Succession Plan for Executive Director - Case Study Example

Heloisa Pope English 102 25 March Succession Plan for Executive Director Introduction The moment the executive director decides to leave the Community Crisis Centre (CCC), whether under sudden or planned circumstances, a period of uncertainty, speculation, confusion, and perhaps fear can grip our staff, management and external stakeholders who have a vested interest in the company. A succession plan is designed to help an organization operate effectively (Department of Management and Department of Administrative Services). Losing the executive director is never desired as it also represents the loss of the commitment, drive, passion, vision and leadership inherent and demonstrated in the job. However, the loss fails to lessen the importance of an organization having a succession plan. In fact, the departure presents an opportunity for any organization to assess its current position in the non-profit industry in which it operates. The positioning is determined through activities such as a SWOT analysis (Sasser). A major undertaking like a SWOT review, including what Ibarra calls a gap analysis (Ibarra) of competencies, can reveal how well the CCC is doing, where its shortcomings exist, its opportunities lie and any threats it faces as it strives to continue to execute its functions in the midst of a sudden, or even planned, leadership change. Unfortunately, a cost associated with conducting a SWOT or gap analysis is required in terms of time, human resources and other tangible items including the possibility of hiring professional subject matter experts for the transition period, increased advertising and outreach programs to get the word out of a need for a new executive director. Planning is one method to identify and reduce these costs. Collaboration among stakeholders organization is another method to identify alternatives and to provide key input into the process. But most important is communication between not only the board and senior management but also between senior management and staff (including external stakeholders) that must be sustained throughout the whole process. However, a CCC succession plan should also consist of short term plans and in the case of an immediate departure of the executive director, an emergency plan. The departure of a key staff member like the executive director can spawn discussion of a “brain drain” on the company (Ibarra). Ultimately a succession plan helps lead an organization generally, and the board of directors specifically, to conduct and implement a new executive search, ensuring that the new executive director hired is the right individual for the job and is chosen at the right time (Ibarra). Below is an illustration of a succession planning project plan (Ibarra 20). Figure 1 - Succession Planning Project Plan Succession planning becomes important as many executive will retire in a very short period of time: Succession planning is becoming particularly important as the baby boomer generation nears retirement age. Recent articles are stressing that 50 to 75% of non- profit leadership will be retiring within the next five to eight years. This is expected to create a limited pool of candidates and a leadership gap in the non-profit [sic] community. Many boards are creating a plan or road map on how they would go about replacing/filling key leadership positions (The Keeley Group 2). Understanding the disadvantages of succession planning If a succession plan is obvious for any non-profit organization, what is interfering with the establishment of such a plan? Or put another way, why do a small number of organizations have a succession plan? In 2006, only 29% of US organization claimed to have a formal succession plan, down to 23% in 2011 (Hensel). Informally, evidence of planning is more apparent: While less than a quarter of businesses have a formal plan in place, the numbers improve when informal plans are considered. More than one-third, or 38 per cent, of HR professionals say their organization currently has an informal succession plan or process in place (up from 29 per cent in 2006) (Hensel). Non-profit organizations have many reasons why succession plans are not in place. In most cases a succession strategy is not one of the priorities that a non-profit organization has because it can be emotionally exhausting, time consuming and costly. In addition, too many other priorities are juggled by staff of a non-profit organization. Succession planning is set as a lower priority as a result. “Evren Esen stated that the reason why many organizations are not developing formal plans is ‘because more immediate projects are taking precedence…’” (Hensel). Change of leadership in a non-profit organization is not easy. Likewise, in many instances, the change of the leadership does not happen for many years. Some have functioned in that role for 10-15 years (Matan). Truly, many executive directors don’t want to think about their own departure, even though we know that it is inevitable. Executive directors are definitely not to blame. Most executive directors that have been with the organization for many years tend to have compassion for what they do, and they truly hold values to their heart. In fact, executive directors have the knowledge and the experience necessary for the continuation of the non-profit organization. Passing off the reigns of control of the organization can often be very difficult. Also, we know that any type of change can have an impact on the people and stakeholders with an interest in the company. For example, it can impact everyone from the volunteer, to the staff, to the donors and so on because usually the executive director has established