How to manage a nonprofit leadership change
You've seen the headlines: The first of the baby boomers have reached 65 and are starting to retire. Nonprofit executive directors, like executives in every sector, are aging out. Data from a national study from CompassPoint and the Meyer Foundation titled "Daring to Lead, 2011" says two out of three top directors plan to leave their jobs within five years, and that many boards are underprepared to respond.
If you're on the board of a Maine nonprofit, odds are you'll be hiring its next CEO. Few things boards do have greater impact or greater risks to staff morale, relationships with stakeholders and future effectiveness.
Some companies have the ability to see themselves through a successful transition and some will need help. Ideally, your organization is already doing leadership development and succession planning. But regardless of whether you have a succession plan, when your executive director is heading for the door, resist the impulse to start a search immediately. To hire the right person, first establish what you need. Here are the steps to take:
Needs assessment: Is your board clear — and in agreement — about what you need in a CEO over the next few years? Start with an updated vision of your organization's role in meeting community needs. Assess its readiness to play this role, and where it needs to develop or take corrective action. Discuss whether a merger is an option worth considering. Make sure your answers reflect input beyond the boardroom. Nonprofits have multiple stakeholders, many of whom care passionately and are important to its success: clients, volunteers, staff, colleagues, funders and (sometimes) regulators. If there are conflicts, this is your opportunity to address them by listening to others' perspectives and taking what you hear into account. Decisions will still be yours to make, but this process will make your decisions stronger and more welcome. This needs assessment defines your priorities in choosing your next executive director.
Search: With your needs defined, you're ready to conduct a high-quality search. Update the executive director job description and salary, and make selection criteria explicit. Decide who will participate, including some non-board stakeholders. Establish ground rules (including confidentiality), and be clear about who makes the final decision — usually the full board. Let your stakeholders help you reach potential candidates by circulating your flier widely through your networks and theirs.
Interim management: Much of the pressure to replace the executive director quickly comes from anxiety about a leaderless operation. So explicitly name an interim executive director, giving him/her permission to play needed roles like team leadership, oversight of key deliverables and communication. Since you're pausing to update your organization's vision, ask the interim leader to focus on the stability of current operations, and put on hold any longer-term decisions or actions. This will also help keep the interim's role manageable. It's simplest when the interim executive director has no interest in the long-term role. But sometimes the best short-term option is also a candidate in your search. This can work, with extra attention to making expectations clear. Even if the search leads you back to this internal gem, you'll never know that you've made the right hire unless you go through the process of identifying what's needed and searching for the best match.
The bottom line: With a majority of executive directors planning to leave their jobs within five years, make sure your board is well prepared to manage an executive transition. Embrace this opportunity to hire well, position your incoming executive for success and strengthen your organization in the process.
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