Leadership Development
Leadership Transitions: Crisis or Opportunity?
In an environment plagued with uncertainty for the nonprofit world, one fact is indisputable - change is coming. Recent surveys alert us to the plans of baby-boom executive directors to retire.
The largest to date, Daring to Lead 2011, asked 3,000 executives about their career paths, likely tenure,
partnership with the board of directors, and the impact of the recession
on their organizations. To supplement the survey, 70 executives
participated in focus groups in San Francisco and Washington, D.C.
The percentage of respondents who said they were leaving their job within five years—67%—was somewhat lower than the 75% who said they planned to leave within five years in both previous studies, with executives' responses suggesting that the recession may have temporarily slowed executive departures. Nevertheless, a large majority of respondents continue to anticipate their departure within five years, making executive turnover and transition an ongoing concern for nonprofits, their boards, and other stakeholders.
Other significant findings:
- Almost half of respondents (45%) said their boards had not reviewed their performance within the past year, and only 18% said that their performance review was useful.
- Most respondents—84%—reported negative organizational impact from the recession, with one in five reporting significant negative impact.
- Nearly half of respondents (46%) said their organizations had operating reserves of less than three months of expenses, even though three months is the minimum level of reserves suggested by most experts.
- Executive coaching was ranked highest by respondents as a very effective professional development strategy, but just 10% of respondents were working with a coach.
Is the nonprofit sector prepared to address this potential massive
leadership change? Are resources and energy being committed to
developing new managers? If the experience of The Nonprofit Center at
La Salle University is indicative of trends in the sector, the answers
would be no and not much.
The Nonprofit Center was concerned that local nonprofits were not
addressing the issue of succession planning. We wanted to know if
replacements were being groomed now to take over the reins from
executive directors who were moving on or retiring. In pursuit of this
information, we recently conducted an informal survey to find out what
was happening regarding succession planning. The results indicate that
this area will experience a leadership gap within the next four years,
as few plans exist to replace retiring baby boomers.
The anonymous survey revealed that while more than 2/3 of the 223 local
EDs responding plan to leave their current leadership roles by 2010 at
the latest at more than half of those organizations there had been "no
discussion" whatsoever of succession at either the board or staff level
and at 52% of organizations, there is no one in the organization
suitable for grooming as replacement leaders. Even more startling is
the finding that no formal succession plan exists in more than 90% of
these nonprofits. Have conditions changed significantly in the past few years. We'll see what our 2011 studies reveal about the sector and its preparedness.
Unlike the business world, the nonprofit sector has not been taking the concrete steps necessary to build its bench strength by identifying talented people and developing them for future leadership.
If nonprofits do not act now to address their failure to have a plan for executive director replacement, as well as committing to developing new managers, this leadership gap will extend to include managers at many levels of an organization. We must ask ourselves what will happen to the people who depend on the important social and community services these nonprofits provide when the organizations face the departure of their leadership with no succession plan in place.
The Nonprofit Center has developed a Leadership Transitions Program to support nonprofits in protecting their vision and stability before, during and after executive transition. It offers three components, depending upon the needs of the nonprofit.
Succession Planning supports an organization's board in developing a plan to address the executive director's departure as well as committing to developing future leaders;
Executive Transitions guides nonprofit boards through the process of hiring or changing executive directors, developing a time and cost-effective approach to address every step - from assessing the organization's staff leadership needs to fostering successful integration of the new hire;
Interim ED Program to place experienced nonprofits executives at the helm for a four to twelve month period while the board and staff address key systems and capacity issues. Research suggests that those groups that use an Interim ED "emerge stronger, more financially sound, and with high levels of optimism about the future impact of their agency services."1 If your group is in a state of transition, an Interim Executive Director, could prove the most effect short-term leadership strategy.
The Nonprofit Center emphasizes continued support of the new director through targeted educational tools will help contribute to success. Chief among these are "CLEAR Circles," peer learning circles facilitated by The Nonprofit Center (see August 2006 Guidestar newsletter), as well as workshops like "Nonprofit Executive Directorship 10, one-on-one executive coaching, and a comprehensive certificate program in nonprofit management.
The time for a nonprofit to address the question of leadership change is before it happens. Your board should be asking itself what steps it is taking to be prepared to handle change at the top, to be in a competitive position to attract skilled senior executives? What experts are available to effectively navigate this critical passage? This is a time when we should be taking cues from the for-profit sector, which, to its credit, has long embraced these concepts.
1 Wolfred, Thomas, Interim Executive Directors, Executive Transitions Monograph Series, Volume 2, San Francisco California, 2005
Read the Chronicle of Philanthropy article on why young people are rejecting nonprofit careers >
