Leadership Succession— are you ready to make the leap?

Joan M. Renner, CPA, CGMA, Director 501(c)(fit!)

It’s hard to imagine your organization without the key members of your management team.  They hold the knowledge, experience and relationships that drive your mission-related impact.  Your CEO and key managers have years of institutional knowledge.  They run your programs and fundraising activities like clockwork.  They call their contacts when they need to get things done and they maintain your organization’s relationships with key donors, members and funders. 

Yet, ask yourself:  how many of these key managers will still be leading your organization in 2028?  It’s no secret that today’s nonprofits are facing a decade of leadership succession as the current generation of leaders prepares to retire.  The AICPA warns that this demographic shift will leave nonprofits “with leadership gaps and potential instability in C-suite ranks” citing succession planning as a key risk nonprofit for today’s nonprofit boards and executives. *

Many Board members already worry about how their organization will pass the baton once their exec retires.  Your next board chair doesn’t want to preside over a surprise management succession.  Most experienced nominees will ask about this issue before stepping up.  

Most nonprofit execs d’un certain age (baby boomers) have an idea about how long they would like to work—perhaps till their spouse retires, their youngest is through college or the house is paid off.  I’ve spoken to managers who are already working past their optimal point because they don’t want to let their organization down.  They stress over what will happen to the organization’s mission-related services when they finally have to announce their imminent retirement. 

So why aren’t more nonprofits talking about this risk and developing a succession plan?

The issue rarely raises itself, so it’s easy to put these sensitive personal discussions on the back burner.  Leaders can be uncomfortable sharing their wishes and there are plenty of more urgent issues to address.  But without creating an intentional dialogue around succession, you’re leaving your organization exposed to risk.

Your organization’s survival depends on your ability to cultivate the next generation of leadership. It’s vital that you capture what your current leaders do, and what they know, and instill it into your next generation of leadership.

How will you prepare your organization to make the leap to the next generation of leaders?

Create position descriptions.  In smaller nonprofits, much of what your exec does is in his or her head.  What a gift it would be to get that in writing and identify the general areas of responsibility handled by the key members of your management.  Ask each team member to write or update their own position description.  You will learn much about their value and service.

Document processes.  Ask your program managers to be sure there are current written policies and procedures in place for each of your programs and activities.  What does it take to keep the gears turning?  Document each current grant agreement so that all the requirements and contacts are in one place.

Close unrealistic loops.   Is there a point in your organization’s process where “magic happens”?  For example, do you have a Treasurer who keeps the books as a volunteer?  Document what that magic person does and realize that you will probably have to hire that as an outside service in the future.  A magic volunteer is a gift, but it is a one-time gift.  When that magic volunteer is done, you will need to hire that service and put it in your budget.

Identify key competencies.  Each member of your management team knows the experience, skills and knowledge that their successor will need to succeed.  Ask them what ingredients make up the recipe for success in their position.

Share duties.  In a smaller organization, each individual performs many duties.  Gain some depth in your organization by sharing key duties.  Spread your risk by dividing up key duties between several team members.

Incentivize an orderly departure.  If you have several managers nearing retirement age, try to negotiate staggered retirement dates so they don’t all leave at once.  Agree on incentives for those who stay until their agreed-upon date.

Team up on supporter contacts.  Your organization is supported by some key donors, grantors and connections.  Be sure that at least two individuals are in regular contact with these key supporters.

Invest in leadership development.  Identify your talent and identify what they need to learn to prepare to take the helm.  Participate in leadership development programs in your industry or in your community.

Backfill key competencies.  Few execs ever rose to their role through the finance department.  Yet most execs must take on the role of overseeing the finance function.  We can help emerging nonprofit leaders learn about the finance function with our seminar, 501(c)(fit!) Financial Leadership Training for Emerging Nonprofit Professionals.  

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