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Succession Planning

Long a focus of corporate Board attention, CEO succession planning has become an increasingly visited topic in association Board rooms. However, there are important differences in these worlds, including:

  • Staff Size – Well over half of the national trade and professional associations in the United States have staffs of 10 or less, with perhaps only 1 in 8 with more than 25. Such staff sizes can be too limited in numbers to be relied upon for the development from within of an organization’s next CEO.
  • Rollover in Board Leadership – The annual rollover in an association’s Chair and Board leadership, combined with the diversity of corporate and professional cultures that can mark an industry or profession, can make hazardous a two year – or longer – projection of the type executive needed to succeed with a particular Chair or executive committee.
  • Role of the Association CEO vs the Corporate CEO – While in recent years the association CEO has become increasingly looked to for leadership, it is rarely at a level comparable to that of the corporate model. Though an association’s direction, relevancy and success can be greatly impacted by the CEO, such fundamentals are ultimately the responsibility of the Board as it seeks to understand, protect and promote the interests of the members.
  • Volunteer Board Engagement – Succession planning can require of the volunteer leadership a deeper level engagement than is practical at the Board level, even sometimes at the Executive Committee level.

All of the above notwithstanding, though, it remains on the Board to ensure the competency and effectiveness of an association’s CEO, and by inference its senior staff. Given that the circumstances facing each association are unique, JDG’s Succession Planning consulting practice has developed under a range of scenarios, including the following:

Competent and effective CEO in place with no expectation of change.

The watch phrase here is Succession Preparedness rather than Succession Planning. What marks Succession Preparedness is its focus on an informed and shared view by Executive Committee and the CEO as to the latter’s role in the organization, the critical capabilities needed to serve in the position and the whats and whys of the CEO’s compatibility with the group’s mission and membership. And as important can be the Executive Committee’s awareness of the performance and competency levels of the CEO’s direct reports and the prospects of their continuing effectiveness in the unanticipated absence of the CEO.

Regarding the CEO, per se, much, if not all, of what may be needed for effective Succession Preparedness may be its substantive inclusion in the CEO annual performance review process. In this, the Executive Committee and the CEO undertake an annual open and informed exchange and review on the role of CEO in the organization, the critical capabilities needed to serve in the position, as well as those that may be needed in the coming year. Also reviewed and discussed would be the CEO’s direct reports, i.e., professional skill, capability and performance levels, growth potentials and, specifically, each direct report’s ability to serve at their current level in the absence of the CEO, as well as each report’s potential to serve in the CEO position. (A model CEO Direct Report Succession Preparedness Evaluation Form is shown below.)

The goal of Succession Preparedness is an informed awareness on the part of the Executive Committee regarding how long the organization could continue at its current effectiveness and pace in the unanticipated absence of the CEO. For example, six months might be viewed as acceptable, while three months might be viewed as indicative of a need for additional Board attention.

An association with a firmly established agenda and position in its industry or discipline with an informed expectation that its internal and external fundamentals will continue for the foreseeable future.

In this scenario, the above size, volunteer leadership and role of the CEO exceptions found in associations can be greatly lessened in their effect. In such organizations, stability is generally prized highly with the greatest risk being that of calcification, i.e., a hardening of structure and agenda such as to threaten relevance. Critical here can be a purposeful, continuing revalidation of direction, mission and culture, with a specific focus on the optimum role and desired impact of the CEO in each of these areas. Also key here can be the vibrancy of the relationship between the volunteer leadership and rank-and-file membership.

Succession planning here ideally would respect the culture of stability while undertaking a thorough and informed vetting of the expectations, needs and interests of the organization’s membership and stakeholder communities.

The anticipated departure of a tenured CEO at the expiration of his/her current contract.
The particulars of this scenario can arise from a range of developments. For example, the negotiation of what is expected by Executive Committee and CEO alike to be the CEO’s final contract or a Board member considering a chair-track position seeking assurances from the CEO that the CEO will still be on the job when the volunteer is elected to the Chair. Without regard to the specifics of its arising, though, the watch word in these circumstances is generally structure. Unless properly structured, a wounded duck environment may soon develop that adversely affects staff morale and its membership interest and participation, even to the group’s stature and effectiveness with outside stakeholders.
Apart from the imperative of structure, this is largely an enterprise that is ad hoc to the circumstances of the association undertaking it. Considerations include: Who is to be in charge, i.e., the succession planning process and, later, the search committee? The Executive Committee? The Board? The Chair?

  • Who will lead the search, who should serve on the Search Committee and when should it begin its work?
  • When should an official announcement of the CEO’s retirement to be made?
  • How does/should succession planning fit/link with strategic planning?
  • Should an existing plan be refreshed prior to starting a search?
  • Which unique strengths and assets does the incumbent bring?
  • Who among those on staff might we look at?
  • Who among staff might we lose in a transition?
  • What opportunities might a change in staff leadership create or open?
  • Will the departure of the incumbent require organizational restructuring?
  • What actions are necessary now to ensure that on the departure of the CEO the organization’s effectiveness will be maintained?
  • Do we want to have a continuing relationship with the incumbent after the successor CEO has assumed command?

