HR Toolkit


HR Planning

Succession Planning

What would you do in your organization if a key employee resigned, fell ill or had to be fired tomorrow? Would you be prepared?

 



Introduction

Succession planning is not an issue that many organizations address in any systematic way. Because many nonprofits are small (with fewer than 10 employees) and because they may be facing other organizational challenges, thinking about who the next executive director might be or what would happen if the director of finance suddenly left is not high on their priority list.

There are many reasons why organizations need to be thinking about succession planning. The most important reason, of course, is that we rely on staff to carry out our missions, provide services and meet our organization's goals. We need to think about what would happen to those services or our ability to fulfill our mission if a key staff member left.

Another reason to focus on succession planning is the changing realities of workplaces. The impending retirement of the baby boomers is expected to have a major impact on workforce capacity. Teresa Howe in "Succession Planning and Management" identified other emerging realities about the workforce in Canada:

  • Vacancies in senior or key positions are occurring in numerous organizations simultaneously and demographics indicate there are statistically fewer people available to fill them
  • Baby boomer retirements are on the rise just at the time when the economy is growing and increasing the demand for senior management expertise
  • There is no emerging group of potential employees on the horizon as in past generations (i.e. baby boomers, women entering the workforce, large waves of immigration)
  • Many organizations eliminated middle manager positions during restructuring in the 1980s and 90s and no longer have this group as a source to fill senior level vacancies
  • Younger managers interested in moving up do not have the skills and experience required because they have not been adequately mentored. This is because middle managers, who would normally perform this type of coaching role, were eliminated

With careful planning and preparation, organizations can manage the changes that result from a generational transfer of leadership as well as the ongoing changes that occur regularly when key employees leave an organization.

Although the type and extent of planning will be different, organizations both large and small need to have some sort of succession plan. Effective succession planning supports organizational stability and sustainability by ensuring there is an established process to meet staffing requirements. Boards and executive directors can demonstrate leadership by having the strategies and processes in place to ensure that these transitions occur smoothly, with little disruption to the organization.

Related HR Management Standards:

Standard 3.3
All employees have a work plan and performance objectives that identify the tasks/activities and expected results for future performance.

Standard 6.2
Backup plans are documented to address any key employee leaves of absence.

Standard 6.3
Critical positions in the organization are identified and succession plans are established.

 

Recommended Reading

La Relève: Succession in Quebec’s Community Sector

Commissioned by Quebec’s Comité sectoriel de main-d'œuvre, Économie sociale et Action communautaire, and translated with the generous support of the Institute for Nonprofit Studies at Mount Royal College, La Relève is a combination discussion paper and workbook, aimed at raising awareness about succession and workforce demographics in the province’s community sector. While the majority of the statistics found in the document are specific to Quebec, the issues and concepts about succession have broad and universal applications for the sector in provinces and territories in the rest of Canada.

 


What is succession planning?

Links and Resources

While the term executive director is used throughout this discussion it is understood it is only one of many terms (such as president & CEO, senior manager and general manager) used by organizations in the sector to refer to their most senior staff person. The same is true of terms used for other positions so that an accountant in one organization may be a financial officer or CFO in another. The important consideration is not the title but the work-related responsibilities and their value within the organization.

 

A succession plan, simply put, is a component of good HR planning and management. Succession planning acknowledges that staff will not be with an organization indefinitely and it provides a plan and process for addressing the changes that will occur when they leave. Most succession planning focuses on the most senior manager - the executive director, however, all key positions should be included in the plan. Key positions can be defined as those positions that are crucial for the operations of your organization and, because of skill, seniority and/or experience, will be hard to replace.

Whenever size and resources permit, a succession plan should involve nurturing and developing employees from within an organization. Employees who are perceived to have the skills, knowledge, qualities, experience and the desire can be groomed to move up to fill specific, key positions. Organizations should:

  • Assess their current and future needs based on either their strategic plan, goals and objectives, or priority programs and projects
  • Match these to the capabilities of the existing workforce
  • Develop a plan to manage the gaps that will arise when individuals in key positions leave or are promoted

The plan will generally include a combination of training and developing existing staff, and external recruitment.

 

Links and Resources

To avoid a potential constructive dismissal or other claim, include a statement to specify that a succession plan is not a guarantee of a position; rather it represents a developmental plan to prepare an individual should opportunities arise within the organization.

 



Why is succession planning important?

