By Bryan Orander, president, Charitable Advisors
For 15 years, research has warned of the unprecedented number of nonprofit executive directors/CEOs expected to change organizations, retire or leave the sector. In the original Daring to Lead study in 2001, two thirds of nonprofit executive directors did not believe in five years that they would still be with their current organization. Updates to this study in 2006 and 2011 found surprisingly similar results.
Though the recession definitely stalled those predicted leadership changes and retirements, nationally the nonprofit sector has begun to see these predicted changes. Recently, The Boston Globe reported on transitions in the Northeast, and in Central Indiana, every few weeks brings news of another executive who has set a date to move on to his or her next adventure or has given his or her board notice of an upcoming retirement.
Who is replacing those departing long-time executives?
In the past several years through my consulting work with nonprofits to help guide changes of leadership, I have seen these changes firsthand.
People often ask about these CEO/ED transitions. Typically, I approximate statistics based on my recent work; however, I thought it time to take a closer look.
To make the math easier, I took the last 25 leadership transitions and looked at some key factors. These go back approximately five years. The organizations have ranged in size from annual budgets of a few hundred thousand dollars to over $20 million and staff teams from three to more than 500. Most client organizations have been in the $1-10 million range.
Two qualifiers: Charitable Advisors is most often contracted for planned transitions and most of clients did not have internal candidates or potential successors that applied for the ED/CEO role.
Here is a quick snapshot.
Where did the CEO/ED go?
- 16 retirements = 64 percent
- 4 board terminations = 16 percent
- 3 CEOs took another job = 12 percent
- 2 new organizations, with no previous ED = 8 percent
Was the successor hired for the position an internal or external candidate?
- 20 external hires = 80 percent
- 5 internal hire/promotion = 20 percent (seven searches had internal candidates)
What is the background/sector of the successors?
- 10 program = 40 percent, including two from government
- 7 fund development/policy = 28 percent
- 4 CEO/ED from another nonprofit organization = 16 percent
- 4 corporate sector = 16 percent, three of the four had been
volunteers or board members for the organization that hired them
From these numbers, I think there are a few insights that can be drawn and useful to board members and senior staff looking to future leadership changes.
- Internal successors are the exception because so few organizations have additional leaders with a broad organizational understanding and skill set. Of the 25 transitions, seven had internal candidates. Of those seven organizations, five selected the internal candidate as the next ED/CEO.
- An organization’s next CEO/ED has probably not been a CEO before. Confirming national research, like Daring to Lead, most new ED/CEOs are coming from the leadership team of another nonprofit but were not in an ED/CEO role.
- Few leaders make the jump directly from corporate America without having served as a board member or volunteer. Search committees look at a broad range of candidates, but are often most comfortable with people who fit the traditional nonprofit skill sets and culture.
- A next leader is increasingly likely to bring a fund development background versus a programmatic background. Traditionally, the leaders of small to mid-sized nonprofits have come from the program ranks because the emphasis was on serving clients well. While that client emphasis continues, nonprofit boards are increasingly concerned with the leader’s ability to attract resources to grow and sustain the organization.
Your plan of action
Ensuring capable staff leadership is one of a nonprofit board’s most important roles. Whether the reason is retirement, illness, resignation, dismissal or transitions, the change can put your organization and the people you serve at risk.
Here are a few things that staff and board leadership can do over the next month or two, if you haven’t already, in preparation for an eventual transition.
- Be prepared for the inevitable. In many organizations there is such a reliance on the CEO/ED so that when that person leaves or is terminated, the board feels uncertain about who is in charge and what comes next. A brief emergency succession conversation at an executive committee or board meeting every year is critical.
Charitable Advisors has developed a template that boards have found useful. For a copy of this easy-to-use emergency succession plan, please email me at: Bryan@CharitableAdvisors.com
- Build your staff and management team. Every nonprofit should aspire to grow future leaders. The ideal circumstance is for an organization to have one or two viable internal candidates when it launches its search for a successor. However, most nonprofits are small and have few, if any, managers except the CEO/ED. Even larger nonprofits have a management team composed of specialists in finance, programming, fund development or human resources, and often lack the organizational-wide perspective of the CEO/ED. So you may not have internal candidates without an intentional development effort to broaden individual leadership experience.
- CEO/ED sets the tone in developing leaders. The current CEO/ED and how he or she works with the staff team sets the stage for the next generation of organizational leadership. A CEO with a controlling style is less likely to develop strong leaders as potential successors either because those people aren’t hired, they leave or they are never groomed for more responsibility. Growing your team prepares for the future and can make the ED/CEO’s job easier by spreading the load.
Bryan Orander is founder and president of Charitable Advisors. After 18 years of for-profit leadership in the Fortune 50 business world and a disability-related nonprofit, Bryan joined a large regional accounting and consulting firm. In 2000, he founded Charitable Advisors with the vision of going beyond traditional consulting to become a connector, advocate and problem solver for the nonprofit sector.