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Designated Successor: Thinking Ahead About Leadership Transitions

March 27, 2017

Nothing is more central to a dynamic organization than its capacity to cope with complexity, ambiguity, uncertainty, and change. In the modern era of rapid change, it is imperative for a nonprofit organization to be more future-oriented and more concerned with selecting the proper direction and most capable leader. Our nonprofit leaders have to be capable of dealing with revenue generation and sustainability issues that demand courage, decisiveness, and action. This makes the distinction between leadership and management quite critical in the search for a new chief executive, which has large implications for both an organization’s externally-focused succession planning, as well as their internally-focused successor planning.

In my 20 years as an organizational consultant and executive recruiter for both the nonprofit and for-profit sectors, I continually find that most board leadership does not have emergency or long-term transition plans in place for the chief executive. The sub rosa issue of a planned departure is avoided in order to not rock the boat with the current executive. A robust leadership continuity plan would, however, serve as a roadmap for an internal junior executive’s talent management prior to their leadership transition; unfortunately, very few organizations provide the executive coaching needed to enable the “designated” (but unprepared) successor – often the current CFO or COO - to succeed as CEO.   

Search committees often make hiring decisions based on candidates’ institutional knowledge, rather than their ability to tackle future challenges. Committees inherently focus on keeping the status quo and select the internal COO or CFO candidate, regardless of whether they have developed or demonstrated the ability to lead. CFO’s and COO’s are good managers, adept at overseeing resources and organizing the activities and operations of the organization, while CEO’s are leaders that challenge the process, inspire shared vision, enable others to act, model the path forward, and encourage commitment internally and externally. In my extensive consulting experience, I am continually dismayed that many organizations are over-managed and under-led, resulting in unmotivated employees without a clear or compelling vision. This implies a lack of robust talent management.

Subsequently, there are many public examples of unprepared internal candidates succeeding chief executives; the COO-turned-CEO or CFO-turned CEO often departs after a limited and frustrating tenure. The search committee must then engage once again in an extensive and expensive search process and adeptly manage declining stakeholder and community confidence.

Search committees must explicitly consider the profound distinction between management and leadership when selecting a chief executive. In the process of assessing talent for a leadership change, it is important to keep the expectations of management and leadership quite distinct – if the board wants the next chief executive to create new ideas, new approaches, and new methodologies. Good managers demonstrate success by being tactical, but great chief executives demonstrate success by being strategic leaders; the distinction is critical.

An effectiveleadership transitionis about a focus on the needs and challenges facing the organization, rather than successor planning that prioritizes the comfort level of the board. To ensure organizational sustainability, chief executives have to demonstrate the skills to competently address problems and issues that demand courage, decisiveness, and action. Taking the time to train potential internal successors to truly lead puts organizations many steps ahead of the game, and will ultimately pay dividends for organizations seeking successful chief executives during a leadership transition.

Contact Information

Fels Institute of Government
University of Pennsylvania
3814 Walnut Street
Philadelphia, PA 19104

Phone: (215) 898-2600
Fax: (215) 746-2829

felsinstitute@sas.upenn.edu