Succession planning 03_11_final

Succession Planning

Chiesman Center for Democracy
Presented by Sandra McNeely, VP, CAE
Abbey Group, Ltd.
March 8, 2011

Session Objectives
⊹ Define and understand the significance of
succession planning and its value to the
organization
⊹ Provide a process for succession planning

©2011, Abbey Group, Ltd. 2

What is Succession Planning?
⊹ What are the goals of succession planning?
⊹ Who should participate in succession
planning?
⊹ When is a “succession plan”
complete?

Big Brothers Big
Sisters of the
Black Hills


Succession Planning
⊹ Succession Planning is a systematic process of
planning for the development and placement
of people in senior management positions. By
identifying leadership talent early and
cultivating it through training, mentoring, and
job rotation, the organization can establish,
maintain and nurture a pipeline of leadership
talent – the goal of succession planning.

∼ Jodi Lehner, The World Bank Group


Succession Planning
⊹ A plan
⊹ A policy of internal promotion
⊹ Training
⊹ Mentoring
⊹ A variation in on the job experience
⊹ A conscious effort to nurture those in the
organization


Succession Planning
⊹ Succession planning is a key responsibility
of incumbent leadership.

∼ Max Dupree, author of “Leadership Is an Art”


Succession Planning
⊹ Responsibility to plan, mentor, and nurture
falls to those that will be replaced
– Executive leadership (employees)
 Who else?
⌖ Board of Directors


Good Governance: Role of the
Nonprofit Board
⊹ Guidance
⊹ Oversight
⊹ Monitoring
Behavior Management Systems, Inc.


Guidance
⊹ Determine vision, mission and strategic
direction for the organization
⊹ Establish strategic goals and a process to
evaluate progress
⊹ Advise and guide the fund development
process through strategic planning


Oversight
⊹ Oversee the organization including setting the
organization’s policies.
⊹ Assure the integrity and accountability of the
organization from a legal and financial
standpoint in conjunction with the mission,
bylaws and articles of incorporation.
⊹ Oversee the efficient and cost-effective
operation by annually auditing and annually
approving the budget, and assessing financial
performance in relation to the budget
regularly.


Monitoring
⊹ Monitor performance towards achievement
of the goals and compliance with policy:

– Board performance
– Committee performance
– Management performance


Board/Staff Relationship
⊹ Hire, monitor and evaluate performance of
the chief staff executive
⊹ Conduct a formal evaluation each year
⊹ Set guidelines and policies to set limitations
for management
⊹ The chief staff executive manages the staff


Managing the Chief Executive
⊹ Review and update the position description
⊹ Develop a performance appraisal process
⊹ Set measurable performance goals and
monitor
⊹ Provide guidance and training
⊹ Define authority and limitations
⊹ Implement a succession plan


Reasons Key Staff Succession Planning
Does Not Happen:
⊹ Fear the successor may outshine you
⊹ Perceived poor candidate pool
⊹ Lack of a long-term vision and the
importance for planning for future staffing
⊹ Incapability – not a skill of incumbent
⊹ Time – too busy running the organization

∼ Wessleman


Elements of the Succession Plan
⊹ Vision

⊹ Mission

⊹ Policies

Care Net Pregnancy Resource Center


Vision of Your Organization
⊹ Vision: Future State
⊹ Examples:
– Club for Boys: Help all boys meet their needs
today so they can fulfill their potential
tomorrow
– SANI-T [Society for the Advancement of Native
Interests-Today] : To create a region offering
fantastic opportunities, pervasive justice, and
meaningful lives for all people.


Vision
⊹ Qualities of a Good Vision Statement
– Presents where we want to go.
– Easy to read and understand.
– Captures the desired spirit of an organization.
– Dynamically incomplete so people can fill in the pieces.
– Compact - can be used to guide decision-making.
– Gets people’s attention.
– Describes a preferred and meaningful future state.
– Can be felt/experienced/gives people goose bumps when they hear it.
– Gives people a better understanding of how their individual purpose
could be realized in the group.
– Provides a motivating force, even in hard times.
– Is perceived as achievable and at the same time is challenging and
compelling, stretching us beyond what is comfortable.

~From Organizational Vision, Values and Mission by Cynthia D. Scott


Mission Statement
⊹ An effective mission statement addresses the
following points:
– A broad description of what your organization is and
what it does
– With whom/for whom do we do it
– What is our distinctive competence (How do we do it
differently, better, more effectively than the
competition)?
– Why we do it, what is the result?

⊹ An effective mission statement is generally 2 – 3
sentences.


