BOARDS’ TASKS IN EXECUTIVE TRANSITIONS

  

By Don Tebbe, Author, speaker & consultant on job transitions and leadership succession

To address the focus problem — or, to put it another way, to expand the board’s focus — boards facing a CEO transition should embrace the following six tasks, all of which are integral to a board’s responsibility for hiring and supporting a new chief executive.

The figure below outlines how these tasks fall along the three phases of the CEO Succession Timeline, as discussed in a previous post. 

 

Task #1 – Prepare for a leadership change.

There are two watchwords for the preparation stage. The first is “readiness”:

• Organizational readiness, which means the organization is stable and ready for a new executive to assume the leadership role. Depending on the current executive’s departure circumstances, this may involve investing time in some serious assessment, planning, and prep work.

• CEO job readiness, which means the chief executive role is ready for a successor to step into the position and effectively accomplish the job. The job has been refitted — brought up to the needs of the present — and recalibrated to the future direction of the organization.

• Team readiness, which means the entire transition team — the board, the board’s transition committee, the departing executive, and the senior managers — are ready to play their parts in the transition process and they are clear about their roles.

The second watchword is “plan.” A plan for the executive search, of course, but also for the transition, including onboarding the new executive. The entire process encompasses much more than the search — it begins with the executive’s decision to depart and doesn’t conclude until his/her successor has settled into the role. So there’s a good chunk of the board’s preparation and management work that precedes the executive search and another big chunk that follows it.

TASK #2 - Manage the transition.

The board’s responsibilities for the CEO transition boil down to two main jobs: first, find the right executive and make sure that he/he gets off to a great start. Second, make sure that the organization – including the board – is ready work effectively with the new executive. The organizational prep work is an important part of the transition and, therefore, the board’s responsibilities.

The readiness prep work varies with the organization’s condition, but at a minimum, it involves identifying strengths to build on as well as weaknesses to address on the new CEO’s watch. And more immediately, it should include a plan to address — before the new CEO comes on board — any issues that may otherwise trip up the next CEO.

The prep work may be delegated to a transition committee, but the board should keep one eye on the readiness ball while simultaneously carrying out the search for a successor. 

TASK #3 - Ensure leadership continuity.

An often overlooked area is the departing chief executive’s role in the transition work. If the departing executive will be in place for the duration of the transition, the board should make sure the departing CEO is clear about his/her role in the transition work and that he/she is preparing a handoff plan. The board should also clarify how much overlap there will be between the incumbent and the successor, and if the incumbent will have an ongoing role with the organization.

If the board is facing an abrupt departure, either because the incumbent is leaving before the successor search is complete or if the board is terminating the executive, the board needs to appoint an appropriate acting or interim CEO. Hiring a temporary bridge leader will give the board the time it needs to carry out the transition process. Trying to bridge the gap by rushing through is never an effective strategy.

Leading an organization going through a CEO transition is not just about caretaking. Whether it's the incumbent leading the organization or a temporary executive, part of the job of the leader-in-transition is to partner with the board and transition committee to prepare the organization to work with the new CEO.

TASK #4 - Manage communications (and ensure positive closure with your current executive).

Communication plays an important role in the success of the transition. How the departure announcement is handled, how communications updates are provided along the way (or not), and how the successor’s appointment is announced have an impact on the organization’s stakeholders and reflect positively or negatively on the board’s professionalism and handling of both the search and the transition.

Coming to positive closure with the current executive is an often-overlooked portion of the communications process. How the board comes to terms with a departure of its current leader and the sendoff that they give the executive into his/her next chapter of life say a lot about the board and can reflect positively or poorly on the organization.

TASK #5 - Search for, select, and hire the new CEO.

Of course, the search for a successor and the process for hiring a new CEO are central to the transition process. The board will need a solid plan for posting the job, screening candidates, conducting the interviews, making the final selection, and, finally, sealing the deal with the new executive.

TASK #6 - Onboard and support your new chief executive.

Onboarding means ensuring that the new chief executive is appropriately introduced to the community and the organization, that the new executive receives a good orientation, and that he/she is provided with the information and support that he/she needs to settle successfully into the role.

Being “new” has a short shelf life. The golden time of onboarding is the first 90 to 100 days of the new executive’s tenure. This early stage of the tenure is all about learning about the organization and the community and building critical relationships. The transition committee, senior staff, and the departing executive should make sure that there’s a handoff and ramp-up plan for the new executive developed by the new CEO or with his/her substantial input.

The board’s task of supporting the new executive certainly begins during the onboarding stage but should extend throughout the executive’s tenure.

