Word to the Wise: Three Phases of Executive Succession

By Don Tebbe, Author, Speaker, & Consultant (don.tebbe@dontebbe.com)

Don Tebbe is an experienced advisor to nonprofits on CEO transition and leadership succession. For over 25 years, he has specialized as an executive succession consultant, helping hundreds of nonprofit leaders plan for and manage their departures. Mr. Tebbe shared his thoughts and insights on the biggest risks related to succession planning.

Tebbe reminds us that there are actually three phases nonprofits should be mindful of:

  1. Succession and Sustainability. First, the executive and the Board should ensure that there is a succession plan in place. And it takes into account the organization’s sustainability—particularly its ability to succeed without the current CEO. For example, relationships often are tied to a particular executive who is a fixture in a community or perhaps has personal relationships with primary funders.
  2. Transition. The second phase focuses on the search and selection process, which will find an effective new executive to lead the organization and prepare the organization to work with the new executive.
  3. Post-Hire. The final phase is often overlooked or underutilized. After a new Executive Director has been found and starts the new leadership role, there should be an intentional onboarding process and relationship-building phase between the Board and the executive.

NRMC: What is the biggest or most significant mistake boards make preparing for a new leader?

Don Tebbe: I think there’s a different mistake that happens during each of the three phases. First, during the succession phase, they don’t do it – they don’t have a plan. Some studies indicate that 1/3 of nonprofits don’t have a succession plan for their executives; I think that’s overstated. It’s probably closer to 20-25%. But really, there’s no excuse not to have a succession plan.

There are fantastic resources—templates, guides, and more—that make it very easy for nonprofits to develop a plan. Typically, it is two documents: a board-adopted succession policy and an executive backup plan. We’ve tried to make it as simple as cutting and pasting for the policy. The backup plan will require more thought because this should be an agreement between the individuals involved.

During the transition phase, it’s a mistake when boards don’t reflect deeply enough on what type of leadership their organization needs for the future. There’s a tendency to simply dust off the old job description and start running ads. Often the job description is a fossilized artifact. Instead, they should stop and ask, “What kind of leadership qualities is our future organization calling for? Should the role be constructed differently based on the trajectory of the organization today and our goals for the future?”

Finally, during the post-hire phase, boards often think that all of the change happens on the executive side of the table when, in fact, they should think critically about how governance might change, or should change, with a new CEO at the helm. Unfortunately, many boards aren’t intentional enough about the ramping-up process. New executives aren’t just ‘plug-and-play’ roles.

I’ve found that in high-performing organizations, there’s an unambiguous Board/Executive social contract. There’s clarity in four areas: the organization’s priorities, their respective roles and responsibilities for the executive and the Board, their expectations for one another, and how performance will be monitored and evaluated. A solid introduction and orientation to the organization and intentional relationship-building with the board can help the executive jump their learning curve.

NRMC: What are some of the missed opportunities in the process of managing executive turnover risk?

DT: Don’t just look at this process as a replacement for an executive. Instead, use it as an opportunity for a capacity-building exercise. A CEO transition is a punctuation point in an organization’s history. These transitions are times when the organization can reset its sights for a better position or if it’s a high-performing organization to set its sights even higher.

Being honest about the state of your organization is critical at this time. There’s a whole range of succession situations—from “sustained success” to “turnarounds”—each has its own transition challenges. Knowing where you are on that continuum and not papering over that fact, especially if your nonprofit is on the troubled end, will help you maximize the opportunity for growth.

NRMC: What are the risks of hiring an independent interim CEO? How can those be managed?

DT: Typically, when hiring an interim, you’re hiring them to prepare the organization to work effectively with a new executive. You should be looking for someone who can provide bridge leadership and prepare the organization—help the staff and the Board set the stage for the new CEO’s leadership. Intentional interims can also help recover from messy departures, cleaning up various areas—financial, political, social.

In the case of messy departures, you also want to make sure that you involve the right professionals so that you’re getting good advice. If the finances are messy, be sure your CPA is engaged. If there’s an employment issue, you would want to involve your legal counsel.

Loren Mead of the Alban Institute wrote a piece called the Five Developmental Tasks of Interim Ministry. The first point is sage advice for any organization going through a transition. “Come to terms with history.” It’s such a beautiful way of putting it. When you’re bringing on the next executive, you need to come to terms with your history; be cognizant of the situation you’re bringing someone into.

NRMC: What should every CEO be doing to create a smooth runway for a future transition?

DT: I wrote a 400-page book on this subject—The Nonprofit CEO Succession Roadmap! But, what it comes down to is starting early. Take a look at your organization and ask, “Is this organization ready to thrive with someone in my role?” If the answer is no, get to work on that! Put things into place, whether it’s reforming the Board, shoring up gaps in the staff, strengthening the funding, whatever. At this point, a big part of your job is helping ensure that the organization thrives with your successor in place.

When you decide to leave, you have three jobs. First, you have a responsibility to lead the organization through your transition and understand that your role will change the closer you get to the end of your term. The second job is to prepare yourself for the next phase in your own life—whatever that might be. Finally, you should plan an active role in assisting the Board in making the best selection for your successor. This is a delicate line. You don’t want to run roughshod over the Board, but you also can’t dump it in their lap and expect them to do all of the work. Make sure there’s a good handoff plan to help your successor with a fast, solid start.