2014-06-24 Sustainability, Succession and Transition Planning


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2014-06-24 Sustainability, Succession and Transition Planning

  1. 1. Sustainability, Succession, and Transition Planning: Options for Actions for Executives, Boards, and Managers Tom Adams June 24, 2014
  2. 2. ABOUT TOM ADAMS 2 Former President of TransitionGuides Former senior executive of NeighborWorks America Led research projects supported by the W. K. Kellogg Foundation and the Annie E. Casey Foundation on nonprofit leadership transition and succession Author of articles, monographs and recent book The Nonprofit Leadership Transition and Development Guide: Proven Paths for Leaders and Organizations TOM ADAMS Director Raffa, P.C. (202) 995-7245 tadams@raffa.com
  3. 3. ABOUT RAFFA, P.C. 3 Focuses on making the world a better place Contributes to client’s abilities to achieve their missions and deliver their promises to the world. Keeps organizations compliant, effective, and efficient with practical back office support and deeper strategies that create sustainability Provides expertise in consulting, accounting, nonprofit search, and technology services that help advance client’s organizational missions. RAFFA, P.C. 1899 L Street, NW, Suite 900 Washington, DC 20036 (202) 995-7245
  4. 4. LEARNING OBJECTIVES •Learn how leadership, strategy, resources, and culture come together to influence organizational sustainability •Discover the three types of succession planning and the benefits of each type •Explore the executive transition process and considerations relative to internal succession for a chief executive 4
  5. 5. WHY DO THIS WORK? 5
  7. 7. THE THREE BIG IDEAS Sustainability Planning Succession Planning Executive Transition Management 7 1 2 3
  8. 8. How is it DIFFERENT than stability or vitality? 8 WHAT IS SUSTAINABILITY?
  10. 10. FOUR CORE ELEMENTS OF ORGANIZATIONAL SUSTAINABILITY 10 Business Model & Strategy Leadership Resources Culture
  11. 11. FOUR CORE ELEMENTS OF SUSTAINABILITY: BUSINESS MODEL/STRATEGY 11 Business Model: How the organization creates and delivers value, and finances the value-creation process. • Has at least 5-7 years of life in front of it. • Built on quality services. Needed by clients. Valued by donors/funders. Business Strategy: A coordinated set of actions aimed at creating and sustaining a market position in order to carry out your nonprofit’s mission. (Competitive advantage.) • Is there a strategy in place? Is it written? • Does it position the organization to meet future needs and demands? • Are the board and staff aligned with it and about it?
  12. 12. FOUR CORE ELEMENTS OF SUSTAINABILITY: LEADERSHIP 12 Leadership in place to meet current and future needs Succession plans for top leadership The Board is a high-value asset to the organization The Board’s work adequately covers its three core roles: • Shaping mission and direction • Ensuring leadership and resources • Monitoring and improving performance, including its own Strong, positive relationship between Board and executive Diversity plus cultural and intergenerational competence
  13. 13. FOUR CORE ELEMENTS OF SUSTAINABILITY: RESOURCES - TRENDS 13 Sufficient financial resources to meet short to midterm commitments (6 to 24 months) Revenue streams are properly diverse and have longevity Favorable trends: revenue, expense and margin; good ratios Proactive resource development strategy in place Sound link: Good stewardship of hard assets and building soft assets Resource PlanStrategy Business Model
  14. 14. FOUR CORE ELEMENTS OF SUSTAINABILITY: CULTURE 14 AGILITY Flexible in a dynamic environment RESILIENCY Bounces back quickly from setbacks • Future focused, results-oriented, and action-based • Organization’s value and impact is widely understood
  15. 15. 15 The Sustainability Mini Assessment
  17. 17. WHY PLAN FOR SUCCESSION? 17 Ensures Organizational Sustainability Increases Transition Success Mitigates Risk Gets us beyond an ugly truth that we avoid: All careers eventually lead to a transition… It’s just a matter of when and how well managed
  18. 18. SUCCESSION PLANNING – THREE APPROACHES 18 1. SUCCESSION ESSENTIALS • Executive Backup Plan • Succession Policy 2. LEADER DEVELOPMENT • Proactive Talent Management 3. DEPARTURE-DEFINED • Succession Essentials • Sustainability Planning
  19. 19. SUCCESSION PLANNING: SUCCESSION ESSENTIALS 19 THE “ESSENTIALS” Emergency Backup Plans and Board Adopted Succession Policy