an understanding with people. Executive directors have also gained their trust of the non-profit organization knowing that the executive director has the best interest of the community in mind. As a result, leadership changes can be demanding and emotional. Additionally, our economy is not in a favourable state, and many say that it continues to decline. Numerous non-profit organizations have been working to try to hold their heads above water dealing with financial constraints. Dealing with the issues and challenges of the day-to- day operations can be overwhelming. In other words, the urgency of a succession plan is very low. To create and implement a plan involves time. Also, to have a proper plan that fits your organization you may need to invest money which lately has been a delicate topic as pressure on budgets becomes apparent. However, the benefits of having a succession strategy are far more important than we think. The most commonly known failure for non-profits organization is not to have a succession plan. In most cases, there is a great possibility that the executive director will need to leave for a short-term, long-term, permanent term or even to retire. The organization will be too vulnerable and unprepared for the situation. It can be too late to ignore the fact that the organization just lost their vision and mission. Consequently, this will raise stress among the volunteers, staff and board. It is always nice to have some type of prediction, but some things are out of our control. To ensure the best outcome and the contribution of all staff involved would be better to have an understanding of what will happen next. This allows for future candidates to have the time to learn the skills necessary to keep the non-profit organization open and for the transition to run smoothly while keeping the vision and mission in mind. Identifying Future Candidates Finding the right candidate at the right time for the executive director job is crucial. To ensure that the plan runs seamlessly, one of the main goals is to find a successor who will not only fulfil the current needs of the non-profit organization but is also compatible with the values and mission of CCC. It is also essential to recognize what the board will look for in a future candidate. For that to happen, the CCC will need to evaluate and understand fully how the role of the executive director will evolve based on a collaborative assessment of the current and future needs, services and programs of the organization. Having this in mind, the board and the executive director should have an open communication with each other, at a minimum, to define the role for the future candidate. Communication on how the role will evolve will also be between the CCC and all of its stakeholders. As the current executive director would have shaped the model on which the CCC operates the discussion between the board and the executive director is a starting point on the chosen path of progression. Openness means creating a concrete description of what skills are necessary, that way it will make the search for the future candidate effective and productive for the continued success of the non-profit organization. Keep in mind, the objectives of this tactic is more than finding the talent gaps. It is also an activity to establish “…a process that recognizes, develops, and retains top leadership talent” (The Keeley Group 2). The process is systematic. According to the American Society of Association Executives, the process is almost perpetual as a result it systematically identifies, assesses and develops talent to ensure “…leadership continuity for all key positions” (Matan 1). The CCC should include in the scope of qualifications both staff who work inside the organization and those who work outside the organization. An assessment of the talent pool within the CCC should be conducted. Feedback from the employees is also important in determining what they believe are the qualifications for a new executive director. The activities that obtain staff feedback can contribute to putting the plan into action successfully. Emergency plan A risk that the CCC faces is the possibility of an unplanned departure of the executive director. The length of the departure can be short-term, long-term or permanent. An emergency succession plan outlines the actions or tactics undertaken by the board of directors in the event of an unplanned departure of the executive director. It also “[allows the organization]…to continue executive functions by outlining policies and procedures for the temporary appointment of an acting executive director” (State of Texas 56). The board will undertake the following actions (State of Texas): 1) Identify all the functions carried out by the current executive director; 2) identify candidates within the current senior management talent pool who can assume the executive director role during the emergency. The possibility should be considered that the executive director duties could be shared between multiple senior management staff; 3) help fill any gaps in training that can be provided to the leadership team until an interim execute director can be found in the event of an unplanned and permanent departure; 4) establish a transition committee in as little time as possible if an unplanned and permanent departure; 5) review any compensation package for the acting executive director or directors, as necessary and financially capable; and 6) develop, maintain and sustain a communications plan. Each action is discussed in turn next. Identify the functions of the Executive Director The executive director is a central element in the CCC. These functions include general duties (State of Texas). Often, some of