement mentality” when it comes to turnover in the chief executive position. They see executive director succession as just a hiring challenge. They fail to recognize that their hiring decision comes wrapped inside a package of organizational changes that reach well beyond who sits in the chief executive’s office. And it’s their responsibility to ensure those changes are managed and managed well.
To help get beyond the inertia of avoidance, let’s look at the benefits of succession planning.
Benefit #1 — Avoid the Risks of Unplanned Absences
Succession planning can help make sure your organization doesn’t take a performance hit if there’s an unplanned absence of a key person by ensuring there are trained backups in place for critical positions — people who are ready to cover for colleagues if needed.
Benefit #2 — Increase Organizational Sustainability
Succession planning can help you strengthen your organization. The planning process can yield valuable insights about organizational capacity, such as the need to strengthen the management team bench depth, refit jobs to make them more doable for successors, and so forth.
Benefit #3 — Better-Managed Leadership Transitions
Succession planning can help you develop a more orderly exit process so you can capture knowledge before it walks out the door in the heads of former employees. It also includes creating handoff plans and onboarding procedures that help new staff members and leaders get off to a faster start.
Benefit #4 — Build Your Team
Succession planning can help sharpen your perspective about your organization’s future leadership needs so you can do a better job at recruitment, retention, and leader development.
In short, succession planning is an essential ingredient for ensuring an organization’s sustainability, and it can play a vital role in a nonprofit’s growth and development.
Three Types of Succession Plans
Here’s a closer look at the three types of succession planning and the benefits they can provide to your organization.
1. Succession Essentials
Succession essentials is my term for what’s often called “backup planning.” This approach focuses on getting two plan documents in place: a board-adopted succession policy and an executive backup plan for at least the executive director position, but ideally for all your management positions.
The succession policy outlines the guiding principles, roles, responsibilities, and procedures that the board will follow in managing turnover in the executive director position when the current executive eventually decides to leave.
The executive backup plan ensures continuous coverage of the executive director’s critical functions by making sure there’s a cross-trained individual ready to step in as a backup in the event of the executive’s unexpected absence — short- and long-term absences.
Together, these documents are the foundation for ensuring leadership continuity in the executive director position and beyond. I call these plans “succession essentials” because they’re essential, good management tools that every nonprofit should have in place regardless of their size.
Why should you put succession essentials in place?
- Working on succession essentials is a great way to break the ice about succession planning. As mentioned earlier in this article, succession planning is still a touchy subject in too many organizations. Working on succession essentials is a great way to get the conversation going and get beyond the inertia of avoidance.
- These plans lead to better-managed transitions. In the case of the chief executive position, these plans can ensure that your board understands leadership succession and has a plan to manage the process when your executive director eventually decides to leave the role.
Managing chief executive turnover is one of the board’s most important responsibilities and probably their least understood job. The succession policy will help the board better understand this critical responsibility.
- Working on these plans can help strengthen the organization, for example, by opening a dialogue about management bench depth, the delegation of duties from an overburdened executive director, organizational sustainability, and other capacity-building opportunities.
- These plans are part of good stewardship. Leadership transitions are inevitable. The best, most well-managed nonprofits don’t leave the question of leadership continuity to chance. They have these tools, and now you can too.
2. Leader Development Planning
This is a process for preparing staff members for potential leadership roles in your organization. This approach can vary in scale and practice. At its simplest, it might involve grooming just a single individual who’s being prepared to step up to the next rung on the leadership ladder. At its most robust, it might involve a formal program to create a pipeline of leaders in a larger organization. Or it might be part of what’s called “talent management” or “strategic HR,” which is a robust process of systematically forecasting, assessing, acquiring, developing, and aligning talent in a way that builds the organization’s capacity.
Why should you consider leader development planning?
- It has a huge positive impact on staff morale and retention and will make your organization a more competitive employer. Developing and promoting your people leads to higher levels of engagement and allegiance to the organization. It’s a powerful demonstration that you care about them and their careers.
One survey found that over half of nonprofit staff members (55%) believe they need to leave their organization in order to advance in their careers. And two-fifths (41%) said that their nonprofit doesn’t do a good job of promoting from within. In today’s tight talent market, that’s not tenable.
