Design Your Succession Plan—Now!

What if your CEO is hit by a bus?

 

by Dan Busby and John Pearson

 

One of the toughest things any leader can do is hand off
the baton of leadership to another leader of the organization.
It takes planning and forethought . . . it’s necessary for outgoing leaders
to keep their egos in check while letting go of one of the things
they love most.[1]

John C. Maxwell
 

 

Here’s a practical tool—with a memorable exercise—that your board will never, ever forget!

Ask a board member, a senior team member, or a consultant to facilitate a 15-minute exercise at your next board meeting. We call it the “What if our CEO is hit by a bus?” exercise. If your CEO or your board members are reluctant to talk about succession planning—this poignant drill (and video) will get your succession juices flowing! (See the last page of this lesson for more details.)

Why is this important? William Vanderbloemen and Warren Bird note, “Everyone wants to talk about succession . . . until it’s their own.”[2] Indeed, ECFA research found that fewer than one in three boards have a written CEO succession plan. Only 31 percent said yes to, “Does your board have a written succession plan in the event of your CEO’s death, long-term illness or unexpected resignation?”[3]

Every CEO is an interim CEO. Even founders die! So boards have two options: plan for succession—or be unprepared for succession. We recommend planning—because the stakes are high! Your board’s decision-making and discernment process will have eternal consequences.

The board’s selection of the CEO, says David McKenna, “separates Christ-centered organizations from other organizations because it is a sacred trust.” McKenna adds, “Like the ripple effect of a stone tossed into a pond, the CEO’s influence will move in waves through generations. No decision of the board, absolutely no decision, is more profound.”[4]

We encourage boards—even boards with new CEOs—to use the helpful tools and resources in the ECFA Governance Toolbox Series No. 4: Succession Planning—Eleven Principles for Successful Successions: “Every CEO Is an Interim CEO.”[5]

What if…

. . . your CEO is hit by a bus and dies?

. . . your CEO is incapacitated?

. . . your CEO has lost all passion for the ministry—and knows it?

. . . your CEO has lost all passion—and doesn’t know it or won’t admit it?

This ECFA Governance Toolbox Series can be your catalyst for addressing succession planning—and moving the muted conversations from the hallways and onto your board’s agenda. The boardroom—where you can leverage prayer, spiritual discernment, and the wisdom of many counselors—is the perfect place to address this elephant in the room.

Here’s a brief summary of the 11 succession planning principles—a “101 course” in understanding the important difference between executive transition and succession planning.

Principle 1 – Avoid buses and boredom!

Peter Drucker famously said, “Fortunately or unfortunately, the one predictable thing in any organization is the crisis.”[6] Effective boards are not fearful of the future—they are faithful in addressing both emergency succession issues and long-term succession planning. Effective boards pray for protection yet establish appropriate policy—and thus are prepared for a future crisis.

Principle 2 – Discern your board’s succession values and beliefs

Before your board’s CEO succession planning discussion spirals into the nuts and bolts, stop the presses! Take time to review your organization’s mission, vision and core values. Then discern: what are our deeply held beliefs about leadership, spiritual discernment, and succession planning?

True or False? “Appointment without anointment always leads to disaster.”

“I know of few Christian leaders today who were anointed before they were appointed,” writes R. Scott Rodin. “We have mostly employed the business model of doing careful searches, looking for Christian leaders who we can appoint to office. We check their credentials, put them through rigorous interviews and give them psychological tests before we make the critical appointment. Once they are in place, we then anoint them and ask God to bless their work.”

Rodin adds, “The biblical evidence seems to indicate that God selects leaders in the opposite order. Samuel anointed David before appointing him king. The selection criterion for leadership was not based on who seemed most fit for the appointment, but on whom God had anointed for the task. And appointment without anointment always led to disaster.”[7]

Principle 3 – Inspire your CEO to thrive with a God-honoring lifestyle

Is your CEO thriving or just surviving? An effective succession planning process begins by ensuring that your board invests time (and accountability) in CEO soul care (see Lesson 4). When your CEO lives and models a God-honoring and healthy lifestyle, he or she will likely serve your ministry longer with greater faithfulness and fruitfulness. And potential internal candidates will already affirm and practice this core value.