Mission
⊹ CASA (Court Appointed Special Advocate) of the Northern Hills:
Program seeks to promote and protect the best interests of
abused and neglected children involved in court proceedings
through the advocacy efforts of trained volunteers.
⊹ Sturgis Center for the Arts/My Sister’s Closet: to provide an
environment of learning and appreciation of the arts.
⊹ Volunteers of America, Dakotas: a nonprofit, spiritually based
organization that reaches out to empower people of all ages to
become healthier, self-sufficient, productive members of their
communities.
⊹ Youth and Family Services: our mission is to support children
and their families in being capable, caring and contributing
members of the community.


Values
⊹ Values: beliefs as to what is important and
what is not, what is right and what is
wrong, what makes for a good life, success,
etc.

CASA of the Northern Hills


Values Exercise
⊹ Basic Rules for Developing Organizational Values*:
– Your organization’s values should directly support your
strategic priorities
– They should be described as behaviors
– They should be simple and specific
– They should be arrived at through a process of
enrollment
⊹ List values:

⌖ Worksheet #1

*Reinventing Strategy: Willie Pietersen


Strategic Planning Steps
⊹ Determine who to include on the planning
team
⊹ Gather market data
⊹ Clarify your strategic position
⊹ Set measurable goals
⊹ Put the guiding principles of your planning,
including relevant market data,
measurable goals, and strategic position,
into a written policy to be used as a guide
as you plan.


Implementing the Plan:
Tools for the Process
⊹ Identify resources required to attain goals
⊹ Create a review process (that works at regular
intervals) that analyzes both successes and
challenges throughout implementation
⊹ Develop a performance reward system tied to
success
⊹ Communicate successes and challenges
throughout leadership team at regular
intervals


Succession Planning – Components of
the Strategic Plan
⊹ Goal Statement: Implement a Succession Plan for Key
Managers
Action Items Who Timeline

⊹ Determine composition of key management succession
planning team

⌖ Worksheet #2

Communicating the Plan
⊹ Identify key stakeholders who must know
about transition
⊹ Determine best method of communication
with each group of stakeholders
⊹ Develop the message(s)
⊹ Determine timing of delivery
⊹ Finalize and Implement the plan


Working with your Succession Plan after
implementation has begun

EVALUATION AND
TROUBLESHOOTING

A Succession Readiness Checklist
1. A strategic plan is in place with goals and
objectives in the near term (up to 3 years),
including objectives for leadership
development.
2. The board evaluates the executive director
annually on general performance and
achievement of strategic goals.

∼ Wolfred, Tom (2008). Compass Point Nonprofit Services. Building Leaderful Organizations.
∼ Baltimore: The Annie E. Casey Foundation.

3. The board, based on its annual self-
evaluations, is satisfactorily performing its
major governance jobs–financial
oversight, executive support and
oversight, policy development, and
strategic planning.
4. The executive’s direct reports, based on
annual evaluations, are judged as solidly
skilled for their positions.
∼ Wolfred, Tom (2008). Compass Point Nonprofit Services. Building Leaderful Organizations.

5. The top management cohort, as a high performing
team:
– Has a solid team culture in place in which members
support one another and can reach decisions as a
group efficiently and harmoniously.
– Shares leadership of the organization with the
executive in having significant input to all major
agency decisions.
– Can lead the organization in the absence of the
executive
– Has authority to make and carry out decisions within
their respective areas of responsibility.
∼ Wolfred, Tom (2008). Compass Point Nonprofit Services. Building
Leaderful Organizations.


6. Financial systems meet industry standards. Financial
reports are up to date and provide the data needed by
the board and senior managers responsible for the
agency’s financial strength and viability.
7. Operational manuals exist for key administrative
systems and are easily accessible and up to date.
8. Top program staff have documented their key
activities in writing and have identified another staff
person who can carry their duties in an emergency.

Leaderful Organizations.


9. Operational manuals exist for key
administrative systems and are easily
accessible and up to date.
10.Top program staff have documented their key
activities in writing and have identified
another staff person who can carry their
duties in an emergency.

∼ Wolfred, Tom (2008). Compass Point Nonprofit Services.
Building Leaderful Organizations.