  20. 20. SUCCESSION ESSENTIALS: EMERGENCY BACKUP PLANNING 20 Understand Key Functions & Relationships Designate Backup Coverage Cross-Train Backups Develop Procedures & Protocols Document Succession Plan & Policy Prioritize Capacity Building Communicate the Plan Refresh Annually
  21. 21. SUCCESSION ESSENTIALS: SUCCESSION POLICY 21 Board-adopted policy Outlines how to handle a planned executive departure Statement of commitment: • Prepares for inevitable leadership change • Assesses leadership needs before beginning a search Plan to appoint interim leadership
  22. 22. SUCCESSION PLANNING: LEADER DEVELOPMENT BENEFIT: Broadens and Sustains Leadership Capacity & Builds Bench Strength Builds Bench strength 22 Strategic Talent Management Component Investing / Positioning Strategizing / Planning Aligning / Assessing Developing / Retaining Reviewing / Recruiting Timing / Implementing
  23. 23. SUCCESSION PLANNING: DEPARTURE-DEFINED 23 GOAL Increase organization’s capacity to deliver its mission under new leadership, whenever the transition occurs OUTCOMES • Capacity-building plan strengthens the four critical elements of organizational sustainability • Succession policy outlines the board’s policies & roles for a chief executive transition • Backup plans and cross-training for continuity
  24. 24. 24 The Succession Planning Mini Assessment
  25. 25. WHY DO SUSTAINABILITY AND SUCCESSION PLANNING? 25 Ensures continuity Builds bench depth and internal capacity Key responsibility of top leadership; can’t be delegated Best if involvement is broad-based and connected to ongoing succession planning • Minimizes crisis of an unplanned absence • Identifies “organizational gaps” in coverage
  26. 26. 26 Culture Sustainability Planning Or Departure- Defined Planning Succession Essentials • Backup Plans • Succession Policy Action Plan Implementation • Executive Leader Development • Board Development • Strengthen Business Model • Sharpen Strategy • Change Culture Executive Transition Management LINK SUSTAINABILITY – SUCCESSION – TRANSITION
  27. 27. OVERVIEW 27 Culture Leadership Sustainability and Executive Transition Management
  28. 28. PROCESS OVERVIEW: EXECUTIVE TRANSITION MANAGEMENT OUTCOME: Increased capacity to deliver organization’s mission under new leadership 28
  29. 29. THE NEXT STEPS WORKSHOP Sustainability, succession, and transition planning for founders and long-tenured executives Dates & Locations • July 9-10, 2014 – Baltimore, MD • October 22-23, 2014 – Washington, DC • January 26-27, 2015 – Washington, DC More information: Melody Thomas mthomas@raffa.com (202) 955-7242 A Two-Day Intensive Hands-on Workshop 29
  32. 32. RESOURCES ANNIE E. CASEY FOUNDATION MONOGRAPH SERIES • Building Leaderful Organizations • Ready to Lead? Next Generation Leaders Speak Out • Capturing the Power of Leadership Change • Founder Transitions: Creating Good Endings and New Beginnings • Interim Executives: The Power in the Middle • Up Next: Generation Change and Leadership of Nonprofit Organizations • Stepping Up, Staying Engaged (Boards During Transitions) AVAILABLE ONLINE AT: • www.TransitionGuides.com/resources/monographs.htm 32
  33. 33. QUESTIONS 33
  34. 34. [Organization Name] [Executive Title] EMERGENCY BACKUP SUCCESSION PLAN Guideline for the Appointment of an Acting [Executive Title] in the Event of an Unplanned Absence of the Incumbent 1. Rationale The [Executive Title] position in a nonprofit organization is a central element in the organization’s success. Therefore, ensuring that the functions of the [Executive Title] are well-understood and shared among the [Senior Management Team] is important to ensure organizational stability and leadership continuity in the event of unplanned and unexpected change. This kind of risk management is equally helpful in facilitating a smooth leadership transition even when it is predictable and planned. The purpose of this plan is to ensure the continuous coverage of duties critical to the ongoing successful operations of [Organization Name]. The Board of Directors is adopting policies and procedures for the temporary appointment of an Acting [Executive Title] in the event of an unplanned and extended absence of the [Executive Title]. The [Board President/Board Chair], or [Board Vice-President/Board Vice-Chair] in the absence of the [Board President/Board Chair], may determine the appropriate time to initiate the implementation of this plan. While the Board of Directors acknowledges that such an absence is highly improbable and certainly undesirable, they believe that due diligence in exercising executive-level management functions requires that it have an Emergency Backup Succession Plan in place. The intent of this plan is to ensure continuity in the administration of the organization's day-to-day operations, programs, management of external relationships, and supervision of staff and finances. 