When Replacing a Long-Standing Executive Director - Don't Forget About the Exit Plan!

When a board succession plans for a departing, long-time Executive Director - most of the attention is focused on the recruitment and onboarding of the new leader...and rightly so. With that said, a critical (and almost always overlooked) component is the exit-plan of the outgoing leader. Following are two essential tips for you to consider:

1. Capture Institutional Knowledge
When any leader exits an organization - untold amounts of institutional wisdom and knowledge leaves as well. And while fresh leadership is often a positive - it can usually be optimized when key institutional knowledge can be retained. This information can include processes, professional networks & relationships, expertise, etc. If the exit is framed by advanced notice (such as a retirement), a multi-week plan to capture this wisdom can be advisable.

2. Set Terms of Exiting Leader's Continuing Involvement - or Lack Thereof
While most organizations make a clean separation with limited-to-no ongoing involvement - it can be advisable for the board to set clear expectations in advance. We occasionally see a retired leader continuing to participate despite the fact that it is a significant distraction and impediment to the new leader's onboarding. Even if a formality, it is a best practice to lay out the mutual expectations for the retiring leader.

Funders Often Surprise - The Misconception Around Transition Funds and Capacity Building

Nonprofits facing a leadership succession may be surprised at the supportive attitude many foundations take during such an event.

OVERVIEW
Under the umbrella of Capacity Building, a number of organizations may realize support from aligned foundations in the form of Transition Funds. Foundation leaders will often view an organization's success as a mission critical requirement worthy of support. As put by one foundation leader, "Transition planning is often seen by organizations as a luxury whereas foundations see it as smart." In contrast, many of these same non-profits that are facing the leadership succession will misguidedly think that foundation support would not necessarily be available. If you've had a different experience, recall the old axiom that when you've met one foundation, you've met one.

TYPES OF TRANSITION FUNDING
A number of transition funding scenarios exist, following a few of the more frequently seen examples:

1. Executive Search Firm Fee - foundations that are aligned with an organization's mission will occasionally, or even frequently, fund executive search fees.
2. Interim Executive Services - i.e., when an interim Executive Director involves a disparate salary expense as compared to the exiting leader
3. Transitional Concurrent Employment - when the nature of a succession is so critical that ideally the organization will employ the exiting leader simultaneously with the incoming leader for a number of months.

TAKEAWAY
Organizations should not miss the opportunity to consult with foundation partners during leadership successions to identify possible support opportunities.

For-Profit Leaders Thinking of a Nonprofit Career? Tips for an Enlightened Transition

Based on a number of factors, an increasing number of nonprofit boards are tapping executives from the for-profit sector. However, the transition is often challenging - certainly, both organizations and executives need to be wary of the prevalent pitfalls in order to optimize the likelihood of success.

CONTEXT
Why are more non-profits tapping for-profit leaders? Following are a number of the more customary reasons:

1. The rapid professionalization of the sector - more and more non-profits wish to operate in more business-like fashion. This trend is driven by influence from funders and by the board's increased interest in efficiencies and cost-containment - if, of course, these concepts can positively impact the organization's mission.
2. Mission Affinity - for profit leaders perceive the opportunity to do work that is more personally satisfying...often with a nonprofit wherein the mission addresses a personal experience personally experienced by that leader.
3. Narrowing Compensation Gap - while still significant - the gap between sector compensation has steadily, albeit incrementally, continued to decrease.

CHIEF TRANSITION CHALLENGES

A number of the distinct differences can prevent a successful sector transition - the most frequently cited are as follows:

1. Board Interaction - Most for-profit executives are surprised by the unique nature of non-profit decision-making including the intricacies of board relations. Accustomed to rapid decision making, many for-profit leaders are not able to adjust to the sector's nuances.
2. Culture Shock - Despite the sector's continued professionalization, many for-profit leaders will not successfully adapt to the legacy cultural components of a given organization that will likely frustrate an unsuspecting leader.
3. Unrealistic Satisfaction Expectations - While tremendous intrinsic rewards are experienced by those that lead nonprofit organizations; those rewards are interspersed among the daily (and hourly) challenges of running an organization that are not dissimilar to the daily challenges in the for-profit sector.

TAKEAWAY

Despite the challenges, a sector transition can be successful and rewarding for both the organization and the new leader. Certainly, a leader must be clear as to the motivations driving the shift. Further, mission affinity is critical - a leader may be successful leading one nonprofit but not necessarily another. Certainly, you can match one of the many success stories that include the Rock and Roll Hall of Fame and Museum's leader Terry Stewart who was formerly the President and COO of Marvel Comics.