Baby boomer nonprofit leaders continue to retire in vast numbers nationwide. Does your organization have key people who are nearing retirement? If so, is there a concrete plan to replace them? A succession plan can be the difference between a nonprofit carrying on its mission without interruption and its operations grinding to a halt.
Choosing a strategy
Three approaches to succession planning are common among nonprofits, and one may best fit your needs. The strategic leader development approach focuses on identifying talented individuals who have, or are capable of developing, skills to carry on your organization’s goals before the top executive or another key person has left. As soon as a successor is identified, the executive director (ED) should begin delegating some leadership duties to this individual. This approach gives the ED time to train and assist the incoming leader until he or she can competently handle the new duties.
Preparing for an emergency
Emergency succession planning emphasizes continuing to achieve the organization’s goals and carry out its mission after an unforeseen event, such as death or disability. In preparation, the top executive or executives should develop a list of their duties and step-by-step details on fulfilling them. They should ask themselves: How was I trained for this position? How have my responsibilities changed over time? What did I learn later that I wish I’d known from the start?
Board members should be involved in any type of succession planning, but especially in emergency planning, because they’re obliged to see that the organization is competently led without interruption. A small nonprofit, even if it has limited capacity for strategic planning, should have an emergency succession plan for its ED.
Planning for a “defined departure”
A defined departure plan is appropriate when the key person has announced his or her retirement one to two years in advance. The goal is to build leadership strength: The key person wants to know that the organization can function well after his or her retirement, and the nonprofit requires the same degree of assurance. Setting a target departure date with the board of directors is typically the first step because it prompts those involved to develop a timeline.
No matter which approach you use, consider forming a succession planning committee if more than one key person eventually will be replaced. This will allow members of the organization with various types of expertise to provide feedback in the areas most affected by the departures.
It’s also important to document the succession plan. Although it might take some time away from other duties now, it could prevent a host of problems later.
Having both individuals work at the same time is one of the most effective ways to transition duties. Consider: Your ED announces nine months in advance that he will be retiring, and your succession plan names a successor. While the two work together, have the successor assume some of the ED’s duties, such as creating the organization’s policies, reviewing financial reports and meeting with key people from your community. Gradually shift more work from the ED to the successor.
If the successor isn’t already in the organization, consider hiring him or her a few months before the targeted transition date. To make the process run smoothly, again it’s important that the two individuals work together. The successor, for instance, might be unfamiliar with your ED’s work with the board of directors. So hands-on training by the exiting leader would be helpful.
The role of key person insurance
There is another step your nonprofit can take to prepare for an ED’s unanticipated departure. Key person insurance can protect an organization in the event of a sudden death or disability. This type of plan can help ensure that the nonprofit’s operations and mission are still carried out without major disruptions due to the loss of a key employee.
For example, let’s say the ED — suddenly disabled by heart surgery — had been the nonprofit’s chief administrator and its primary fundraiser. Temporarily hiring two individuals with these critical skills is likely to be more expensive than the cost of finding a permanent replacement. But key person insurance proceeds could provide for this while the search is underway.
Tools and resources
If you find yourself struggling over how to start a succession plan, you can find numerous free or low-cost planning toolkits online, as well as others that are more costly. Many of them will walk you through the process step by step. Some also offer templates and worksheets to help you keep track of goals and tasks and gauge timelines.
In the scheme of everyday activities, putting together a succession plan for your top executive may end up on the back burner. Don’t let it happen. Charting the future of your nonprofit’s leadership is too important of a responsibility to be left to circumstance.