In NEXT: Pastoral Succession That Works, William Vanderbloemen and Warren Bird recommend that boards create sabbatical policies, mandate vacations and days off, and inspire leaders to be in accountability groups. After examining almost 200 pastoral succession case studies, they conclude, “Too many successions are on the heels of a moral or financial failure. And nearly every one of those failures happened because the [leaders] were tired and didn’t have anyone to talk to about their personal fatigue.”[8]

Principle 4 – Model successful succession in the boardroom first

Read this next line, in unison, at your next board meeting:

“There are no dysfunctional organizations—
only dysfunctional boards.”

Then add:

“There are no dysfunctional succession plans—
only dysfunctional boards that allow mediocre planning
to occur.”

Boards are better equipped to address CEO succession if they have already been faithful in planning for the ongoing succession of board chairs and board members who retire, cycle off, or otherwise need to be replaced on the board.

Principle 5 – Delegate succession planning to the appropriate committee

There is a substantial difference between executive transition and succession planning. According to Nancy Axelrod, “The search for a new chief executive is an intermittent event that is timeline-driven. Succession planning, on the other hand, reflects an ongoing, continuous process that boards (with the help of their chief executive) implement.”[9]

Succession planning should be assigned to the committee or task force that fits your board culture. This may be an executive committee, a governance or nominating committee, or a succession planning task force if there is no current plan in place.
Give the committee two tasks:

  1. Preparing for an emergency transition
  2. Creating a long-term succession planning mindset and culture throughout the organization

Principle 6 – Invest in growing your leaders (every leader needs a coach)

Some board members might push back: “What happens if we invest in developing our people and then they leave us?” But the better question is: “What happens if we don’t, and they stay?”

The ongoing process of succession planning will be smoother (and often seamless) when your board invests in the professional growth of your current CEO. When your top leader is a lifelong learner and open to feedback, he or she will inspire the entire team to grow. Bill Conaty and Ram Charan set this high bar beautifully:

Only one competency lasts.
It is the ability to create a steady,
self-renewing stream of leaders.[10]

Principle 7 – Trust God and discern direction

Boards that are blessed with God-honoring men and women will have a culture of spiritually discerning God’s voice in every board meeting. Don’t wait until the eleventh hour of a succession planning crisis to get on your knees. Practice spiritual discernment early and often! Consider this caution from Ruth Haley Barton: “It is also important to involve the right people. One very common leadership mistake is to think that we can take a group of undiscerning individuals and expect them to show up in a leadership setting and all of a sudden become discerning!”[11]

Principles 8, 9, and 10 – Planning for Plans A, B, and C

Address the elephant in the room! Your CEO will retire or accept another assignment someday, as will the senior leaders reporting to the CEO. Healthy boards and healthy CEOs address these facts of life—with prayer, discernment, and transparent conversations. The toolbox materials will help you create plans for three scenarios:

  • Plan A – Your CEO retires. Does the organization have board-approved policies to address CEO succession? Could the CEO’s retirement occur in the next five years? Has the CEO begun to plan for retirement by finding a “retirement mentor”—a wise confidant who has “ended well” and has permission to speak truth into the CEO’s situation?
  • Plan B – Your CEO resigns. Does the board have a signed “Memo of Understanding” (or contract) between the board and the CEO that requires advance notice of X weeks (or months) upon submitting a letter of resignation?
    Is the board prepared to quickly and effectively put “next steps” in place when a letter of resignation is submitted? What is the board’s protocol for appointing an interim CEO?
  • Plan C – Your CEO is terminated. Donald Rumsfeld advises, “Never hire anyone you can’t fire.”[12] So did your board have frank discussions with your current CEO regarding the when/if scenarios that would prompt a termination?

Is your board prepared to spot potential problems early on, or will the board wait to address issues only “when all else fails?” If the board faces a situation where the CEO must be terminated, are board members adequately prepared to exit the CEO in a God-honoring and appropriately confidential way?

Principle 11 – Discern if a search firm would be helpful

The toolbox materials list three options that a board might consider when searching for a new CEO: retaining a search firm, retaining a consultant/coach, or conducting your own search. And note this wisdom: select the option based on your mission and vision—not today’s budget.

Finally, heed this insight from Michael J. Lotito: “If you spend a lot of time figuring out who you’re going to hire, you’ll have to spend far less time figuring out who to fire.”[13]

Ram Charan reminds boards: “There is nothing more important for a CEO than having the right strategy and right choice of goals, and for the board, the right strategy is second only to having the right CEO.”[14]  When your CEO exits (whether for Plan A, B, or C), it’s time for board members to execute their fiduciary and spiritual duty. No one, except the board, has this God-given stewardship responsibility.

