The Boardroom

When searching for a new chief executive two years ago, the board members of the J. Marion Sims Foundation were so sure of their selection that they chose the same candidate—twice.

"After going through the entire interview process with the search committee and full board, my father fell ill, and I ended up declining the offer," said James "Jim" Morton, chief executive of the foundation, which has awarded more than 250 grants totaling more than $17 million since its inception in 1994. "A few months later, they still had not filled the position and my father passed away in the interim, so when they approached me about reopening the conversation, I was able to view it in a different light and accept the job the second time around."

The J. Marion Sims Foundation was fortunate to land the candidate it wanted. However, it discovered, as many nonprofits do, that the process can be fraught with unforeseen difficulties.

"It was a lengthy process, which I think can be owed to a number of factors," said Morton, who came aboard in 2000. "First was the fact that the board advertised nationally and had a lot of applicants, but didn't use a headhunting firm. And second, the search committee screened all of the initial applicants themselves."

According to Nancy R. Axelrod, author of Chief Executive Succession Planning: The Board's Role in Securing Your Organization's Future (BoardSource, 2002), "[When] the foundation is not in place to pass the baton with competence and grace, the result can undermine the entire transition process and create lingering casualties."

Nevertheless, CEO succession planning is something few organizations prepare for adequately. Instead, many choose to focus on seemingly more pressing matters, such as fiscal solvency, program development or replacing outgoing board members.

Even for the Sims foundation board, succession planning is just now growing as a priority, according to Morton. "We're a young foundation and are looking within the next year and a half to replace board members," he said.

According to Axelrod, several factors can prompt boards to leap into the choreography of an executive search: an announcement from an incumbent that he or she wishes to move on; a sudden or unexpected departure; or the growing consensus that it is time to bring in new leadership.

Let the Dance Begin: Planning for a Successful CEO Search

The Cleveland Foundation, a public charity dedicated to improving the quality of life in Greater Cleveland, is the oldest and second largest community foundation in the nation.

It also just hired Ronn Richard as successor to its CEO, Steve Minter, who retired in June after 19 years at the helm. (For more, see "A Conversation with Steven Minter" at www.foundationnews.org/CME/article.cfm?ID=2391.)

"Obviously this is a very prestigious job," said Jack Sherwin, vice chair of The Cleveland Foundation board and chair of the sixmember search committee. "As the oldest public charity in the U.S., it has a grand history, and we have a lot of people interested in the job—those from both the foundation community and the corporate community."

To ensure a smooth search, Sherwin said The Cleveland Foundation focused on making its process inclusive and transparent.

"I don't think we did anything dramatic compared to anybody else," he said. "We started out with a small committee of board members, sent out our requests for proposals and interviewed a consultant. Afterwards, we developed a position description or profile, and in the process of doing that interviewed staff, board members and community leaders for their input into what the vision of a new CEO would look like."

Nevertheless, that was only the beginning, Sherwin said.

"Once that was completed, we sent that information out to a broader group of community leaders, soliciting ideas as to potential candidates they would recommend."

For The Cleveland Foundation's board, the key to its meticulous search has been thoughtful planning, a detailed procedure and transparency of the process, according to Sherwin.

"Our current CEO told us over a year ago of his intention to retire," he said. "So we set up a timeline, with the object being to give all candidates a fair and thorough hearing without creating a situation that sometimes happens where a preferred person is suddenly whisked through the process. We're focusing thoroughly on process to get it right."

Finding the Right Fit

Matching the needs of the organization with competencies sought in the next chief executive is one of the board's most important succession planning roles.

Understanding that the organization is seeking the right person to take it forward—not duplicate the efforts of the past leader—is as important as having a clear vision of what attributes and skills the next CEO should hold, Sherwin said. "What we need as a public charity is very different from what someone would need at General Motors," he said. "We decided to put our focus on leadership, growing the endowment and grantmaking in the community…[as] areas [of]…expertise we would hope to find in a new CEO."

Matching leadership with organizational needs is key, Sherwin added. "I think it's very important that the candidate understand the organization's mission and vision," he said. "You have to know what sort of champion you need to fulfill that vision."

Another key factor is ensuring the process is one of teamwork, said Sherwin. "I think the most important thing is to have a relatively small search committee that is capable of rapidly building a trust level that allows for appropriate, and full, communication between members of the committee about the candidate," he said. "Everyone should have the right to speak and be encouraged to communicate their views. This should be a team process rather than being handled by one leader who ultimately dictates what he or she might want."

Plan for the Inevitable

The best nonprofit boards understand that while chief executive departures are often unexpected, executive leadership transitions are inevitable. They view them as journeys that start as soon as the chief executive is appointed, rather than intermittent episodes sparked by executive turnover, says Axelrod in her book, Chief Executive Succession Planning: The Board's Role in Securing Your Organization's Future (BoardSource, 2002).

Board members and their chief executives, she adds, should ask themselves questions that cause them to pause, take stock and reflect on where they are in the succession-planning continuum.

Here are some things to consider:

• Is there a current written job description that clearly spells out the responsibilities of the chief executive?    
• Is there a climate of mutual trust and respect between the board and the chief executive?    
• Do board members understand their roles and responsibilities?    
• Is there agreement between the board and the chief executive on their respective roles and mutual expectations?    
• Does the board have a constructive process for reviewing the chief executive's performance, salary and benefits on a regular basis?    
• Do board members support the current mission statement?    
• Do the board and chief executive have a collective vision of how the organization should be evolving over the next three to five years?    
• Does the work of the board and staff reflect defined institutional directions and goals?    
• Does the board have a clear understanding of the financial condition of the organization?    
• Does the board have in place emergency transition management policies should the chief executive be unable to serve or depart suddenly?

—SRH

Resource

Axelrod, Nancy R. Chief Executive Succession Planning: The Board's Role in Securing Your Organization's Future (Washington, DC: BoardSource, 2002). To order, call toll-free 800/883-6262 or visit www.boardsource.org. Order #289. $39, $52 Non-Members.

Illustration by Clemente Botelho