CEO Jane Wear (Warsaw, Ind.; jane.wear@cardinalservices.org) sees great value in succession planning for an organization’s executive position. That’s because this type of planning has a versatility to it that can help the nonprofit in several challenging circumstances involving the departure of the executive.

“Succession planning can take many forms,” Wear said.

A good succession plan can develop an internal candidate to be prepared on an interim basis to lead an organization if something unexpected happens to the CEO, Wear said. It can also prepare a person or two within the organization to be an effective leader as the CEO retires or otherwise leaves the organization, she said.

That’s not all: “It is also an effective way to invest in employees that you see significant potential in,” Wear said.

There are four important areas where an investment in succession planning can assist the organization, Wear said:

  1. Unexpected personal situation with the CEO.
  2. Retirement of the CEO.
  3. CEO departure announced at least a year in advance.
  4. Surprise CEO departure.

Unexpected personal situation with CEO

As CEO, Wear found herself in an unexpected situation facing life with a husband with terminal brain cancer. This blow would also affect the organization directly.

“I knew I would be in and out of the organization for 18 months as I cared for my husband during his last days,” she said. “Work was the least of my worries for several reasons.”

This unexpected development left the organization without its leader, but an internal person was already being groomed as a potential successor, due to planning that included:

  • Work that had taken place. A formal succession plan is in the implementation stage for this person, Wear said.
  • An effective job description. The responsibility to serve as the interim CEO was stated in his job description.
  • Staff leadership in the know. The administrative management team attended all board meetings, Wear said.
  • Team decision-making. The administrative management team was involved in all important decisions.
  • Policy matters planned out in advance. There was a policy review schedule established for the board and committee meetings, Wear said.

“The fact that everyone, including the board, knew what the protocol was when I was unable to be at work and that the key managers of the organization were involved in important decisions allowed the organization to function as usual in my absence,” Wear said.

By having a preset policy review schedule in place, the board and staff were assured that everyone knew the regular business the board needed to handle was for each month, she said.

Retirement of the CEO

A CEO’s retirement can create multiple routes for the board to take in its succession planning. Wear said one is for an internal candidate to emerge.

“The board needs to decide whether to even interview other candidates,” she said.

The other route for the board, according to Wear, is when there are no internal candidates, or there is an internal candidate but the board decides to interview the internal candidate and then open up the position to others. Let’s look at each issue.

With a solid internal candidate in place, the board has several issues to consider:

  1. If the internal candidate is not promoted to CEO, is he or she likely to leave the organization?
  2. How do the customers, staff, funders, legislators and others in the community feel about this person?
  3. Is the board performing their role appropriately if they select the internal candidate without interviewing others?
  4. If the internal candidate is promoted, what holes are left in the organization that will need to be filled?

On the other hand, if there is an internal CEO candidate but the board wishes to interview outsiders, the board should consider issues such as these:

  • How to explain the interview and hiring process to staff and the internal candidate.
  • The need to establish an interim CEO if the organization is now facing a period without a CEO.
  • The internal candidate’s role. “The board also needs to determine if the internal candidate will be involved in any interviews with the other candidates,” Wear said.

CEO departure announced at least a year in advance

A CEO departure that is announced well in advance of the exit date gives the board time to plan for what is best for the organization, Wear said. Issues to consider in this scenario include identifying:

  • The goals of the organization going forward.
  • What skills a successor will need to achieve those goals.
  • What is needed in terms of the capacity of the board, managers and internal processes to sustain funding and programs into the future.
  • Where the organization appears vulnerable going forward.
  • Formation of a succession planning committee.
  • Whether the CEO should continue working with the organization in some fashion.
  • The search strategy and whether to use a consultant and/or recruiter.
  • A communications plan.
  • The additional support, resources and accountability a new CEO may need.

Surprise CEO departure

The final issue for a board to consider, the unexpected departure of a CEO, presents sterner challenges to the organization, Wear said.

“The job description of the CEO should specify the amount of notice expected if the CEO plans to leave the organization,” she said. Well-thought-out strategies for the following will also help to put the organization in a more favorable position if such an event arises, Wear said.

  • A succession plan is already in place for the CEO.
  • It is clear who the interim CEO will be.
  • A strong management team is in place.
  • Communication to clients, staff and community should be crystal clear.