Properly anticipated, these questions and others, can be addressed in a well-structured and managed process with milestones and tasks set and defined that will take an organization from initiating a succession plan to the successful completion of a CEO executive search. (See Association CEO Succession Search below)

Whatever the scenario – those falling within the above or beyond – JDG Associates, Ltd. stands ready to assist and consult.

Executive Resources Committee of the Board 

Succession planning and preparedness are but two of a range of CEO oversight responsibilities of the Board. In managing these and others, a Board may want to consider establishing an Executive Resources Committee (ERC). Composed of the Chair, PastChair and In-coming Chair, the ERC would serve as the Board’s first resource on the CEO position. The ERC could not only be tasked with succession planning/preparedness and the annual performance review, it would also serve as a focal point for Board awareness and inquiries about the CEO position and what should be expected from it. (See Executive Resources Committee under Association Articles) 

CEO Direct Report Evaluation    

To be prepared by the CEO on the completion of the annual performance evaluations of the association’s Direct Reports (DR) and shared confidentially with the officers of the association and/or or its Executive Committee. The purpose is to convey the CEO’s expectations and concerns on each DR’s performance and professional development in the coming twelve months.      

Performance of Function – The performance of the DR’s division in the past twelve months 

Importance of Function – The relative importance of the DR’s division to the continuing success of the association in the next three years 

Performance of the DR – The DR’s performance against his/her position description and beginning-of-year direction, guidance and professional development goals 

Resource Relationship with the CEO – Dependence by the DR’s division on the leadership, skills and knowledge of the CEO for its level of performance   

Professional Development Status of DR – The DR’s professional growth potential in his/her current position and other positions within the association 

Career Aspirations of the DR – DR’s aspirations to grow in his/her current area of expertise or as an association executive at the next level in this association or elsewhere 

Criticality of the DR to Organization’s Success – On a scale of “A” to “D”, the criticality of the DR to the continued success of the organization   

Potential to Serve as CEO – Those areas in which the DR would need to grow and strengthen to become a viable candidate for the CEO position should it open

Association CEO Succession Search

An Association CEO Search with Specific Focus on Organizational Succession

Traditional Association CEO Search

Typically, an association CEO executive search will begin 6 to 9 months prior to the planned departure of the incumbent CEO. For JDG, the search starts with the development of a CEO Position Profile — an executive needs assessment tailored specifically to the client association. Far more than a position description, the profile explores and specifies the type executive required to direct the resources of the group toward the needs of its membership and other stakeholders. Its development includes individual interviews with each member of the Search Committee, a client headquarters site visit and interviews with senior staff, a review of the strategic and operational plans, recent financial statements and other materials as appropriate.

Association CEO Succession Search

An Association CEO Succession Search (ACSS) is begun approximately 18-24 months prior to the planned departure of the incumbent CEO. As with the traditional CEO search above, it too will begin with the development of the CEO Position Profile. With the ACSS, however, the Profile will include a section on the direct-reports to the CEO position. This will focus on the relative strengths of those in these positions, whether one or more incumbents might be considered as a potential candidate for the CEO position, the relative importance of function to the organization, and the incumbent CEO’s direct role in the performance of the function, i.e., will the incumbent CEO’s departure substantively impact the performance and effectiveness of the association in this area?

The Process

18-24 Months

The CEO Positon Profile begins with telephone interviews of the Search Committee. (This can include a site visit to headquarters including interviews with direct reports and other senior staff as appropriate.)

Concurrently, the incumbent CEO prepares an evaluation on each direct-report as above for the Search Committee’s consideration. These evaluations are forwarded to JDG for appending to the draft profile which is then distributed to the Committee members for review.

The committee meets, preferably in person, to review, comment on, change/approve the profile, taking note of the incumbent CEO’s evaluations on the direct-reports. (JDG will attend this meeting, revising the Profile and offering counsel as appropriate.)

12 Months

The incumbent CEO meets with the committee to update/calibrate his/her views on the direct-reports, in particular whether one or more should be considered as a possible successor. Also discussed with the incumbent CEO will be his/her views on the strengths of the direct-reports in their current positions with possible consideration given to positions and performance that may be needed to be strengthened. (JDG will participate in this meeting should the search committee chair deem it appropriate.)

6-9 Months

The committee reconvenes by phone, confirms/amends the Position Profile, and considers internal candidates for the positon and any actions that may be indicated regarding incumbent direct reports. At this time, the committee will also decide the date on which the search is to commence. (JDG will participate in this meeting, providing counsel as appropriate.)

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