Transition Success Factors

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 Excerpted from an article by Tom Adams as published in Nonprofit World • Volume 16, Number 3 May/June 1998

Executive transition is a powerful milestone for an organization and a predictor of its future effectiveness. Careers of departing and arriving executives and reputations of board leaders are directly affected by the outcomes of transition. Whether or not you’re currently involved with an executive transition, this article will help you manage one of the most difficult and unavoidable aspects of nonprofit life.

What follows are lessons and practical tips for executives and boards based on a five-year field research project of the Neighborhood Reinvestment Corporation, a national nonprofit based in Washington, D.C. and experienced in applying these lessons in over 200 executive leadership transitions.

Neighborhood Reinvestment has developed a systematic three-phase approach to executive transition that increases the likelihood of success. Here are lessons learned from this project:

1. Take time to clarify how the transition can benefit the organization.

For a host of financial, programmatic and emotional reasons there is enormous pressure to move quickly to place an ad and begin recruiting. No matter how experienced the leadership, this tendency is almost unavoidable. Tom Gilmore, author of Making a Leadership Change, describes the rash and unconscious decision-making that occurs during transition as “sleep-walking through the process.”[1] The odds of a successful transition are improved when an organization faces this pressure, addresses the legitimate issues that warrant immediate action, and then carefully reflects on how the organization can benefit most from this time of change.

2. Don’t skimp on any phase of the transition.

There are three phases to the executive transition process: getting ready, recruiting, and post-hiring. Each phase builds on the preceding one. Skimping on any phase puts the success of the transition at risk. (See the chart below for key considerations and potential obstacles in each phase.)

Be careful that the recruiting phase doesn’t absorb the board’s attention to the detriment of the pre-hiring and post-hiring phases. If the pre-hiring phase is slighted, you may end up with the wrong person. If the board doesn’t reserve energy for the post-hiring phase, they’ll get off on the wrong foot with the new executive. Exhausted board members who disappear after selection run the risk of a weak executive-board relationship and too little accountability. Devoting time and energy to all three phases is critical to long-term success.

3. Identify what type of transition it is.

The type of transition influences the costs, risks, and transition strategy, as well as the attributes of the next executive. First, you need to clarify whether the transition is routine or non-routine.  Routine transitions occur when an executive retires or takes another position and a stable organization goes through an orderly process of hiring a new executive. Neighborhood Reinvestment’s field experience and research, validated by executive search professionals, suggests that most transitions today are non-routine and complex. In Neighborhood Reinvestment’s experience, the four most typical transitions today are:

Turnaround transitions. If your organization is in a financial or programmatic crisis, or there is a recognized need to reorganize board or staff, you are facing a turnaround transition. Such a transition requires one or more lead supporters willing to invest in an interim manager, a consultant, and a permanent executive experienced in managing turnarounds. Turnarounds are especially difficult, costly, and high-risk for first-time executives. But even proven executives can be overwhelmed by the challenges of a turnaround unless they have extensive organizational assessment experience.

Organizational startups. When an organization hires an executive for the first time, big shifts occur. The hiring may be part of the organization’s formation, or the new exec may be hired after relying on volunteer or part-time “staffing” for months or years. In either case, founders and volunteers must make major adjustments. Letting go and shifting roles can be painful, and reshaping the organization’s culture is disruptive. Executives of start-ups also face intense demands. They are often shocked by the number of questions and details handed to them for resolution. Because an organization’s beginning has such a great effect on its future, hiring the first exec demands the involvement of people experienced with start-ups.

Underperforming organizations. Many symptoms point to underperformance. Although such thoughts are often unspoken at first, board members and funders begin to wonder if the organization is doing” enough. Sometimes a personable executive is able to raise operating support but provides limited services or products year after year. Underperforming organizations frequently turn out to be in crisis when light is shed on them. Many of the same skills required for a turnaround or start-up are required from the new executive in this situation.