2. Key Functions of the [Executive Title] Of the duties listed in the job description (see Attachment 2), the key functions of the [Executive Title] have a corresponding temporary staffing strategy for an Acting [Executive Title] in the attached Emergency Backup Succession Plan Detail (See Attachment 1). The [Senior Management Team] members assigned in the Short-Term Staffing of Key Functions are relevant based on the organizational structure in place at this time (See Attachment 2). In the event that those assigned are no longer available or positions are vacant, the [Board President/Board Chair] may select other staff to support each of the key [Executive Title] functions. It is the responsibility of the [Executive Title] to ensure that staff receive appropriate cross-training to successfully implement the temporary staffing strategy. 3. Business as Usual This Emergency Backup Succession Plan and the temporary staffing structure will minimize disruption in quality service and maintain business as usual to the extent possible. In the absence of the [Executive Title], unless otherwise determined by the Board of Directors, business as usual includes maintenance of matters such as fiscal oversight, leadership, and serving as a liaison to the board of directors. (See Attachment 1.)
  35. 35. 4. Emergency Backup Succession Plan Implementation The Board of Directors authorizes the [Board President/Board Chair] to implement the terms of this Emergency Backup Succession Plan in the event of a planned or unplanned temporary, short-term absence of the [Executive Title]. The [Board Vice-President/Board Vice-Chair] has authorization to implement this plan in the event that the [Board President/Board Chair] is unavailable or cannot be reached. Phone calls and conference calls are an acceptable substitute for any meetings designated in this plan. As soon as feasible, following notification of an unplanned temporary or short-term absence, the [Board President/Board Chair] will convene an Executive Committee meeting to affirm the procedures prescribed in this plan, or modify them if needed. The Executive Committee may choose to amend and/or not to implement this plan Consider: What ,if any, checks and balances are desired to guide actions by the [Board President/Board Chair]. If you do not have an active Executive Committee, you will need to decide if the full Board needs to be convened or another named Committee. Another option is to change “will convene” to “may convene” and let the circumstances guide the Board President/Board Chair] in deciding whom to consult and when. While this timeline may vary based on circumstances, the suggested steps for implementation are: • The [Board President/Board Chair] appoints an Acting [Executive Title]. • The [Board President/Board Chair] informs the Board of the Acting [Executive Title] appointment. • The [Board President/Board Chair] (and potentially other officers) consults with the Acting [Executive Title] on the circumstances of the absence, organizational situation and related factors. • After the [Board President/Board Chair] and Acting [Executive Title] consult, stakeholders will be notified following the defined Communications Plan. 5. Definitions • A temporary absence is one in which it is expected that the [Executive Title] will return to his/her position once the events precipitating the absence are resolved. • An unplanned absence is one that arises unexpectedly, in contrast to a planned leave, such as a vacation or a sabbatical. • A short-term absence is three months or less. • A long-term absence is one that is expected to last more than three months. • A permanent absence is one in which it is firmly determined that the incumbent [Executive Title] will not be returning to the position. Consider: In most organizations three months is defined as short-term with the assumption that the person, assuming the duties temporarily, will have difficulty doing the key functions of two positions for more than three months. Later in the plan, it is suggested that after three months or in a long-term backup, consideration should be given to reducing the pressure and hand-off from Acting [Executive Title] functions. If three months is too long for [Organization Name], you can shorten the short-term period by redefining short-term absence to “one month or less” or “two months or less”. Prepared by 2 | P a g e
