A presentation I delivered at the International Society For Third-Sector Research-2014 Annual Conferencer in Muenster, Germany, July 2014.

1. Nonprofit Executive Succession Planning
An Israeli Perspective
ISTR 2014, Muenster

2. Shalom I’m Gil Bozer

3. In the beginning
•A key player in the economic & political arenas.
•Growing size and importance in the Israeli economy as well as in civil society.
•Increased focus on effectiveness & efficiency.

4. Israel Third Sector in Numbers
35,000
1,600
390,000
53
30
16
30

5. Israel Third Sector in Numbers
35,000
1,600
1. # of nonprofits registered in Israel
390,000
16
30
53
30
Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010

6. Israel Third Sector in Numbers
35,000
1,600
2. # of new nonprofits every year
390,000
30
53
30
16
Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010

7. Israel Third Sector in Numbers
35,000
1,600
3. # of employees
390,000
30
53
30
16
Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010

8. Israel Third Sector in Numbers
35,000
1,600
4. Annual turnover in Billions (USD)
390,000
53
16
30
30
Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010

9. Israel Third Sector in Numbers
35,000
1,600
5. % of public finance from total sources
30
53
16
30
390,000
Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010

10. Israel Third Sector in Numbers
1,600
6. % of Self income from total funding sources
35,000
390,000
30
53
30
16
Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010

11. Israel Third Sector in Numbers
35,000
1,600
7. % of donations from total funding
Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010
390,000
30
53
30
16

12. A deliberate and systematic effort by an organization to ensure leadership continuity in key positions, retain and develop intellectual and knowledge capital for the future, and encourage individual advancement.
Source: Rothwell, 2001, p.6
What’s this all about ?

13. Importance of Succession Planning
Sustainability of an organization requires a succession of high performers to fill key positions and to meet future talent needs.
Evidence suggests that succession plans are associated with higher organizational performance via smoother transitions

14. Organization can rise to the height of its people

15. Relevance increases with the size of the organization…

16. “When you look at the fact that over 64 million workers will exit from the workforce by year 2010, this puts employers in a talent deficit dilemma”
Bea Fields, “The Top 10 Strategies for Attracting Gen Y as Employees into Your Company

17. The managerial challenges of the executive leadership role

18. •Executive directors (EDs) have to maintain the financial stability of their organizations (fund-raising). • EDs have to manage the work of volunteers, who are not employees in the conventional sense. • EDs function in a vulnerable position between their boards of directors and their organizations’ staff. • EDs are pressured to satisfy the demands and fulfill the expectations of multiple stakeholders.

19. The unique challenges of integrating the realms of mission, resource acquisition, and strategy Herman, 2010, 157

20. Method
•Data was collected using The Global Survey of Executive Succession (GSES) in Nonprofit Organizations (Santora, Sarros, and Cooper, 2009).
•9 succession planning indicators were to assess the extent to which our participant nonprofits plan organizational transference of executive authority.
• The questionnaires were distributed to nonprofit organizations identified through a range of Web sites focused on the charitable and nonprofit sector.
• 100 questionnaires were received from Israeli EDs.

21. Profile of Executive Directors
N
%
Mean
SD
Gender
Male
38
52.8
Female
34
47.2
TOTAL
72
100
Mean Age (in years)
76
46.4
9.1
Educational Level
High School
1
1.4
Certificate/Diploma
2
2.7
Bachelor’s Degree
17
23.3
Postgraduate Degree
53
72.6
TOTAL
73
100.0
Founder of Organization
Yes
15
20.5
No
58
79.5
TOTAL
73
100
Tenure as ED in current organization (in years)
73
6.4
5.1

22. Profile of NPOs
N
%
Service Type
77
Labor organizations
1
1
Environment
1
1
Civil society, law, social change, and politics
21
27
Health
6
8
Education and research
21
27
Philanthropy
2
3
Welfare
21
27
Culture and leisure
2
3
Infrastructure organizations
2
3
Full-time employees
75
1–5
21
28
6–10
10
13
11–20
9
12
21–30
11
15
31–50
6
8
51–100
6
8
101–200
5
7
>200
7
9

23. N
%
Mean
SD
2011 operating budget
(in millions)
69
4.8
11.1
$100,000 or less
3
4
$100,001–$250,000
11
16
$250,001–$500,000
9
13
$500,001–$1,000,000
11
16
$1,000,000–$2,000,000
9
13
$2,000,001–$5,000,000
9
13
$5,000,001–$10,000,000
10
14
$10,000,001–$25,000,000
4
6
More than $25,000,000
3
4
Funding profile
76
Primary source government funding
13
17
Primary source donations
26
34
Primary source philanthropy
9
12
Primary source fund-raising
16
21
Primary source self-income (membership/activity/service fees)
9
12
Combination
3
4
Profile of NPOs

24. Findings
•Most Israeli nonprofits do not plan for executive succession.
• Only a third of the nonprofits have a policy regarding internal applicants for senior management positions.
•36% of respondents reported that their board is likely to recruit an internal replacement.

25. Findings
•Previous EDs have been internal in only 34% of the respondents to that indicator.
•21% of the EDs reported that they advise their boards of directors on succession planning often or always.
•20% of the Eds are involved with board in the selection process of their incumbent.

26. Succession Planning Indicators
Succession Planning Indicators
N
n
%
1. The organization has a succession plan.
70
11
16
2. The organization has a formal (written) succession plan.
70
5
7
3. The organization has a deputy.
73
32
44
4. The deputy will replace the executive director.
73
9
12
5. A policy exists regarding internal applicants for senior management positions.
72
24
33
6. The board is likely to recruit an internal replacement.
67
24
36
7. Previous EDs have been internal.
52
17
34
8. The ED always or often advises the board on succession planning.
62
13
21
9. The ED is involved with the board in the selection of an incumbent.
64
13
20

27. Discussion
•Results provide warning data about the issue of internal succession and manifest the lack of succession planning structural practices in the Israeli third sector.
•Findings suggest that the role of deputy director in the participating nonprofits is not perceived as crucial for the governance of the organizations.
•It is evident that nonprofits do not look inside their own organization for executive replacement.

28. Discussion
•These results echo those of previous studies of U.S. nonprofit organizations (e.g., Froehlich et al., 2011; Santora et al., 2011).
• Creating a strategic leadership development plan is one of the greatest challenges for nonprofits which are dependent on a single leader and cannot develop prospective successors from within the organization.
•The significance of executive transitions will become more urgently felt as the large baby-boomer generation is now reaching retirement age.

29. You can predict the future by inventing it…

30. Future Research
•Further research on nonprofit succession issues at the board level merits further consideration.
•Conducting comparative cross-country analyses to determine similarities and differences among nonprofit EDs and boards to determine their actions on succession issues.
•There is a compelling need for nonprofit governing bodies to connect succession to strategy. This will allow the organization, its staff, and its constituents an equal share in the benefits of a coordinated strategy.

31. Thank You!