Founder/entrepreneur successions. When a founder leaves, the organization faces major adjustment. Its culture, performance expectations, and relationships are linked to the founder and personality. Even stable organizations can quickly become vulnerable without careful attention to the impact of this change. Similarly, departing executives who built or rebuilt an organization through their entrepreneurial drive, vision, and energy are difficult to follow. Boards often fail to adjust expectations, resulting in rocky starts and short tenures. Rather than rushing to fill the void left by the founder or entrepreneur, it’s sometimes better to hire an interim manager. Using short-term leadership can offset the distorted perspectives that are common when such a powerful leader leaves.[2]

4. Assess your organization’s health, needs, and resources, and sharpen its mission, vision, and goals.

Search firms refer to this process as scoping—turning a lens to examine and understand the organization’s history, current condition, and future needs. When thoughtfully done, this assessment provides a clear picture of what the next exec should be like, what compensation package will attract such a person, and what issues need attention before hiring the new exec. This snapshot also provides a basis for the board to map out its transition route, evaluate the expertise it has available, and identify where outside assistance is needed.

5. Take extra time to recruit a pool of finalists that is diverse in gender and ethnicity.

Many organizations, especially those in multi-ethnic communities, seek to insure that finalists represent the diversity of the communities served. An organization’s ability to recruit a diverse pool of finalists is increased if the board and its leadership are diverse. Given the competitiveness for talent and the shortage of experienced executives in some communities, added time and outreach are often needed to identify and attract a diverse pool.

6. Offer a competitive compensation package, including an employer-contributed retirement benefit.

Don’t advertise a salary too low to attract people with the needed skills. It's better to remain flexible about salary until you’ve met potential candidates and know their current salaries and needs. Funders may be willing to supplement salaries with grants to help you hire a more experienced executive.

It’s increasingly important to offer benefits, including an employer-contributed retirement plan. A 1993 national benefit survey points to a retirement benefit as more important than salary among Neighborhood Reinvestment affiliates. Organizations that offered an employer-contributed retirement benefit had executive tenures twice as long as those that didn’t.

7. Consider outside assistance.

Initially, many board members don’t see much difference between hiring a new executive and hiring any new employee. Such a view underestimates the complexity of the process. Involving a person with a proven track record in selecting nonprofit executives is a tremendous advantage.

For larger, more established nonprofits with clear mission niches, search firms that focus on nonprofits (preferably in their mission area) can be particularly helpful. Community-based nonprofits, smaller organizations, and nonprofits with emerging mission areas tend to benefit from working with independent consultants experienced in one or more phases of the transition.

Most boards find outside assistance valuable in assessing their readiness to recruit, in doing candidate outreach and reference checks, and in facilitating the initial relationship-building and performance reviews with the new executive. New executives find enormous benefit in working with an executive coach or management consultant during the stress-filled first year.

Endnotes


[1] Thomas N. Gilmore, Making a Leadership Change: How Organizations and Leaders can Handle Leadership Transitions Successfully. Jossey-Bass Publishers, 1988.

[2] See Interim and Acting Directors: The Case far Short-term Leadership, by Catherine W. Farquhar, Management and Information Exchange, July 1983.

Selected References

Adams, Tom. “Demystifying Executive Leadership Changes,” Stone Soup, Neighborhood Reinvestment Corporation, Spring 1997.

Brinkerhoff, Peter. “How to Choose and Work with a Consultant,”  Nonprofit World, March-April 1992.

Farquhar, Katherine W. et al., “Special Issue on Leadership Transitions,” Human Resource Management, Spring 1995

Fram, Eugene & Robert Pearse, “Custom Design Your New Exec’s Orientation Program,” Nonprofit World, January-February 1991.

Fram, Eugene & Robert Pearse, “The Effective Executive Takes Over,” Nonprofit World, May 1991.

Nathan, Maria L, “The Nonprofit Executive as Chief Learning Officer,” Nonprofit World, March-April 1998.

National Center for Nonprofit Boards, “Crisis or Opportunity? Executive Leadership Transitions,” Board Member, Special Edition, May 1997.

Neighborhood Reinvestment Corporation, Managing Executive Transitions: A Handbook for Nonprofit Boards Hiring Executive Directors, 1994; revised for Winter 1997.