Nonprofit CEOs are usually the chief money raisers for their organizations. This means that when a nonprofit CEO tells his board that he’s retiring, alarm bells should go off.
Nonprofits are different from nearly every other type of human endeavor. Companies that make things or deliver services get paid in return for their efforts. Nonprofits, on the other hand, depend on the generosity of patrons to meet bi-monthly payroll and other financial obligations. A retiring CEO can spell disaster for a nonprofit if adequate planning has not been completed before the retirement announcement.
You’re a Board Member — Here’s What You Can Do
Insist on a real and critically considered annual performance review for your CEO. The performance review will highlight strengths and shortcomings of the current CEO, and alert board members to hidden concerns that might surface during a transitional period.
Have a strategic plan and use it as a routine operating tool. Too many nonprofit boards view the strategic plan as a “once every five years” exercise that “we do whether we need it or not.” Your strategic plan should be updated annually and referred to by board members regularly. That’s how you’ll know your CEO is on track. You’ll also be able to easily determine where you should fill in gaps before you need to recruit a new CEO.
Prepare a succession plan every year. Identify potential candidates both inside and outside the nonprofit who could take over if an unexpected transition should take place. One Fortune 500 company I worked for listed outside executives whom board members considered potential replacements for the CEO. Those potential replacements’ names remained strictly confidential, they had no idea that they were listed on the succession plan.
Take advantage of the opportunity. Recruiting a new CEO can create dynamic change for a nonprofit. When our nonprofit search team is called upon to recruit a new CEO they start by interviewing funders, patrons, clients, and other constituencies to get a clear picture of what the nonprofit’s leadership needs are. Our report helps the search committee determine what key characteristics the new CEO needs to have. Fresh leadership is a wonderful opportunity for institutional growth and development.
Draft a comprehensive description of duties and expectations — with specifics. Notice we didn’t say duties and responsibilities. We are proponents of the term “expectations” because expectations are what a CEO is hired to meet and exceed. Clearly defined expectations are essential for recruiting a top performer who can get the job done.
Don’t wait, act. Avoid a leadership gap if possible. A nonprofit without strong leadership at the helm is an invitation to disaster. Key funders and philanthropists lose heart if they think their gifts and grants will not be managed by reliable stewards. Losing the trust of generous givers because of a leadership gap can be devastating. Some nonprofits never recover.Dise & Company has spent decades learning how to become the leading nonprofit executive search firm we are today. Read our whitepaper to learn more about why finding the best executive talent takes expertise.