The document discusses internal CEO succession planning for nonprofits. It outlines various scenarios for internal succession, including when the executive unexpectedly chooses a successor without board input or when the board selects an internal candidate without proper vetting. The document also discusses key decisions around leadership development culture, board preparedness, board-staff alignment, and the executive's responsibility. Finally, it presents three approaches to internal succession: no search, limited search, or full search, each with risks and rewards.

1. Internal CEO Succession:
Karen Schuler
March 10, 2015

2. ABOUT KAREN SCHULER
Former Executive Vice President of TransitionGuides
Leads the Nonprofit Search and Transition practice at Raffa
Focuses on bringing the strongest elements of planningFocuses on bringing the strongest elements of planning,
leadership transition, and effective business modeling to the
nonprofit sector.
Helps organizations integrate Succession and Sustainability
Planning to build mission capacity and thrive through
leadership transitions and executive searches.
Karen Schuler
Search & Transition
Executive
Raffa P CRaffa, P.C.
(202) 995-7244
kschuler@raffa.com
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3. ABOUT RAFFA, P.C.,
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 sustainabilitystrategies that create sustainability
Provides expertise in consulting, accounting,
nonprofit search, and technology services that help
RAFFA, P.C.
1899 L Street, NW,
Suite 900 p , gy p
advance client’s organizational missions.Washington, DC 20036
(202) 995-7245
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4. AGENDA
Opening and Welcome
Agenda & Overview
S i Pl i F kSuccession Planning Framework
Internal Succession Considerations
Key Decisions to Support Internal Succession
Three Approaches
Discussion and Questions
4

5. LEARNING OBJECTIVES
•Explore why organizations need to pay attention top y g p y
CEO succession planning before an executive
transition occurs
•Identify the challenges of internal succession
•Review the key decisions that support effective
internal succession models
•Explore the risks and rewards associated with three
approaches to internal succession
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6. SUCCESSIONSUCCESSION
PLANNING
FRAMEWORK
6

7. FRAMEWORK & ASSUMPTIONS
GOALS:
• Support the long-term sustainability of the organization
• Increase mission impact
ASSUMPTIONS:
• CEO transition is inevitableCEO transition is inevitable
• Planning increases potential for long-term success
• Internal succession works with careful planning
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8. WHAT IS INTERNAL SUCCESSION?
The disciplined means of nurturing, developing, and
retaining talent as a platform for an executive’s inevitable
transition
It creates a culture that maximizes the internal
institutional talent, appropriately “grooms” top
potential/performers, and empowers them for top
leadership positions

