Why Succession Planning Should Be Your Next Priority

If you’re a nonprofit board member or executive leader, succession planning is probably the last thing on your mind. Instead, you’re focused on raising your organization’s budget, hiring and managing staff, and developing programming that makes even greater community impact.

You’re not alone in this approach. Plymouth University’s 2018 report, The Wake Up Call, found that a mere 22% of nonprofit leaders have a succession plan for their role or for other senior positions. To make matters worse, 67% of nonprofit leaders reported planning to leave their jobs in the next five years.

Experts estimate that in the coming years, “the nonprofit sector will need almost 80,000 new senior level managers/leaders annually.” This leaves a major gap in nonprofit leadership that could affect your organization sooner than you think.

So if your nonprofit doesn’t have succession plans in place, today might just be the perfect day to get started.

Why Is Succession Planning Important?

Turnover comes at a cost. When it comes to senior leadership roles, filling open positions is no easy feat. According to the Society for Human Resource Management, “50% of senior outside hires turnover within the first 18 months.” That means your organization needs to be ready to maintain continuity of programming through leadership transitions, which a clear strategic plan can help with. 

Plus, every time you need to replace a key staff position, it hits your organization’s bottom line. Per Gallup research, replacing an employee will cost you “from one-half to two times the employee’s annual salary.” This doesn’t even factor in the opportunity costs when key nonprofit positions—such as in fundraising—are vacant for an extended period.

On the flip side, there may be situations where avoiding turnover has an even higher price. According to research in the Harvard Business Review, even one “toxic” employee can harm an organization. When dealing with a toxic team member, 48% of employees “decreased their work effort,” 47% spent less time at work, and 38% produced lower quality work. The same research found that getting rid of a toxic employee saves an organization an average of $12,500.

As much as we want to assume best intentions, especially in the nonprofit sector, the role of an organization’s staff and board leadership is to steward the organization’s success and sustainability. That may mean dealing with friendly, unplanned, or even hostile leadership transitions. The readier you are, the better the chance of a positive (and less costly) outcome.

Protecting Your Organization: Key Areas of Consideration

Apart from financial costs related to staff transitions, there are also risks connected to departing employees. In thinking through succession planning, consider: 

• Finances and fundraising: Which staff members have access to financial information, including institutional financials and donor information? Which staff members anchor key fundraising relationships? What would happen if these staff members left tomorrow—and took some of this information with them?
   
• Physical and intellectual property: Do you provide staff with laptops or cell phones? If so, do you have an easy system to track costly physical property and get it back, particularly when it comes to remote staff? Do you have policies in place, including in employment contracts, that specify what intellectual property belongs to the organization—and how that information should be treated by departing employees?
   
• Productivity: Do you understand the core functions that each of your leadership staff members provide and oversee? If not, it’s time to brush off those job descriptions and be sure they are accurate and based on reality. Once you know the work that needs covering, it’s time to create a plan to cover it. This will also benefit your organization when senior staff members need personal or family leave. 
   
• Stakeholder communication: Communicating with internal and external stakeholders can be one of the trickier parts of leadership transitions, particularly if they are not planned or friendly. Who will be in charge of developing organizational messaging? Who will be responsible for sharing the news with staff? Who will share the news with external partners, especially donors?

When to Start Succession Planning

The reality is that leadership transitions are not easy. Successful transitions require advance planning and coordination. And most nonprofits simply are not prepared.

In summarizing the findings of The Wake Up Call report, the authors conclude what many of us in the nonprofit sector have lived through:

…many boards are not as engaged with leadership issues as they should be. Investment in leadership is low, oversight of leadership is weak, and succession planning for key leadership roles in many organizations is notable only by its absence.

Whether you’re a board member or a staff member, the time to start preparing for leadership transitions is now—before they happen.