“CEO succession planning is one of the most important responsibilities of a (nonprofit) board…” 1
Yet others and I find it to be a neglected responsibility. In the for-profit arena, a mistake in choosing the wrong CEO, “leads to a loss of $1.7 billion in shareholder value in addition to a loss of organizational confidence and momentum.“ 1 Choosing the wrong nonprofit CEO in a situation when I was a board member set in motion a year of staff turmoil, lost growth potentials, the decline in the nonprofit’s reputation, and an uncalculated financial loss. After a post-turmoil CEO took the helm, the agency prospered for more than twenty-five years.
Based on a national study of for-profit boards, the following are some COVID-19 CEO succession questions that nonprofit board members should consider now.1
Is our emergency successor still right for this environment? Is the internal successor capable of managing under turmoil conditions? If not, a new external person needs to be contacted. Often this turns out to be a consultant in the mission field. It’s important to reevaluate all external options now for the CEO’s ability to manage under unprecedented conditions.
Is our CEO role specification still right? Over several decades, I have encountered a number of what I would call, “mind-the-store” CEOs. These persons have: nice personalities, keep expenses within budgeted incomes but are not proactive in seeking innovation and change. Unfortunately, these types of CEOs can satisfy their boards for decades under what might have been considered normal circumstances.
Because CEOs have a better grasp of current mission-related trends, boards and CEOs should be planning for the Post-COVID 19 period, even while addressing unusual operational challenges.
Do we have the right people in our near-term succession pipeline– are they prepared? The selection of the CEO is the only employment decision that nonprofit boards make. But they are also required to overview the near-term staff succession pipeline for those with very special talents. For many nonprofit boards, this involves an uncomfortable discussion of who might be in line to succeed the CEO or other senior managers should any become temporarily incapacitated.
Is your board ready and able to have these discussions? Under current tenure requirements, the average tenure for nonprofit board members centers around six years—two six-year terms or three two-year terms. As a result of this brief tenure, many board members may feel that simply raising the question of CEO succession suggests a lack of the CEO’s abilities to manage It also may cause board conflict if suggested. However, it is simply the members’ due diligence responsibility and, if ignored, can cause strategic problems for the organization.
First Steps: 1
- Review your leadership/experiential criteria. The abilities a nonprofit CEO will need may change substantially. Working with the CEO, nonprofit boards need to take the lead in surfacing these criteria, for example, a better understanding of IT requirements.
- Ensure that your emergency (succession) plan is more than just a single name on an envelope. It’s a good idea to have a process ready for an unplanned exit by the CEO. But CEO experience criteria should be reviewed in-depth every two years to be current.
- Do now what you normally would put off for later. Start listing the criteria that a CEO will need to operate successfully Post COVID -19. It will enable the board to consider the changes taking place. Also, the CEO can have some guideposts on how his/h abilities need to be enhanced.