  36. 36. 6. Emergency Backup Plan: Short-term, Temporary, Unplanned Absence Consider: It is preferred that there be one person as first backup and another for second backup. That is not always possible. Two people can share the backup as long as the lines of authority and communication to Board are clear and Board agrees. Where there are two equally prepared candidates available and the executive and Board does not want to select one over the other as first backup, alternating appointment is possible. A. Appointing the Acting [Executive Title] 1. The Board of Directors authorizes the [Board President/Board Chair] to implement the terms of this Emergency Backup Succession Plan in the event of the unplanned absence of the [Executive Title]. 2. In the event of an unplanned absence of the [Executive Title], a member of the [Senior Management Team] shall immediately inform the [Board President/Board Chair] of the absence. 3. As soon as is feasible, the [Board President/Board Chair] may convene a meeting of the [Senior Management Team] to affirm the procedures prescribed in this plan or to make modifications the [Board President/Board Chair] and team deems appropriate. B. First Backup for the Acting [Executive Title] The [Board President/Board Chair] may appoint [Designated First Backup1], [First Backup Title1], to the position of Acting [Executive Title]. His position description will specify that he may serve as Acting [Executive Title] in the absence of the [Executive Title] unless otherwise decided by the Board President. He will have an Emergency Backup Succession Plan with backup designees if he becomes Acting [Executive Title] or becomes unable to serve his daily functions as [First Backup Title1]. Consider: Appointing two first backups on alternating years. Optional Language: The [Board President/Board Chair] may appoint [Designated First Backup1], [First Backup Title1], or [Designated First Backup2], [First Backup Title2], to the position of Acting [Executive Title], depending on the year in which the absence occurs. If the absence occurs in an even year, [Designated First Backup1] will be the first backup. If the absence occurs in an odd year, [Designated First Backup2] will be the first backup. The position descriptions will specify when they may serve as Acting [Executive Title] in the absence of the [Executive Title] unless otherwise decided by the [Board President/Board Chair]. They will have an Emergency Backup Succession Plan with backup designees if they become Acting [Executive Title] or they become unable to serve daily functions as Deputies. The designated backup who serves as first backup will continue his/her responsibilities as [First Backup Title1], or [First Backup Title2]. C. Second Backup for the Acting [Executive Title] The [Board President/Board Chair] may also consider splitting duties among designated appointees based on the primary functions to be carried out. (See Attachment 1) [Designated First Backup2], [First Backup Title2], may serve as second backup for the position of Acting [Executive Title] based on the discretion of the [Board President/Board Chair]. He Prepared by 3 | P a g e
  37. 37. may serve should the first backup become unable or unwilling to serve as Acting [Executive Title] or otherwise decided by the [Board President/Board Chair]. Consider: Appointing two second backups on alternating years. Optional Language: [Designated First Backup2], [First Backup Title2], or [Designated First Backup1], [First Backup Title1] will serve as second backup for the position of Acting [Executive Title] based on the year in which the absence occurs. The designated second backup may serve as first backup should the first backup become unable or unwilling to serve as Acting [Executive Title] or otherwise decided by the [Board President/Board Chair]. D. Cross-Training Plan for Appointees The [Executive Title], in collaboration with the [Board President/Board Chair], will develop a plan for training the potential appointees in the key [Executive Title] functions mentioned in section 2 above and in the attached Cross-Training Plan. (See Attachment 1.) The [Executive Title] will have the responsibility of handling the logistics of the plan’s