the functions of the executive director are known to existing staff such as those in finance or other senior management capacities. These professional could be considered candidates for acting executive director. It is important that the focus remains on the roles and responsibilities of the position, not the individual (State of Texas). Ibarra suggests that a high-potential employee has the capacity to advance to one of the following (Ibarra): 1) Critical position; 2) higher level of responsibility; or 3) a higher level of technical proficiency. Cross-training requirements A review may yield gaps in knowledge, skills or abilities that need to be filled through formal training, possibly by a third-party executive training provider. A training review that culminates in a training plan will not identify the gap but also provide a source of information when talk turns to future needs of the CCC or when the new job description for the position is revised and updated (Ibarra). Transition Committee Typically the transition committee will implement the succession plan of the CCC. The committee generally consists of several select employees (possibly from the ranks of senior management) from within the CCC to act as coordinator of activities associated with the transition process. In addition, the committee acts as advisor to the board of directors on progress and issues. Compensation Package The compensation package provided to an interim executive director depends on the situation and circumstances. The package provided depends on the financial resources available to the CCC and the availability of the interim executive director. Communications Plan The communications plan is vital. All stakeholders to whom the CCC will communicate must be identified and a chosen communications medium established. Stakeholder groups are vast in a non-profit organization and include constituent groups, major donors, government bodies, foundation program officers, community leaders, and internal stakeholders (State of Texas). The plan will mitigate the risk of mistrust and discontent (Sasser). In conclusion, an emergency succession plan is vital to help guide the board of directors in not only choosing a successor to the sudden departure of an incumbent but to ensure that the necessary actions and tactics undertaken by the board are aligned with documented policies and procedures, including financial package policy, which may get updated and revised during the entire planning and analysis process. Ultimately, it eases the transition process, and minimizes or mitigates any risk that normally would transpire in the event of no succession plan being in place for the CCC, all of which is based on a firm foundation of strong communication between the board and all stakeholders of the company. Above all, the planning process allows for the company to take a proactive approach that will help the CCC take advantage of new opportunities and gain valuable insights into the future direction of the company without sacrificing its core values and mission. Works Cited Department of Management and Department of Administrative Services. "State of Iowa Workforce Planning: Succession Planning." 2010. Iowa.gov. http://das.hre.iowa.gov/documents/publications/succession_planning_guide.pdf. 7 April 2012. Hensel, Jason. One+ Magazine Blog. 21 June 2011. http://www.mpiweb.org/magazine/pluspoint/20110621/Succession_Planning_Decreasing. 2012 8 April. Ibarra, Patrick. "Succession Planning: An Idea Whose Time Has Come." Public Management (January/February 2005): 18-24. http://www.tmhra.org/pdf/IbarraSucPlanning.pdf . Matan, Ron. "Succession Planning for Nonprofit Organizations: A Journey, Not a Destination!" Summer 2010. Sobel CPA. http://www.sobel-cpa.com/sites/default/files/whitepapers%20summer%202010.pdf. 8 April 2012. Sasser, Littleton & Stidham P.C. "Planning for Non-Profit Executive Transitions." 2006. Northeast Institute for Quality Community Action. http://www.niqca.org/documents/Plan_Nonprofit_ExecTransitions.pdf . 7 April 2012. State of Texas. "Emergency Succession Plan Outline." Leadership Transitions n.d: 55-57. http://www.arts.state.tx.us/toolkit/leadershiptransitions/templates/emergencysuccessionplanoutline.pdf. 7 April 2012. The Keeley Group. "Succession Plan." 2010. Northland Foundation. http://www.northlandfdn.org/Convening/keeley1110/Succession/PlanTemplate.pdf. 8 April 2012. Annotated Bibliography Department of Management and Department of Administrative Services. "State of Iowa Workforce Planning: Succession Planning." 2010. Iowa.gov. http://das.hre.iowa.gov/documents/publications/succession_planning_guide.pdf. 7 April 2012. The Department of Management and Department of Administrative Services created this how-to guide to help the State of Iowa with their success planning. Developed within the last two years, the guide is written with a public sector audience in mind. However, it contains key principles that can be applied to the non-profit sector. It provides details on four phases for succession planning. The phases are augmented with added templates that can be used as a starter kit to support each phase of the success planning process. Operating effectively during a transition is important and I plan to make reference to some of this effectiveness from this publication. Hensel, Jason. One+ Magazine Blog. 21 June 2011. http://www.mpiweb.org/magazine/pluspoint/20110621/Succession_Planning_Decreasing. 