There have been predictions for years that there will be wholesale nonprofit executive turnover as the baby boomer generation of nonprofit founders and leaders reach retirement age. The Great Recession and its aftermath postponed many planned exits due to the diminished value of retirement nest eggs. But the economy has been rebounding, albeit not smoothly.
Transitions in senior positions have been steadily taking place — and it’s not just the baby boomers who are retiring. Generation X executives are also leaving their organizations. Some are determined not to repeat the pattern of hanging on too long; others have decided to start new enterprises or are pursuing other interests.
Even though these trends have been observed, many organizations are not prepared for major leadership transitions. A 2014 nonprofit employment survey revealed that more than two-thirds of the responding organizations had no succession plan in place. The result is that a number of organizations have gone through a series of painful executive changes.
Responsible funders can, and should, provide leadership to grantees during these times, including:
- Continuing to provide operating funds so that the organization can be fully staffed during the transition;
- Providing additional support for the organization to engage interim executive services that will diagnose needs and put in place changes needed for the incoming executive; and
- Encouraging the organization’s board/search committee to give adequate thought and time to the transition process and the appropriate direction for the future.
Transforming during Executive Transitions
The departure of a key executive can create a void in any organization. But nonprofits are generally leanly staffed, and so are particularly affected. Parceling assignments out to an already stretched staff until the right person is hired only exacerbates difficult transitions.
The disruption of an executive transition also provides an opportunity to make productive changes. When a long-time or founding executive leaves, organizations are often saddled with legacy systems or procedures that fit the quirks of that leader or that were homegrown and tweaked as the organization matured.
A transformational interim executive brings an experienced eye to an organization and can be an effective sounding board for trustees. A transition with an independent interim executive avoids the difficulties arising when an incumbent stays on. The incumbent might defer making needed changes knowing that someone new would be coming in. But delaying the inevitable only puts the new executive at a disadvantage of having to fix the infrastructure before moving the organization ahead with a new vision.
Some organizations will use an insider (staff or board member) as the interim executive. However, these insiders might have vested interests or biases. Also, if the interim is a candidate for the permanent position, there might be pressure to hire her/him.
Real transformational change can only happen when people, systems, and the organization are all fully engaged. An independent transitional interim leader can often provide an open channel for the Board, staff, funders, and community to have frank discussions about the organization and can assess the adequacy of the existing systems and operations. A transitional leader can make the needed changes and provide a seamless hand off to the new executive.
Funders must take an active role to ensure healthy disruptions. Interim leaders need time and flexibility to work with the Board and staff to diagnose the organization and make needed changes. If funders provide continuity in funding during this period, an interim will be able to focus on strengthening the organization rather than paying the bills.
Funders should also provide additional resources to encourage their grantees to step back and look at their full range of opportunities. It is critical to review the current state of the organization before rushing to fill the ongoing position. This is an opportunity to consider restructuring the organization to leverage its resources. For example, it might make sense to migrate programs that don’t fit with the mission. In any case, an interim period of transition provides a time to strengthen an organization for its next chapter.
These are hard issues to deal with, but they are often deferred until a crisis hits. An executive transition shouldn’t be a crisis event. It is rather an opportunity for healthy evaluation and change.
Patricia J. Kozu is interim executive director at the New York Chinese Cultural Center, and is a Steering Committee member of the Asian Women Giving Circle. She also serves on the Board of the Nonprofit Coordinating Committee of NY and is a member of the U.S.-Japan Council. Pat served on the CEP Board of Directors from 2006 to 2011.