implementation. E. Authority and Restrictions of the Appointee The Acting or Interim [Executive Title] may have the same authority for day-to-day decision- making and independent action as the [Executive Title] except as further defined by the [Board President/Board Chair]. Decisions requiring [Board President/Board Chair] approval, after consultation with the Executive Committee or other appropriate committee as directed by the Executive Committee, include retention or termination of [Senior Management Team] members, expansion of programs, cultivation of new partnerships or collaborations with external parties, acquisition of public policy positions on behalf of the organization, and execution of new contracts or other financial decisions not included in the current approved budget. Consider: What are unique risks for your organization in terms of executive decision making? Are there different or additional limits you want to place on the authority of the acting or interim executive? F. Compensation The [Board President/Board Chair], in consultation with the Executive Committee, may consider and direct a salary adjustment for the Acting [Executive Title]. G. [Board President/Board Chair] Responsibility for Oversight and Support to the Acting [Executive Title] The [Board President/Board Chair] and Board of Directors will have the responsibility for monitoring the work of the Acting [Executive Title]. The Acting [Executive Title] will provide regular updates and meet with the [Board President/Board Chair] as the [Board President/Board Chair] may determine. The [Board President/Board Chair] will also be alert to the special support needs of the Acting [Executive Title] serving in this temporary leadership role and act to address them. Prepared by 4 | P a g e
  38. 38. H. Communications Plan Within eight (8) hours after an Acting [Executive Title] is appointed, the [Board President/Board Chair] and the Acting [Executive Title] will meet to implement an external communications plan to announce the organization’s temporary leadership structure, including the kind of information that will be shared and with whom (e.g. major donors, partnering agencies, etc). (See Attachment 1.) Within 24 hours after an Acting [Executive Title] is appointed, the [Board President/Board Chair] and Acting [Executive Title] will implement the Communications Plan to announce the organization’s temporary leadership structure to the [Senior Management Team] and the Board of Directors. A staff member designated by the [Executive Title] will maintain updated key contact information in a database, on an ongoing basis. 7. Emergency Backup Plan: Long-term Temporary, Unplanned Absence The procedures and conditions will be the same as for a short-term absence with one addition: The [Board President/Board Chair] will give immediate consideration, in consultation with the Acting [Executive Title], to develop and implement a plan to carry out the duties of the Executive Director for a more extended timeframe through temporary staffing of agreed upon functions as needed from the various positions impacted by the backup plan.. This is in recognition of the fact that, for a term of more than three months, it may not be feasible for an individual to carry the duties of both his/her deputy position and the Acting [Executive Title] position. The position description of a temporary appointment would focus on covering the priority areas in which the Acting [Executive Title] needs assistance. 8. Emergency Backup Plan: Permanent Unplanned Absence The procedures and conditions will be the same as for a long-term temporary absence with one addition: The [Board President/Board Chair] may appoint a Transition and Search Committee in accordance with the terms of the [Organization Name] Succession Policy. 9. The [Organization Name] Succession Policy The Succession Policy for the [Executive Title] is a risk management and sustainability planning tool that complements the Emergency Backup Succession Plan. The Succession Policy provides a proactive process for the Board of Directors to plan and execute an executive leadership transition. The Board of Directors will be responsible for adopting and implementing the process and procedures set forth in the Succession Policy. 10. Emergency Backup Plan Approval This Emergency Backup Succession Plan requires approval by the Board of Directors and an annual review at the last formal Board meeting of the fiscal year, typically held in [Month], to make any needed changes in the designated backup appointees. The [Board President/Board Chair] may review and amend the plan at other times if a designated backup appointee is no longer available to Prepared by 5 | P a g e