The benefits of good succession planning include:

  • A means of ensuring the organization is prepared with a plan to support service continuity when the executive director, senior managers or key people leave
  • A continuing supply of qualified, motivated people (or a process to identify them), who are prepared to take over when current senior staff and other key employees leave the organization
  • An alignment between your organization's vision and your human resources that demonstrates an understanding of the need to have appropriate staffing to achieve strategic plans
  • A commitment to developing career paths for employees which will facilitate your organization's ability to recruit and retain top-performing employees and volunteers
  • An external reputation as an employer that invests in its people and provides opportunities and support for advancement
  • A message to your employees that they are valuable

The absence of a succession plan can undermine an organization's effectiveness and its sustainability. Without a succession planning process, an organization may not have a means of ensuring that the programs and services that are crucial to its operation are sustained beyond the tenure of the individual currently responsible for them.

 

Links and Resources

A mid-sized arts organization lost an employee who had been hosting, organizing and managing a major fundraising event for a number of years. When he left, staff knew very little about how it was put together and there was no operations manual documenting the event. This very important event ended up being abandoned by the organization because they simply did not know how to run it.

 

A succession plan ensures that there are qualified and motivated employees (or a means of recruiting them) who are able to take over when the executive director or other key people leave an organization. It also demonstrates to stakeholders such as clients, funders, employees and volunteers that the organization is committed to and able to provide excellent programs and services at all times, including during times of transition.

 

Links and Resources

A mid-sized organization relied heavily on the corporate memory, skills and experience of a longtime employee. In her final position, she was responsible for office administration including payroll, budget monitoring and the organization's major annual fundraising event. Over the course of her employment she held a variety of positions and had a very good understanding of the organization's operations and history.

Her unexpected death was both an emotional blow and a wake up call to her colleagues. Everything she had known about the organization was "in her head." While discussions had occurred regularly concerning the need to document this information and to pass this knowledge on to others - this had never happened. The organization was able to regroup and survive the transition but the employees experienced high levels of stress as they struggled to determine what needed to happen when. A great deal of time and effort was spent recreating systems and processes and even then, some things fell through the cracks resulting in the need to rebuild relationships with supporters.

 



Who is responsible for succession planning?

Both the board and the executive director have pivotal roles to play in succession planning.

The board is responsible for succession planning for the executive director position. The board hires the executive director to ensure it has a skilled manager at the helm to implement the organization's mission and vision. It is therefore very important for boards to spend some time reflecting on what they would do if, or when, the executive director leaves. All too often, boards find that they are unprepared for such an occurrence and are left scrambling to quickly replace that person. There are many examples of an executive director leaving only to have the organization fall into disarray: funders withdraw resources, and other key staff members leave due to lack of effective leadership. Even when provided with adequate notice, boards sometimes find themselves in the position of having to scramble to find an interim solution.

The executive director is responsible for ensuring a succession plan is in place for other key positions in the organization. These will likely be developed with help from the management team with input from implicated employees.

 

Links and Resources

To ensure the process is fair and the succession plan considers different perspectives, ask for input from all key stakeholders.

 



What are some challenges to effective succession planning?

Some challenges to succession planning are:

  • Size of the organization: some nonprofits have so few positions that they may not have the ability to offer opportunities for advancement; employees with the potential and the desire to advance their careers may move to larger organizations as a result
  • Lack of financial resources: employees may leave for better salaries and benefits offered in other workplaces
  • The nature of funding: as more and more organizations depend on project funding as opposed to core funding, there are fewer core staff members available to take up positions in the organizations
  • Project staff come and go and may not be seen to be part of the talent pool available to organizations
  • In some cases, senior leaders are staying on in their positions, despite the fact that the skills needed for the job may have changed or they are no longer making a meaningful and productive contribution to the organization
  • Indiscriminate inclusion of employees in the succession plan including those who are disinterested, unmotivated or lack capacity to advance
  • Inadequate training and development resulting in an employee who is not prepared for a promotion
  • A plan that does not promote people in a timely fashion, leading potential successors to leave the organization to seek new opportunities
  • Poor communication resulting in confusion and turmoil within the organization as staff speculate about what the succession plan really is
  • Potential candidates for promotion cannot be guaranteed that they will be promoted; a lot depends on timing and need of the organization

 


Succession planning in small and mid-sized organizations

In many smaller organizations, succession planning may be viewed as a luxury, but it isn't. At the very least, boards of directors have a responsibility to consider and plan for the departure of the executive director, who is often critical to the existence and sustainability of the organization.

When faced with the loss or impending loss of an executive director, these kinds of questions quickly surface:

  • Should we hire from within or look for an external candidate?
  • Do we have anyone internally who is qualified?
  • Whether we hire internally or externally; does anyone really know the specifics of what that person was doing?
  • What kind of impact will this change have on our capacity to deliver on our mandate and on our relationships with our clients, donors and volunteers?
  • What do we tell our stakeholders?