 

BOARDROOM LESSON
_______________________________

If your CEO were to be hit by a bus today—
is your board prepared for the executive transition?
Your current CEO will one day be your former CEO.
Christ-centered boards address succession planning—
not with fear—but with faith,
believing that God will lead them.
 

  Board Action Steps:

  1. Design: Facilitate a “What if our CEO is hit by a bus?” 15-minute exercise for your next board meeting. Download the “Facilitator Guide” from the ECFA Governance Toolbox Series No. 4: Succession Planning—Eleven Principles for Successful Successions.[15] Follow the four steps and screen the short video, “The Bus Ride to Eternity.”

  2. Delegate: Appoint a committee or task force to address executive transition and long-term succession planning. Study biblical examples of leadership succession, including Moses and Joshua, David and Solomon, Elijah and Elisha, and Paul and Timothy. Put the plan in writing and ensure that your Board Policies Manual addresses succession policies.
     

 

Prayer

Lord, You’ve told us in 1 Thessalonians 5:24 (NIV)
that “the One who calls you is faithful and
He will do it.” So we rest in this assurance
as we discern Your will during our next
executive transition—according to Your timing. Amen.
 

 

 

[1] From the foreword by John C. Maxwell in Tom Mullins, Passing the Leadership Baton: A Winning Transition Plan for Your Ministry (Nashville, TN: Thomas Nelson/Leadership Network, 2015), xiv.

[2] William Vanderbloemen and Warren Bird, NEXT: Pastoral Succession That Works (Grand Rapids, MI: Baker, 2014), 9.

[3] Warren Bird, Unleashing Your Board’s Potential: Comprehensive Report from ECFA’s Nonprofit Governance Survey (Winchester, VA: ECFAPress, 2019), 24, 25, 28, 31, 44.

[4] David McKenna, Stewards of a Sacred Trust: CEO Selection, Transition and Development for Boards of Christ-centered Organizations (Winchester, VA: ECFAPress, 2010), 19.

[5] ECFA Governance Toolbox Series No. 4: Succession Planning—Eleven Principles for Successful Successions (Winchester, VA: ECFAPress, 2017).  Visit: www.ECFA.org/Toolbox.

[6] Peter F. Drucker with Joseph A. Maciariello, The Daily Drucker: 366 Days of Insight and Motivation for Getting the Right Things Done (New York: HarperBusiness, 2004), 112.

[7] R. Scott Rodin, The Steward Leader: Transforming People, Organizations and Communities (Downers Grove, IL: InterVarsity Press, 2010), 13–14.

[8] Vanderbloemen and Bird, NEXT, 33.

[9] Nancy Axelrod, Chief Executive Succession Planning: Essential Guidance for Boards and CEOs, 2nd ed. (Washington, DC: BoardSource, 2010), 2.

[10] Bill Conaty and Ram Charan, The Talent Masters: Why Smart Leaders Put People Before Numbers (New York: Crown Publishing, 2010), 2.

[11] Ruth Haley Barton, Strengthening the Soul of Your Leadership: Seeking God in the Crucible of Ministry, exp. ed. (Downers Grove, IL: InterVarsity Press, 2018), 198.

[12] Donald Rumsfeld, Rumsfeld’s Rules: Leadership Lessons in Business, Politics, War, and Life (New York: HarperCollins Publishers, 2013), 59.

[13] Quoting Michael J. Lotito in Janet Boydell, Barry Deutsch, and Brad Remillard, You’re Not the Person I Hired! A CEO’s Survival Guide to Hiring Top Talent (Bloomington, IN: AuthorHouse, 2006), 41.

[14] Ram Charan, Owning Up: The 14 Questions Every Board Member Needs to Ask (San Francisco: Jossey-Bass, 2009), 68.

[15] “Facilitator Guide” in ECFA Governance Toolbox Series No. 4: Succession Planning—Eleven Principles for Successful Successions (Winchester, VA: ECFAPress, 2017), 3. Visit: www.ecfa.org/Toolbox

 

From More Lessons From the Nonprofit Boardroom: Effectiveness, Excellence, Elephants!, 2019, www.ECFA.org/KnowledgeCenter.


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.

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