  39. 39. serve in an Acting [Executive Title] capacity. The [Board President/Board Chair] may reevaluate the plan when new designees are appointed. 11. Signatories The [Board President/Board Chair], the [Executive Title], and the designated backup appointees will sign this plan. 12. Maintenance of Record The [Board President/Board Chair], the [Executive Title], and the designated backup appointees will maintain copies of this plan. Approved by: [Organization Name] Board of Directors on _______________________________. Date Acknowledged by: I acknowledge that I have reviewed this plan. _____________________________________ [Board Name], [Board President/Chair] _________________________________________ [Designated First Backup1], [First Backup Title1] _____________________________________ [Executive Name], [Executive Title] _________________________________________ [Designated First Backup2], [First Backup Title2] Prepared by 6 | P a g e
  40. 40. THANK YOU! Tom Adams, Director tadams@raffa.com 202.955.7245
  41. 41. Nonprofit CEOs - Prepare Your Nonprofit for Your Departure. Explore tools for executive succession and transition, presented in a confidential environment. Registration is now open for the 2014 workshop, click here! Are you thinking about leaving your chief executive position within the next 1-5 years? Exclusively for nonprofit chief executives, Raffa’s Next Steps Workshops offer a safe and confidential space to explore best practices in organizational sustainability, leadership succession, and chief executive transition. Our two-day workshops focus on you, your legacy, and how to prepare yourself, your organization, your staff, and your board for your eventual departure. These “tough-to- talk-about” topics are skillfully guided by national experts who have helped more than 500 executives – with tenures ranging from 5 to 35 years – ensure that their hard work and legacies endure. Register for the following workshops: Next Steps Workshop Testimonials ““Provides substantive, specific information to help think productively about planning, managing, and leaving an organization in the best way possible.” Myrl Weinberg, National Health Council “This information is hard to find, so take advantage of the offering of resources, materials, and networking. It’s well worth the money and time.” Betsy Mitchell, Montessori School of Northern Virginia, Inc. “Exceedingly valuable session. I expected a lot but it greatly exceeded my expectations. I feel motivated and focused on what to do next.” Trudy McFall, Homes for America Register Early: Enrollment is limited to 25 participants! Registration includes continental breakfast and lunch, comprehensive resource materials, a workbook, 1 complimentary book, and a 30-minute coaching session. NHSA is partnering with Raffa / TransitionGuides to offer these unique CEO succession and transition planning workshops to our National Assembly member organizations and leaders of their affiliates. July 9-10, 2014 Annie E. Casey Foundation, Baltimore, MD Early Bird: $400 (before 6/1/2014) Regular: $495 (after 6/1/2014) October 22-23, 2014 Meyer Foundation, Washington, DC Early Bird: $400 (before 9/1/2014) Regular: $495 (after 9/1/2014) January 26-27, 2015 Meyer Foundation, Washington, DC Early Bird: $400 (before 12/15/2014) Regular: $495 (after 12/15/2014) Next Steps features: • Three Vital Tools: 1. Organizational Sustainability Planning 2. Leadership Succession Planning 3. Executive Transition Management • Two Tracks: 1. Preparing Yourself 2. Preparing Your Organization • Roles - Discussion of executive, board, and staff roles. • Communications - Advice on the who, how, and when. • Small Groups working with experts and peers. • A Post-Workshop Coaching Call with a facilitator. You’ll leave Next Steps with: • Clarity about where you are - personally, professionally and organizationally - with succession and transition and what’s next for you beyond transition. • A High-Level Action Plan for transition, capacity building, and sustainability. • Tools & Guides you can tailor to your needs. • A Rich Understanding of what will be required of yourself, your organization, and your board. • Your Concerns Addressed by hearing from peers who have successfully transitioned. • New Ideas for building team diversity and strength.