 

Developing a succession plan for the executive director

In some instances, the board may decide that there needs to be a "second in command" who has the capacity to replace the executive director in the future. This means:

  • Identifying that person in collaboration with the executive director
  • Ensuring that the person is motivated to take on the top job
  • Developing a plan to ensure that the eventual successor gains the requisite skills and knowledge to take the job on
  • Ensuring that the second in command is exposed to a broad range of experiences so that he or she has a wider understanding of the operations of the organization

The plan could include a formalized process of mentoring or coaching and training in more specific aspects of the job. When the size of the organization permits, it would be preferable to have more than one person identified as a potential successor to the executive director.

In a small nonprofit, it may not be possible to groom a successor from within the ranks of existing staff. To ensure continuity and stability when an executive director leaves, employees may be paired to cross-train each other to ensure there are two people on staff who know each job.

The board chair should have a conversation with the executive director on an annual basis regarding his or her career aspirations. While the executive director is not required to share any career goals, the conversation can allow for a frank discussion about future plans.

 

Steps to put in place

First and foremost, the board is responsible for drawing up a plan of action and effectively communicating it to the rest of the staff as soon as possible. This is necessary to demonstrate that the board is taking decisive action, to deal with any misinformation that may be generated by a quick departure and to ensure that all of the employees' questions are answered.

The board must also communicate its plan of action for replacing the executive director in a timely manner with its funders. Funders will need to be assured that plans and programs are on target and deliverables will not change.

With no succession plan or second in command identified, the board may want to name an interim executive director until a replacement is selected. This choice should be made wisely because someone with the right skills and knowledge needs to be chosen. If a person is asked to take on the executive director responsibilities in addition to his or her job, there should be an adjustment in that employee's compensation to reflect the additional responsibilities and work load.

Another option is to ask a qualified group of two or three employees to co-manage the organization by sharing the executive director responsibilities. In order for this approach to be effective, it requires a clear understanding of the various aspects of the executive director 's position so that tasks may be given to those with ability to take them on. It also requires ongoing communication and coordination between the employees that are part of the co-management team.

If there are no employees able or willing to take on the task on an interim basis, a board member may be asked to temporarily assume these functions. Of course, the board member will have to resign from the board if he or she takes on a paid position with the organization.

 

Links and Resources

HR Toolkit: Transitioning to a new executive director

Learn more about things board members should consider when hiring a new executive director.


 

Ideas for recruiting for other key positions

The following ideas can be incorporated into your succession plan for key positions in the organization other than the executive director.

Look to other organizations for exceptional employees

New employees are often found in other nonprofits. While some may view this as poaching, the reality is that employees who aren't being challenged or aren't happy will leave the organization for a better opportunity. In some cases, employees have been known to leave for a position in another organization but return years later with new experiences and skills. Helping to keep exceptional employees in the sector by allowing them to move around to develop their careers should be seen not as a loss for individual organizations, but as a gain for the capacity of the sector.

An innovative approach would be to develop a pool of candidates with other organizations and develop a rotational program to allow key employees to move from one organization to the next. This approach would ensure key individuals remain challenged and motivated while a group of nonprofits all benefit from the expertise.

Look to your organization's volunteers

There may be board members or volunteers in other positions within the organization with the talent, knowledge and experience who can effectively make the transition to a paid position.

Look to project staff (either current or those who did project work for your organization in the past)

As a result of a shift from core funding to project-based funding, there are more and more project staff who move from organization to organization with short contracts. These people will often have gained information about your organization's operations and could move seamlessly into a core staff position.

Look to consultants (either those that have worked with your organization or other similar organizations)

While most consultants may prefer to stay in their line of business, there are those who would like to become staff members, if asked. In some cases, consultants worked for a nonprofit before becoming a consultant and are interested in moving back into the sector to work.

 

Links and Resources

Knowledge transfer is a key component of the succession plan. Ensure that core organizational processes are well documented. Whenever possible, ensure an overlap of time so the exiting employee can help orient and train the new employee.

 



Succession planning in larger organizations

The steps outlined below provide a roadmap for larger organizations interested in developing succession plans. Different organizations will implement these activities differently. While there is no right or wrong way to develop a succession plan, the following provides important components that need to be considered.

 

Capacity and needs assessment

Step 1

Identify key positions for your organization. These include the executive director, senior management and other staff members who would, for their specialized skills or level of experience, be hard to replace. Ask yourself which positions would need to be filled almost immediately to ensure your organization continues to function effectively.

Step 2

Review and list your current and emerging needs. This will involve examining your strategic and operational plans to clearly articulate priorities.