9. INTERNALINTERNAL
SUCCESSION
CONSIDERATIONS
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10. INTERNAL SUCCESSION CONSIDERATIONS
Examples of Possible Scenarios
• The Executive Surprise
• The Board Punt
• Interim to Placement
• The Executive-Board Collaborative Plan
Th C i• The Compromise
• Unexpected Considerations
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11. INTERNAL SUCCESSION CONSIDERATIONS
The Executive Surprise
Occurs When?
CEO grooms internal manager to be the successor
HIGH
RISK g g
without informing Board
Implications
RISK
• Messy for the board
• Poor ending for organization
• Unfavorable ending for departing executive
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12. INTERNAL SUCCESSION CONSIDERATIONS
The Board Punt
Occurs When?
Board relinquishes its duty of executive selection by
HIGH
q y y
selecting a staff or board member with insufficient
attention to expectations, skills, and attributes of new
executive
HIGH
RISK
Implications
• High risk for failure
• Potentially an inappropriate “fit” for the position
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13. INTERNAL SUCCESSION CONSIDERATIONS
Interim Placement
Occurs When?
A short-term executive is selected as the new executive.
HIGH
Implications
• Boards can try out an internal candidate as an interim
HIGH
RISK
• Boards can try out an internal candidate as an interim
executive to determine if it’s a good fit
• Internal interim with no intention to apply may seek the
position or be asked to apply based on trying the roleposition or be asked to apply based on trying the role
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14. INTERNAL SUCCESSION CONSIDERATIONS
The Executive-Board Collaborative Plan
Occurs When?
Executive and Board use ongoing succession planning
MODERATE
g g p g
and leader development to reach a consensus on an
internal successor
MODERATE
RISK
Implications
• Awkward for the potential candidate(s)
• Requires a thoughtful processRequires a thoughtful process
• High odds of success when done well
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15. INTERNAL SUCCESSION CONSIDERATIONS
The Compromise
Occurs When?
Either the internal successor is recommended by the
Best
Practice y
executive or applies and the board is divided about
appointing internal candidate without an external search
to compare with other candidates
Practice
Implications
• Board becomes more confident in candidate
• New executive is more empowered
• “Partial Search” for limited candidate comparison is
hard to do well
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16. UNEXPECTED CONSIDERATIONS
What happens if….
• More than one internal candidate
• No internal candidate – executive hires a new senior
manager with intent s/he will be successor
• Designated internal successor leaves the
organization before the transition occursg
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17. POTENTIAL CHALLENGES
INTERNAL SUCCESSION LEADERSHIP TRANSITION PROBLEMS:
WHO
CHOOSES
Handpicked
PAIN
AVOIDANCE
Easy Shortcut
INSUFFICIENT
RIGOR
Less Critical
MISDIRECTED
CRITERIA
• Familiarity vs• Handpicked
• Successor-
Appointed
• Easy, Shortcut
• “Solution” To
Full Search
• Less Critical
Evaluation
• Overreliance
• Familiarity vs.
Experience
• Limited to no
Exploration of
• Board-staff
divide
• Less Board
investment in
new executive
• Hiring on
“hope”
Exploration of
Role
• Too big of a
stretch for
successor
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18. POSSIBLE ADVANTAGES
• Institutional knowledge and organizational understandingInstitutional knowledge and organizational understanding
• Increases employee morale
• Inspires others employees to leadership roles
• Salary stability vs. matching external salaries
• Decreased learning curve and training required
• Less prone to “rock the boat”
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19. KEY DECISIONS TO
SUPPORT INTERNALSUPPORT INTERNAL
SUCCESSION
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20. KEY DECISIONS
Decision Factors to Consider:
• Culture of Leadership Development
• Board Preparednessp
• Board-Staff Alignment
• Executive’s Responsibilityecut e s espo s b ty
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21. KEY DECISIONS
Leadership Development Culture
• Does the existing culture support leader development?
• Does the organization have a clear assessment of its bench strength?
B d P dBoard Preparedness
• Is the Board ready to own the decision (selection of next executive)?
• Is the Board ready to define the position and the leadership needs thaty p p
support the organization moving forward?
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22. KEY DECISIONS
Board-Staff Alignment
• Are the Board and staff aligned on
 Strategic Direction
 Near-term Priorities
 Issues to monitor/address during the transition
Executive’s Responsibility
• Groom potential internal successor
• Avoid selecting internal successor prematurely or without a process
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23. APPROACHES TO
INTERNALINTERNAL
SUCCESSION
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24. INTERNAL SUCCESSION PLANNING
Step 1: Fully engage your stakeholders
Step 2: Establish criteria
Steps
for
Step 3: Assess your internal candidates
Step 4: Measure internal candidates against criteria
(short-term and long-term)
for
Successful
Planning
(short-term and long-term)
Step 5: On-board the successor
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25. INTERNAL SUCCESSION: NO SEARCH
Requires:
B d l it & li t t t i di ti i iti• Board clarity & alignment on strategic direction, priorities,
competencies
• Robust vetting of internal candidate
• Strong, deliberate transition plan (hand-off, relationship building
with board, role of departing executive, communications)with board, role of departing executive, communications)
Risks:
• Organization defaults on the plan; unsuccessful transitiong p ;
• Internal successor not a good fit; organization limps along
• Internal successor not selected and leaves the organization
Rewards:
• Reduced learning curve for new executive
• Leader development culture reinforced
• Successful transition that “sticks”
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26. INTERNAL SUCCESSION: LIMITED
SEARCH
Requires:
• Board clarity & alignment on strategic direction priorities competencies• Board clarity & alignment on strategic direction, priorities, competencies
• Capacity to attract known qualified candidates
• True openness to external hire
• Agreed upon process for candidate vetting & selection
• Strong transition plan tailored to the selectionStrong transition plan tailored to the selection
Risks:
• External candidates perceive process favors internal
• Board division between internal and external candidates
• Internal candidate feels disrespected if communications not handled well
• Process/selection polarizes staff and board
Rewards:
• Reduced learning curve for new executive
• Internal candidate more empowered
• Board more certain of decision
• Successful transition that “sticks”
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27. INTERNAL SUCCESSION: FULL SEARCH
Requires:
• Board clarity & alignment on strategic direction, priorities,
competencies
• Capacity to implement outreach & build strong candidate pool
• Clarity regarding process & how internal candidates will be
managed (& communications)
Risks:
• Internal candidate not selected & leaves the organizationInternal candidate not selected & leaves the organization
• Board not fully invested in process/open to external candidates
Rewards:
• Validation of new executive’s selection
• Successful transition that “sticks”
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28. PROCESS OVERVIEW
Executive Search and Transition
Prepare Search Onboard
Launch the Search
Recruit
Screen
Organize & Tailor the
Process
Gather Information
Onboard
Relate
Evaluate
Select
Hire
Engage the Board
Develop Profile &
Search Plan
Evaluate
Support
Board-executive alignment on priorities,
roles and performance measures.
An exceptional executive selected – who
fits the current and future leadership
needs of the organization.
Board clarity and alignment about the
four factors critical to the search and
transition.
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OUTCOME: Increased capacity to deliver organization’s mission under new leadership.

29. DISCUSSION &DISCUSSION &
QUESTIONS
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30. INTERNAL SUCCESSION PLANNING
1. Who owns the CEO Succession?
2. Is there agreement between you and the Board around
internal succession?Questions
to
3. What’s involved in grooming a successor?
4. Who’s a good candidate and how do you know?
to
Consider
5. Are internal candidates better than external candidates?
6. What criteria should be used to select a CEO?
7. How transparent is the succession process?
8. When should planning begin, and what time horizon
should it be considered?should it be considered?
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31. THE NEXT STEPS WORKSHOP
Nonprofit CEOs
A Ne t Steps Planning Workshop
Sustainability succession and transition planning
A
Two-Day
A Next Steps Planning Workshop
Sustainability, succession, and transition planning
for founders and long-tenured executives
Dates & Locations
Two Day
Intensive
Hands-on
Workshop
• May 11-12, 2015 – Hartford, CT
• July 27-28, 2015 – Baltimore, MD
More information: Melody Thomas
mthomas@raffa.com
(202) 955-7242( )
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32. Thank you!y
Karen SchulerKaren Schuler
Search & Transition Executive
kschuler@raffa.com
202 955 7244202.955.7244