Moving forward with your succession plan

APPLICATION

Successor Selection
⊹ Identify Skills
⊹ Identify Responsibilities
⊹ Know which positions are Key Positions and
require a plan
⊹ Determine how skills and responsibilities will be
measured
⊹ Write a policy that reflects what has been identified
and communicate it to the organization
⊹ Consider appointing an interim guide that is
already an associate of the organization in case of
an emergency


Successor Selection and Mentoring
⊹ The future direction and stated goals provide a
framework for identifying the skill sets
required of future leadership.
– Identify key staff positions to include in the
succession planning process.
– Review general skill sets and competencies
required for successors.
– Identify skill sets and competencies required for
successors in light of key long term business goals
and capture on appropriate form.
⌖ Worksheet #3


Define the Role of Key Managers
⊹ Identify current roles of key managers
⊹ Identify future roles of key managers as a
result of the succession plan and business
plan elements

⌖ Worksheet #4

Wellspring

Key Staff Positions and Required Skills

Skills Skills
Key Staff Position Title (today) (Future)


Personal Succession Plan
⊹ Answer the following questions based on the assumption that you
may leave the association before the end of the year:
1. My critical job responsibilities include:
2. Staff members who know/need to know how to do the major
components of my job include: (Who, What)
3. Stakeholders who would need to know about the transition include:
(Who, What They Need to Know, Best Method of Communication)
4. Current employees who could be potential candidates for my position
include: (Who, Key Skills They Possess, Key Skills to Develop)
5. Identify other positions in the national/state association of interest to
you for future employment purposes: (Position, Key Skills You
Possess, Key Skills to Develop)
6. List any development/training opportunities that would help you
prepare for a different position in the association:
7. Provide suggestions for the succession planning process in your
association:
⌖ Worksheet #5


Successor Performance Development
Plan
⊹ Set measurable goals

⊹ Set timelines

⊹ Assign mentor


Mentoring
⊹ Develop performance goals
– Goals should reflect the mission and vision of the
organization, even though they are for an individual
– Example: Write Individual Development Plans (IDPs)
 The process of clarifying the development gap between what
possible successors can already do and what they need to be able
to do in order to qualify for advancement
 Besides training and education, also use on-the-job work
assignments to close developmental gaps and meet succession
needs.
 A hybrid of a learning contract, performance contract, and career
planning form.
 IDPs are best paired with an internal promotion policy, instituted
organization-wide.
∼ Rothwell, William J. (2001, 4th Ed.) Effective Succession Planning.
New York: American Management Association.


Successor Performance Plan

Goal 1
Action Items

Goal 2
Action Items

Goal 3
Action Items

Goal 4
Action Items

⌖ Worksheet #6

Communicating the Succession Plan

⊹ Formalize the succession plan and
succession communication plan
– Design the succession transition (timeline and
action steps) from the current leadership to the
next
– Prepare the succession communication plan


Communicating the Succession Plan
– Identify the stakeholders who must know
about the transition
– Determine best method to communicate with
each group of stakeholders
– Develop the message(s)
– Determine timing of delivery

⌖ Worksheet #7


Examples of how to troubleshoot implementation
of succession planning

SOME COMMON PITFALLS
(AND HOW TO AVOID THEM)

Trouble shooting: Manager-
determined Successors
⊹ The gambler’s fallacy:
– The belief that if deviations from expected behavior are
observed in repeated random independent trials of some
random process, then future deviations in the opposite
direction are more likely.(1) (Betting on heads when tails
came up the last 20 tosses, when the probability of heads is
still ½)
– Managers may be replaced after repeatedly making the
same error and creating mounting losses for the
organization. This could call into question logic by which
successors were selected.
– If succession occurs due to lack of performance,
succession plan should be re-examined for familiar
pitfalls.(2)
(1) Lehrer, Jonah (2009). How We Decide. New York: Houghton Mifflin Harcourt. P.66
(2) Rothwell, William J. (2001, 4th Ed.) Effective Succession Planning. New York: American Management Association.


Solutions
⊹ What to do when leadership’s strategic logic breaks
down, and the succession plan will come into play
because of it?
⊹ An important step in succession planning:
⊹ Identify, in advance (and during planning):
– Which positions are Key Positions
– Work requirements or competencies for key positions
– Identify measurement for how individual performance
should be appraised
– Put policies in writing!
– These steps will allow for the re-evaluation of the
succession plan in the event of management failure
∼ Rothwell, William J. (2001, 4th Ed.) Effective Succession Planning.
New York: American Management Association.


Falling Through the Cracks:
What Is the Board’s Role?
⊹ Board roles differ in strategic leader development,
emergency succession planning, and departure-
defined succession planning.
– (These are all different kinds of succession planning)
⊹ The board should provide feedback on succession
plan and policy drafts
⊹ Plan is presented to board for review and adoption
⊹ Develop (written) board procedures to manage an
executive transition in the event of a permanent
absence
∼ Wolfred, Tom (2008). Compass Point Nonprofit Services.
Building Leaderful Organizations. Baltimore: The Annie E.
Casey Foundation.