2012 8 April. Jason Hensel provides an updated report via an online blog citing statistics related to how prepared most organizations are with their succession planning. The report is primarily focussed on businesses in the United States. The blog further delineates which typical functional areas within and organization lead efforts to drive succession planning activites. It concludes with an emphasis on the Human Resource Department playing a more active role in succession planning and concludes by redirecting a question back to the reader as to the importance they place on succession planning within their organization. There are many reasons why organizations place little emphasis on succession planning. Hensel provides some statistics I would like to use in my section on the disadvantages of succession planning to bring attention to how little priority planning is given in most organizations. Ibarra, Patrick. "Succession Planning: An Idea Whose Time Has Come." Public Management (January/February 2005): 18-24. http://www.tmhra.org/pdf/IbarraSucPlanning.pdf . Patrick Ibarra’s journal article provides a moderate eight-point outline of how to implement succession planning within an organization. Somewhat dated, the article includes two generic outlines covering a project plan for succession planning and employee development strategies. It culminates with a review of the essential components of a succession plan and concludes with a case study, emphasizing key points to remember. How does an organization know where to start with their planning? Ibarra reviews the SWOT analysis prinicples that are both useful to my introduction and as part of emergency planning, particulary with the concept of gap analysis. Ibarra also provides some good visual illustrations I can use as part of my introduction to the paper. Matan, Ron. "Succession Planning for Nonprofit Organizations: A Journey, Not a Destination!" Summer 2010. Sobel CPA. http://www.sobel-cpa.com/sites/default/files/whitepapers%20summer%202010.pdf. 8 April 2012. Ron Matan writes a detailed analysis from the perspective of a Certified Accountant on succession planning. His analysis covers key topics including the recruitment process and selection of candidates and training plan. The analysis offers tips for a smooth and planned transition culminating in the steps to execute the plan. The paper is augmented with some case studies about what does and does not work when it comes to strategically applying succession planning to a process for renewal. What many non-profits could find useful is the succession readiness checklist at the end of the paper. Looking at the existing talent pool is important when considering new leaders. Matan covers some useful topics I can use in the section on identifying future candidates for the role of executive director. Sasser, Littleton & Stidham P.C. "Planning for Non-Profit Executive Transitions." 2006. Northeast Institute for Quality Community Action. http://www.niqca.org/documents/Plan_Nonprofit_ExecTransitions.pdf . 7 April 2012. In Planning for Non-Profit Executive Transitions, the authors focus primarily on the activities undertaken by the board of directors and new executive directors for activities related to executive transitions. With an emphasis on communication to sustain, and strategic directions to take, they review the recruting process and steps to bring the new executive director onboard. In addition, they stress the importance of a graceful exit of the incumbent while providing advice to the new director. Their issue paper concludes with some details about contracts and emergency planning, both laden with questionnaire-based checklists to help organizations along with their own process. No part of the planning is successful without a solid communications plan. I plan to make reference to communication planning from Sasser in the section on emergency planning, including the risks mitigated by a communications plan. State of Texas. "Emergency Succession Plan Outline." Leadership Transitions n.d: 55-57. http://www.arts.state.tx.us/toolkit/leadershiptransitions/templates/emergencysuccessionplanoutline.pdf. 7 April 2012. The State of Texas’ header on Leadership Transition aptly describes their outline on emergency succession planning as part of a tool-kit. Despite its small outline, the paper succintly describes plans for short-term, long-term and permanent departures of an executive director. Emphasis is given on the procedures an organization can follow given a specific planned or unplanned departure. Part of the outline includes a key statement that all organizations can be better prepared. So it provides a good lead-in to asking how prepared is the CCC? How an organizaton continues to provide effective operations during a succession process is highlighted in the State of Texas paper. I would like to use some quotes from their paper to emphasize this concept, especially in my section on emergency planning. The Keeley Group. "Succession Plan." 2010. Northland Foundation. http://www.northlandfdn.org/Convening/keeley1110/Succession/PlanTemplate.pdf. 8 April 2012. The Keeley Group highlights key considerations for a successful succession planning process including questions an organization can consider before they embark on the process. They cite differences when moving from a founding CEO to a hired CEO, including coverage of developing and updating the succession plan, providing leadership and governance, and preservation of corporate culture. In addition to providing a ten-point step-by-step guide, they cover the key roles played by both the board and the current CEO in the process. The group concludes their planning guide with a succession plan template. I plan to use the reference in their report on the importance of planning because there is a need to emphasize the understanding of the impact departing leaders will have on organizations in the near future. There are some interesting statistics to cite in my paper introducing this impact. Read More