Succession Planning: A Key Component of a Well-Run Foundation

You are a Board member of a private foundation. Your President has been bringing up the possibility of retirement for 6 months and she will reach age 70 next year. Your CIO is very active in the sector and is probably being courted by other organizations. Your most senior program officer has a spouse who has accepted a position in another city. Should you wait until you are formally notified to start thinking about how you would go about replacing them? Rational thinking would say don’t wait. You should already have a well-considered plan in place to deal with both planned and emergency departures. By taking the time to establish a succession plan the Board can ensure that an organization remains unharmed by either the anticipated or unexpected loss or retirement of a key leader.

What are the steps to being adequately protected from the loss of key employees?

Create an Emergency Succession Plan:  You should have an Emergency Succession Plan in place for every senior position in the organization. This could be as simple as saying that the work handled by Employee 1 will be delegated to the four direct reports, who will report to Employee 1’s supervisor until a permanent replacement is found. It could be as complicated as recognizing that there is no one to take over the role, and that you need to determine an interim solution. Whatever you decide, the plan should be written, reviewed annually, and provided to all of the affected individuals.

For the most senior positions, the emergency plan should be reviewed annually by the Board’s Audit Committee during the Risk Management exercise. For the CEO/President, the Emergency Plan should designate a specific person or position on the staff or the Board that will become the interim leader until a permanent replacement is identified. There should be an Emergency Plan in place for the top position in each discipline, i.e., chief executive, chief investment and/or chief financial, chief operations and chief program officers. You can use the immediate steps you’ve identified in the Emergency Plan to lead you to the Formal Succession Plan where you will address the steps to be taken to find a permanent replacement for any of these important positions.

Create a Formal Succession Plan: We like to say that when you’ve seen one foundation, you’ve seen one foundation. But while the operations and structure may be different, almost all staffed foundations are led by an executive and have a few key positions that must be staffed. Foundation Boards may vary in size and composition, but all Board members are concerned about their fiduciary responsibility and the need to ensure that the foundation continues to be well run during a transition.

So, how do you start? If you have the luxury of planning ahead, ask the staff to develop the beginnings of a succession plan. Start by laying out possible internal candidates for each position, ranking them as ready now, ready in 2 years, ready in 5 years. Spend some time thinking and talking about what it would take to get them ready. Lay out the development plans and build them into your budgets. If you are a foundation with a close circle of external colleagues, think about who might be a potential candidate from that pool as well. And what about a current Board member? Use the same process in terms of readiness of expertise. Look for opportunities to work more closely with these colleagues. Discuss your succession plans with the Board and once approved, with your staff. The more transparent you are, the better the plans will be. And, remember, creating a plan does not lock you into any particular path. Nor does it alleviate the time and stress of finding, hiring and orienting a replacement, but it will give you peace of mind to know that you are well prepared.

This post originally appeared on Philanthropy New York's blog. To view the original post click here

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