- 90% of everything you need to develop leaders in your organization is readily at hand and won’t cost you a dime. Two big myths about leader development are that it’s too costly, and it’s only for the “big guys.” Neither is true. All it takes is a little bit of savvy and time commitment.
3. Departure-Defined Succession Planning (Exit Strategies)
This is a great approach when an executive’s anticipated departure date is known in advance. This might involve a retirement or another situation where the departing executive will know or have an inkling that they’re planning to leave in the next one to three years.
This approach is all about succession readiness — organizational and executive readiness.
- The organization overall — Making sure the organization is stable and ready to work effectively with a new CEO.
- The executive job — Ensuring that the executive director’s job is successor-ready. Making sure the job gets unpacked and refitted for the needs of the present and recalibrated to the future direction of the organization.
- The people, especially the leadership — Ideally, ensuring that you have the right board and management team in place to meet the current and future needs of the organization. And immediately ahead of the transition, making sure the board, the management team, and the departing executive are ready to carry out their roles in the transition process.
The organizational readiness prep work is often driven by the timing of the executive’s departure and how much advance notice they’re giving to the board.
If the executive’s departure date is several years off, there are many more options available. A longer lead time means the preparation work can include sustainability planning, and there’s time enough to ask big strategic, sustainability-enhancing questions that can prepare the organization to better thrive with a new executive director in place. (For more on organizational sustainability, see dontebbe.com/sustainability-guide.)
If the executive is planning to leave within the next 12 months, the window to ask the big sustainability questions closes. The prep work shifts to preparing for the executive search and transition, especially preparing the board for their six transition management tasks. (For more on the board’s six tasks, see dontebbe.com/transition-guide.)
The second track involves executive readiness. This revolves around the three jobs of the departing executive:
- Lead the organization through the succession process but recognize that the job will change as the departure date draws closer. It will change as the board steps up to lead the search and transition process, as the management team prepares to onboard the successor, and some decisions will necessarily need to be deferred to the successor.
- Prepare the organization for the transition. Making sure the organization is ready to work effectively with the successor and that everyone is prepared for their role in the transition process.
- Prepare themselves for life’s next chapter. The executive is ready to leave gracefully, and they’re prepared to thrive in post-career life or whatever is next.
Why should you consider departure-defined planning or developing an exit strategy?
- As we’ve outlined, an exit strategy is a great way to make sure that you and your organization are ready for leadership succession.
- Executives who’ve used this approach report that focusing on preparing the organization well is a great way to wrap up the job. Those actions helped them feel that they were leaving well and helped them feel a sense of closure about that chapter in their career and leadership journey.
Three Things to Do to Get Started
Here are three things you can do to get the ball rolling on succession planning:
- Invest an hour in putting succession essentials in place. Download a copy of my free step-by-step guide, Executive Succession Essentials, which includes fill-in-the-blank templates for the succession policy and backup plan. Much of the work has been done for you — all you’ll need to do is add your organization’s information. You can create that board-adopted succession policy and executive backup plan painlessly, and in under an hour most cases.
- Learn how easy it is to get started with leader development planning. Check out this case study, Developing Leaders, Developing Successors.
- If you’re ready to develop an exit strategy, check out this related article, Every Nonprofit CEO Needs an Exit Strategy, or better yet, grab a copy of The Nonprofit CEO Succession Roadmap: Your Guide for the Journey to Life’s Next Chapter. It’s the first-of-its-kind guide to look at executive director succession through the eyes of the departing executive, taking a 360° view of the road ahead as the executive prepares to move into post-career life.
First, every nonprofit should have Executive Succession Essentials in place. It’s a vital ingredient in leadership and organizational continuity.
Second, it’s becoming increasingly important in today’s tight labor market that nonprofits pay more attention to leadership development. And it’s surprisingly easy to do because the most important ingredient – developmental experiences – can be provided by any organization of any size.
Finally, as the executive director begins to think about life beyond their current leadership role, they should also be thinking about mapping out their exit strategy. A great way to cap off their leadership tenure is by ensuring their organization is as strong as possible before turning it over to their successor, and their board and management team are well prepared for the transition.
 Cornelius, Maria, Patrick Corvington, and Albert Ruesga. Ready to Lead? Next Generation Leaders Speak Out. Baltimore: Annie E. Casey Foundation, 2008.