A critical element in the support process is what I call, drawing from the political science literature, the “board-executive social contract,” which frames the board-executive partnership. Rather than being a literal contract, it’s an understanding between the board and executive that includes clarity about (1) priorities, (2) roles and responsibilities, (3) expectations that the executive and board hold for each other, and (4) the process and criteria for performance evaluations.

The board and executive form two sides of the most critical leadership team in the organization. The greater the clarity and mutual understanding you can introduce into this relationship, the stronger your organization will be.

These tasks don’t add significantly to the time commitment but increase the odds of success enormously.

Often boards exhaust themselves trying to find the "perfect" executive, so when they reach the post-hire stage, they are tired, ready to put the search behind them and get back to business as usual. But, onboarding and supporting the new CEO is a critical part of the process that leverages the investment the board made during the hiring process.

Conclusion

Embracing these six tasks doesn’t add significantly to the board’s time commitment, but it increases the odds of a successful transition enormously. The slight additional investment of time will pay huge dividends in strengthening the organization and avoiding the risk of a failed transition and the need to potentially do the process over again in a few months.

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Don Tebbe was the cofounder of an executive search firm that became a national leader on nonprofit CEO transitions. He writes, consults and speaks on career transitions and leadership succession. He is the author of Chief Executive Transitions: How to Hire and Support a Nonprofit CEO, published by BoardSource, and the forthcoming book, The Nonprofit CEO Succession Roadmap. This article previously appeared on his blog at dontebbe.com, there you’ll find a free eBook on how to take charge of your exit and make the most of a leadership change. © Donald Tebbe, 2016. All rights reserved.

  

  

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I take special pride in the following article because I introduced Mary Funke and Jeannie Hodges, then Executive Director and Interim Executive Director at N Street Village and Miriam's House, respectively, with the thought that a merger could help both organizations.  A success!

Charity Works: A match made in a recession

By Vanessa Small, Published: August 19, 2012, Washington Post

  

It was a marriage born during the Great Recession. Until then, both nonprofits were too engulfed in their own passions to entertain thoughts of companionship. Then the markets dropped and the plausibility of a union rose. Timing was everything.

  

Nearly one year since the vows, two nonprofit darlings of the District — N Street Village and Miriam’s House —are calling their merger a success.

  

It was not without discomfort and uncertainty, but after an economic downturn that swallowed fundraising dollars and government grants, the region’s nonprofits were forced to either find creative ways to adjust or shut down. Mergers were widely encouraged by fundraising professionals.

  

The combination of N Street Village and Miriam’s House, both providing human services to homeless women, has been one of the more high-profile, full-scale mergers in the region since the recession began in 2008.

  

For N Street Village, the economic doldrums sparked a hiring freeze, cessation of employee benefits and two years of deficits causing executives to dip into reserves. All the while, demand for services were increasing.

  

“The stress was really tremendous during those times,” said Shroeder Stribling, N Street’s executive director. She said she told board members that closing programs might be inevitable.

  

In 2010, the board and senior staff decided to pursue four strategies to adjust to the new economy. One included forging partnerships with other women services organizations. This included sharing funding or even a staff member. But the idea of an outright merger was “on the radical end of the spectrum.”

  

Meanwhile, Miriam’s House was undergoing an identity crisis. As a nonprofit created in 1996 to serve homeless women with HIV, the hospice model became outdated as advancements in medicine lengthened patients’ lives. Now HIV treatment is just one of many needs.

  

Collaboration was a possible answer, but when the economy dropped in 2008, it became urgent. Revenuewas slashed by $200,000, the budget shrunk from $800,000 to $600,000 and a fifth of the staff was laid off. After three years of deficits, there were no more reserves.

  

“We were trying to carve pieces off of our budget until in 2010, there was nothing left to shave off,” said Tim Fretz, executive with Miriam’s House and husband of its founder, Carol Marsh.

  

By 2010, Miriam’s House began looking earnestly for a partner, and after it changed executive directors, began talking with N Street about a merger.

  

N Street Village appointed a merger liaison, attorney Peter Shields, who facilitated the process. It began with an exchange of formal letters indicating expectations regarding real estate, programming, intellectual property, corporate structure, government contracts and human resources.

  

“In a for-profit merger, it’s full speed ahead and get it done as soon as possible,” said Shields, whose merger experience included work with the satellite radio companies Sirius and then-District-based XM. “This was the opposite. The driver was the mission, so it required sensitivity and attention.”

  

The two groups held social events, such as bowling, for staff from both groups. Both organizations’ executives met with staff regularly to address concerns and changes. N Street Village held regular trainings for its new employees. The merger was approved in September 2011.

  

Since the merger, revenue has increased, salaries are higher for Miriam’s House employees, programs have expanded, government funding has increased and new funding from AIDS groups has increased. A recent government grant will make way for another housing location.

  

  

  

  

  

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