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National Survey Report

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The National Nonprofit Sustainability and Succession Survey Report

In January, 2013, TransitionGuides, a leading provider of nonprofit succession planning, sustainability planning, and executive search, teamed with McGladrey LLP, a national provider of assurance, tax, and consulting services to tax-exempt organizations, to survey sustainability and succession planning among nonprofit organizations across the country.

The survey explored critical succession and sustainability factors, such as current CEO tenure and age, backup and emergency plans, talent development, succession policy, structure of senior management team, business and strategic plans, and more. This first-of-its-kind survey establishes a baseline for future examination of these issues. The results are grouped as follows:

  • Organization profile
  • Leadership profile
  • Succession issues
  • Sustainability issues
  • Selected comments

Our observations on these results and comments from participants precede the presentation of quantitative data collected through the survey.

Observations

This is the first year of the survey, so trends can only be inferred from our industry knowledge and through an examination of similar reports. Based on extensive experience in the field, as well as a comparison of these data with the 2011 Daring to Lead report, prepared by CompassPoint Nonprofit Services, and the 2013 Nonprofit HR Solutions study, TransitionGuides observes the following:

  • Overarching Trends
  • Trends in Succession Planning
  • Trends in Organizational Sustainability

Click Here to Read the Full Report...
 

Overarching Trends

Grants by national and local foundations in succession planning and executive transition management are paying off. More organizations are developing written succession plans and organizations appear to move through executive transition with less trauma than previously observed.

The 2008-2009 recession has contributed to increased attention to organizational sustainability, and diversification of revenue sources has become a more important part of business models and fundraising strategies.

There remains a significant cohort of nonprofit executives and senior managers from the baby boom generation. Attention to planned succession and generational hand-offs of leadership remains a high priority, given the inevitable continued exodus of a generation of leaders.

Top leadership is aging out. Almost 50% of the executives of participating organizations were 60 years old or older, and another 40% were between 51-60 years old.

Emergency plans are becoming more widespread. The percentage of organizations with written emergency backup plans for the CEO is rising. 47.5% of responding organizations had written backup plans for the CEO, as compared to 17% in 2011 Daring to Lead and 31% in 2013 Nonprofit HR Solutions studies. Nearly a quarter (24.1%) of organizations have written emergency backup plans for senior executives, a major advance in broadening the application of succession planning.

Most organizations lack talent development processes. Nearly three-quarters of organizations reported no assessment of leadership talent in any organized way. One fourth (25%) of respondents reported periodically reviewing talent, while 2.5% reviewed talent annually.
 
Most organizations have stable leadership. Seventy-two percent (72%) of organizations have had stable CEO leadership over the past 15 years; 43% reported one executive and 30% reported two executives over the 15 year period.

CEO transitions are largely successful. Attention to planning for CEO transition has increased and has yielded improved results from leaders’ perspectives. Fifty-seven percent (57%) reported planned and successful CEO transition; 18% unplanned and successful; 22% unplanned and challenging; and 3% difficult and disruptive.

High turnover in leadership continues. Fifty-one percent (51%) of executives plan to leave in four years or less (27% 3-4 years; 15% 1-2 years; and 10% in one year). This is highly consistent with prior studies that reported 8-10% actual transitions each year and predictions of 10-15% annual departures.

Deep succession planning is not widespread. Only 4% reported written succession plans for all key employees that include cross-training plans. Fourteen percent (14%) of organizations had used a consultant to assist with succession planning and 29% an executive search consultant. Fifty-eight percent (58%) had never used a consultant for succession planning or executive search.

Leadership teams reflect strong alignment. Sixty-three percent (63%) of organizations reported a high degree of alignment among the board, executive, and management team about the direction and strategy of the organization.

Strategic plans are no longer gathering dust. Over half of respondents reported that the strategic plan is frequently used in priority setting discussions.

Confidence in business models is mixed. Thirty-six percent (36%) believe their business model will work for the next 5-7 years, while fifty-two percent (52%) believe this is partially true.

Boards viewed as valuable. Over half (54%) see the board as a high value asset to the organization, and another 41% see that as partially true.

Board recruitment is a weak link. Nine percent (9%) have confidence in their strategy for recruiting and developing leaders for board and staff, while 61% reported some progress on this aspiration. Meanwhile, confidence in board succession is mixed. One third of boards are confident of their process for board officer succession, while 49% of other organizations reported partial confidence.

Funding prospects are positive. Sixty-five percent (65%) have confidence in short-term funding (3-12 months), while 49% have confidence in longer term funding.

Revenue diversification is a challenge. Only 17% believe they have the right diversity of funding; 56% are advancing this goal.

Most organizations are confident of stewardship skills. Seventy-two percent (72%) see themselves as overall good stewards of both financial assets and the reputation of the organization.

Most organizations are confident in their cultural assets. Sixty-one percent (61%) reported a resilient, forward-focused, results-oriented culture, while 70% of organizations reported that anyone on the team can make a compelling case for supporting the organization.
 

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