Falling Through the Cracks:
What Is the Board’s Role?
⊹ The board needs its own succession plan, as does the
executive team. Does the board have term limits?
– Board committee to draft board’s own succession plan,
which the board will ratify.
⊹ Policies on the board parting at the same time as an
Executive Director?
– Board as a solid bridge between directors.
⊹ The board is the ultimate guardian of the agency’s
mission and operations, and employer of the executive
director.
Leaderful Organizations. Baltimore: The Annie E. Casey
Foundation.


Replacing the Irreplaceable:
The Original Executive Director
⊹ Organizations may have additional challenges
when they are planning the succession of their
first and only executive director.
⊹ Possible preemptive measures:
– Appoint a veteran affiliate of the organization to
take over for a stated period of time between
current executive director and the next, and to
head up the selection of the replacement.
– Communicate succession plans well in advance to
avoid shock among staff, supporters, and clients,
and to allow time for further communication about
the succession between these groups.


Replacing the Irreplaceable:
The Original Executive Director
⊹ Possible preemptive measures:
– Have current Executive Director work with a
third party to clearly define the organization’s
agenda for its next permanent ED.
– Continue relationship between board and ED in
developing written policies that support
transition.

∼ Wolfred, Tom (2008). Compass Point Nonprofit
Services. Building Leaderful Organizations. Baltimore:
The Annie E. Casey Foundation.


Replacing the Irreplaceable
⊹ Generally, there are no term limits for executive
leadership: how do they know when it’s time to leave?
⊹ Career coaching is a part of executive development: is
this position still what you are looking for?
– Planning for next stages, like retirement.
⊹ Is this still the right person for the position?
– Board’s annual performance review
– Performance reviews can be delicate, another reason why a
relationship based on candor and respect is important
between the board and the executive.
– Board can support itself with clearly written policies that
are consistently executed.
Leaderful Organizations. Baltimore: The Annie E. Casey Foundation.


For-Profit v. Non-Profit Succession
Planning
⊹ CEO/Executive director “raiding”– less likely in
non-profit than for-profit.
– Succession planning has been emphasized less among
all non-profits, even ones that operate in the same
sector as for-profits, such as health care providers.
⊹ Tenure expectations differ (for-profit CEOs
expected to move on or be replaced more
frequently)
⊹ Board concerns prioritized differently
∼ Biggs, Errol L. “CEO Succession Planning: an emerging
challenge for boards of directors.” Academy Management
Executive, 2004, Vol. 18 No. 1, p 105


Profit v. Non-Profit Succession
Planning
National Association of Corporate Directors survey of boards, and
what their top concerns were.

Public Companies Non-Profit Healthcare
1. Corporate Performance 1. Financial Survival (27%)
(28%) 2. Strategic planning (25%)
2. CEO Succession (25%) 3. Conflict of interest among
3. Strategic Planning (15%) board members (17%)
4. Corporate Governance 4. Quality-of-care oversight
(10%) (15%)
5. Board – CEO relations 5. Board evaluation and
(6%) education (10%)

Do non-profits need a succession plan
less than for-profits?
⊹ Since the vision of an organization in either
sector is different, as is the vision of its
employees, what can be borrowed from the
private sector and what cannot?
– Preparedness
– Financial stability

Volunteers of America, Dakotas


Implementation in your organization

⊹ Steps for any organization to take, from the
beginning:
⊹ What is your immediate reaction to the
possibility of key management succession
planning in your organization?
– List potential positive outcomes
– List potential negative outcomes


Value of Succession Planning
⊹ List some of the potential positive outcomes of key
management succession in our association:

⊹ List some of the potential challenges/issues to
address when implementing key management
succession planning in our association:

⊹ List some suggested approaches for addressing the
challenges/issues potentially associated with key
management succession planning:

⌖ Worksheet #8


Implementation
⊹ Different types of succession plans:
– Strategic Leader Development
– Emergency Succession Plan
– Departure-Defined Succession Plan
⊹ Determine which positions in the organization require a
succession plan
⊹ Write clear job descriptions, including competencies
and responsibilities, of those positions
⊹ Identify natural successors, and evaluate where gaps
occur in their experience or skills
– Create Mentoring System that uses formal elements and
informal elements
– Seek out on-the-job experiences for possible successors


Implementation
⊹ Identify and reinforce rules for board
behavior and succession
– Succession of board members
– Timing board changes and executive changes
– Reinforce board evaluations of itself and
executive (respect and candor)
⊹ If appropriate, identify a third party to act
as an automatic interim director in the case
of an emergency transition in leadership


Next Steps:
⊹ List 3 specific steps you will need to take to begin
implementing a succession plan
⊹ List 2 potential obstacles you may face
⊹ List 2 solutions/approaches to overcome
potential obstacles
The Journey Museum


Succession planning 03_11_final

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