The Importance of Succession Planning

February 22, 2016

The Importance of Succession Planning

 

      by Cathy Self, Baptist Healing Trust

Our organization has recently journeyed, formally and with intention, on a growing understanding of and appreciation for the importance of succession planning. It started when I somewhat casually mentioned to our staff that I wanted to retire at the end of 2016. That was in 2014. Since that moment we have experienced the highs and lows of planning for transition. This blog may help you think a bit more about why succession planning should matter to you and your organization.

The Harvard Business Review has run a series of articles about succession planning. Some startling statistics emerge in those articles, one based on a new study completed by The Bridgespan Group based on a survey of more than 400 nonprofit C-suite leaders. Some of these statistics have been notable in the for-profit sector, but these numbers apply directly to our sector and our work. Of the 400 leaders surveyed, only 30% of open C-suite positions in the nonprofit sector were filled by an internal candidate (the rate at for-profits is 60% of positions). And almost half their replacements came from other nonprofits. This number reflects significant financial and productivity costs, noted historically by the corporate world: Onboarding an external hire can cost up to twice the departing executive’s salary, and the time it takes for an external hire to become productive is twice as long as for someone hired from within.

The survey also found that in the past two years, one in four C-suite leaders left her or his position, and nearly as many reported that they planned to do so in the next two years. Meanwhile 44% of their replacements came from other nonprofits. Projecting those findings out over the next eight years, the nonprofit sector could need to replace the equivalent of every existing C-suite position, creating, if patterns hold, a case of leadership musical chairs.

Many of the executives interviewed for the survey said their organizations were too small and flat to provide opportunities for promotions, even for the most promising staff. Other rising leaders found a lack of mentoring and support to be most discouraging: “My plans to stay or leave change relatively frequently,” says the executive director of a youth development organization in Pennsylvania, “and relationships with the board are the primary factor.”

Even smaller organizations can implement effective professional development policies. This research showed that skill development can often compensate for lack of upward trajectory. In fact, stretch opportunities abound in smaller organizations where everyone wears several hats. Building the most effective leaders possible is particularly critical for smaller organizations, where any weak link can hurt the entire chain.

Some leaders fear that their leadership development investments will walk out the door. But recent Corporate Executive Board research found that staff members who feel their organizations are supporting their growth stay longer than those who don’t, because they trust that their organizations will continue to invest in them over the long term. 

Succession planning is becoming noteworthy as a viable sustainability practice. Succession planning is also increasingly understood as a process rather than a single event, a process that needs to constantly scan for potential leaders and further development needs.

Most of the stories we know and have told (and retold) are of organizations filled with passionate leaders and compelling need. These characteristics are typical of startup and infancy days for most nonprofits, but very difficult to actively sustain over the long-term. It’s what happens as the agency matures that creates a rub. According to industry leader Tom Adams, “without deeper attention to the connection between sustained leadership and inevitable leader transition, the organization weakens and in some cases closes down.” For some, as during the recession, organizations are forced to consider mergers or severe dilution of mission.

The nonprofit sector is especially vulnerable to gaps in leadership that will naturally occur – planned or unplanned. Lower salaries, longer hours, increasing need, an aging leadership cohort all add to the challenges faced by the sector. When faced with change that is unplanned or sudden, an organization often experiences chaos and a time of churn without results. Most donors are not amenable to those conditions and find their attention being drawn to other initiatives and programs. The time to invest in leader transitions and leader development is now, not later. The decision to be made is not necessarily to define a date but to ensure that 1. the leader is ready for transition (whenever that may be), 2. the leadership team and staff are ready for transition, and 3. the organization is ready for transition. The most important decision you may make in 2016 is to practice the “habit of paying attention to succession all the time (Adams, T. )”

Most of all, planning for leader development and leader transition is not an indication of weakness but a strengthening of the bench for work that is yet to come. Our team invested heavily this past fall in creating emergency succession plans for every position. The requirement to consider every aspect of one’s work was, initially, quite daunting. The end result was, happily, extremely rewarding to see. We are prepared, now, for the unexpected and the unplanned. But we are also much clearer about capacities and skills, both for who we are today and what we need to become for the future. Our staff and Board have clearly defined roles and responsibilities, with double backups for every key or important function. Contact information has been collected and passwords have been stored safely but accessible in a crisis. We have identified cross training needs and calendars for training. We can approach expected and unplanned transitions with confidence and boldness. I am sleeping better now. How about you?

Cathy Self, Ph.D. has been President and CEO of Baptist Healing Trust since 2010. She worked as Senior VP and Consultant for the Trust for five years prior to being named CEO. With 35 plus years of experience in healthcare and leadership, Cathy loves to “walk alongside” other leaders in discovering their best and most fulfilling ways of being a leader. She is especially fond of adaptive, transformational leadership from a serving perspective. Cathy plans to retire in December, 2016.

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