Associations don’t often plan for an executive’s sudden departure, but it’s worth thinking ahead. A nonprofit financial pro explains the steps.
Uncertainty is draining on an organization, never more so than when the uncertainty is around the chief executive. A leader’s abrupt departure can throw a wrench in an association’s best-laid plans, but most organizations are ill-prepared for it: According to one study, less than half of nonprofits have a written succession plan.
It may be that associations are loath to draw up such a plan because it requires squarely facing uncertainty, but it can also be due to a lack of understanding about what such a plan might involve. A. Michael Gellman, CPA, CGMA, head of Fiscal Strategies 4 Nonprofits, says the planning for a CEO’s sudden departure should be just as urgent as the plan around a serious IT outage or social-media crisis. “Just like having operating reserves, it’s good to have a set of procedures in place for A, B, C, or D if the chief staff position turns over quickly,” he says.
Less is better than more, and less is better than nothing.
A. Michael Gellman
Gellman says organizations can simplify the process by dedicating their attention to three key areas: risk management, continuity, and reputation.
Risk management involves matters related to the financial stability and well-being of the association. What financial roles was the CEO alone empowered to handle, or back up? How will those roles be re-delegated in the case of their departure? In larger organizations, that may mean having a plan to reassign those duties to an executive staff person like a COO; at smaller ones, the treasurer on the board may be recruited. “Risk management is the procedural, operational, keep-the-lights-on things,” he says. “You want to be able to pay bills, process payroll, all the things we need a hard signature on…. Transactions don’t stop, even for a day.”
A transition plan, to that end, should include particularly crucial points on the association’s financial calendar so that the person stepping into the role knows what’s coming: When the audit is scheduled, when the budget is discussed, and so on.
Continuity involves the less-urgent but still important day-to-day leadership roles. Who will be leading the next board call or meeting? Who will write the monthly email from the staff leader? “Some of these things can be delegated to a second in command, or a programming committee,” Gellman says. “You want to keep programs moving—if you’re planning your biggest membership mailing or your renewal period is a month away, you want to make sure you have the capacity to handle it.”
Reputation entails everything about communicating the CEO’s departure and the next steps, whether that’s to staff, members, or other stakeholders. “This is about letting the chair of the board know first, and then discussing how the association is going to message the members and the general public. How are you going to talk that through?”
There are no straightforward best practices for such a succession plan, which will depend largely on the size and personnel bandwidth of the organization. But, Gellman says, it’s important to have something documented so the organization isn’t blindsided. “Less is better than more, and less is better than nothing,” he says. “Start out with a very simple plan that you can slowly build later on just to have something.”
But while drawing up the plan, look at timing as well. “ You’re going to have the three buckets—risk management, continuity and reputation—but you’re also going to have one month, three months and six months. You’re addressing those three buckets over time.”
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