Step 3

Prepare a chart that identifies the key positions and individuals in the organization. The positions might include those listed in step 1 and/or others that are pertinent to your organization, such as volunteers.

Step 4

Identify and list the gaps by asking questions such as:

  • Which individuals are slated to or likely to leave (through retirement, project completion, etc.) and when?
  • Which new positions will be required to support the strategic plan?
  • Which positions have become or will become obsolete (for example, those related to a program that has been terminated)?
  • What skills and knowledge will need to be developed (for example, to support a new program)?

Step 5

Evaluate/assess all staff members with the goal of identifying those who have the skills and knowledge or the potential along with the desire to be promoted to existing and new positions.

  • The evaluation can be formal or informal and can include, but is not limited to, performance reviews, 360 degree assessments and informal conversations with the individuals under consideration.
  • The executive director may be aware that an employee has aspirations to and the capacity to move up. This may be an opportunity to recognize this goal and support it.
  • Take this opportunity to give younger workers a chance. Many young people enthusiastically enter the sector and then, finding few opportunities for advancement, leave. Younger workers can remain engaged if you help to match their interests to opportunities provided through effective succession planning.

 

Develop and implement the plan

Based on the evaluation and on the requirements of your strategic plan, identify the key person or people you will want to develop and nurture for the future, the position you would like to groom them for, and the timeframe required to prepare them. Consider different ways of developing your employees like: self-development, books/journals, mentor programs, special project work.

Identify the career paths that the selected individuals should be following. Customize the path to fit the individual's abilities and talents by developing an action plan. The plan must be dynamic - able to be changed as the individual's and the organization's needs change. It must also consider the specific needs, learning styles and personalities of the individuals involved in order to be effective.

Formalize education, training, coaching, mentoring and assessment activities. The mix of activities included within the action plan should be linked to timelines and specific outcomes.

If possible, move people into different areas for experience and training before they are needed in critical positions. Have individuals job-shadow for an agreed upon period of time to give the successor a real sense of the responsibilities and to allow the organization the chance to determine whether the individual really is suited for the new position.

 

Monitor and manage the plan

As people leave and new people assume their responsibilities, the plan will have to be updated to identify the next person to be groomed for promotion and the requirements of his or her individual action plan. For organizations that engage in an annual (or regular) strategic planning process, the succession plan should be included in that discussion.

Be prepared to address issues such as concerns of staff who have not been selected for career advancement. Ensure alternative paths are identified to allow all employees who are interested in career enhancement to be given some type of professional development opportunity. Professional development can include such wide ranging activities as formal education and training, workshops and seminars as well as less formal learning opportunities such as the chance to represent the organization at a consultation.

Recognize that no matter how well you plan, something can still happen which the succession plan doesn't address. For example, you may have dutifully trained a "second" only to have that person leave. Even though there may be no one able to fill the breach immediately, the succession plan will ensure that there is a process for you to follow in filling the position.

 


Tips for successful succession planning

Secure senior management and board support for a succession planning process. This gives employees and staff an understanding of how important succession planning is to the organization.

Review and update your succession plan regularly. This ensures you reassess your hiring needs and determine where the employees identified in the succession plan are in their development.

Develop procedure manuals for essential tasks carried out by key positions. Include step-by-step guidelines.

Adequate time should be provided to prepare successors. The earlier they are identified, the easier it is on the individual to be advanced and on other employees within your organization who will know whether certain options are available to them.

Understand that your succession plan will be a unique reflection of your organization. Succession plans are as different from each other as the organizations for which they are developed.

 

Example

 

Next Section: Risk Assessment in HR

 

Links and Resources

Related sections in the HR Toolkit:

Getting the Right People

Learning, Training and Development

 

External links on succession planning:

Coaching, mentoring and succession planning (PDF 362KB)

Guide prepared by the Cultural Human Resources Council

 

Transition Guides

Website providing tools, ideas and services to strengthen organizations during leadership change. Their provides a sample succession planning policy which deals with the issue of executive leadership transition.

 

Books and articles referenced in this section:

Axelrod, Nancy. Chief Executive Succession Planning. BoardSource. This book may be purchased through the BoardSource web site: www.boardsource.org

Howe, Theresa. January 19, 2004. Succession planning and management. Charity Village Library. Available online at: www.charityvillage.com/cv/research/rhr12.html

Nonprofit Quarterly. Leadership Transitions: Critical Thresholds. Winter 2002.

Luhn Wolfe, Rebecca. 1996. Systematic Succession Planning: Building Leadership from Within (Crisp Fifty-Minute Series).

Robinson, Maureen. 2004. Nothing Succeeds like Succession. Contributions Magazine, Chronicle of Philanthropy.

 

Next Section: Risk Assessment in HR