Tag Archive for Boards of Directors

Leadership Succession: Term Limits for Executive Staff?

July 18, 2012 Rebecca Reynolds Business, Leadership, Nonprofit Organizations, Planning

The idea of term limits for executive staff leaders in nonprofit organizations came up in a LinkedIn group last week. It’s a provocative concept, one that incited a range of comments and got me to thinking.

Although this article focuses on nonprofit organizations, its points are germane to both for profit businesses and government as well.

For the most part, nonprofits take for granted that board governance should specify term limits for its member and officers. It’s a good thing, too. There’s more than ample evidence that organizations without term limits eventually experience problems: stagnating board involvement, decreasing vitality and innovation, and, in some cases, a leadership stranglehold by a few individuals.

But should terms apply to executive staff positions as well? LinkedIn members viewed the idea with skepticism, even considered it radical and, for some, threatening. And I can understand why. One person explained that in smaller communities where the pool of qualified candidates is limited, it would be onerous and even risky to the nonprofit’s health and stability to institute staff terms. Another suggested that he saw no reason for terms if the executive was still performing well. And someone said it was out of the question in an economic slump like the one we’re in.

As I considered the proposition, I realized that the idea of a leadership staff life cycle occurs organically in all organizations. In other words, all nonprofits at some point outgrow their leadership staff and need to address this eventuality. Some address it more directly and strategically, others – tragically – only when the situation has become dire.

The organizations that are attune to the signs of staff leadership “terms” expiring, consider and plan for leadership succession as part of their strategic planning and executive leadership evaluation processes. Those organizations that are not explicitly attune, will instead be confronted with the symptoms of leadership that is “beyond its expiration date,” such as declining mission relevance, morale issues, financial problems, etc. The more aware organizations are that all things have a life cycle – boards, staff, the nonprofit organization as a whole – the better they can prepare for change.

For example, the most challenging leadership transition in any organization is from the founder to the organization’s first executive leader after the founder (or the similar situation of an executive director who has been with an organization for decades). The transition from the founder comes for all organizations, and yet, too often, is left unspoken until things turn for the worse. This is because many organizations are unable or unwilling to overcome the emotionality surrounding the transition, not to mention the founders themselves. And yet, this transition is a critical one for boards and executive staff to foresee and prepare for well in advance, to ensure the stability and longevity of the organization into the future. Not doing this may be a way to avoid ruffled feelings, but it puts the organization at risk, which should be an unacceptable trade.

So, while I find the concept of leadership staff terms useful, I think it may be too prescriptive a solution given the huge range of circumstances in nonprofit organizations. One organization’s appropriate executive leadership tenure will be another’s stagnating yoke and yet another’s “blink and you missed it” time period. For example, a mature and stable organization will have different needs from its executive than a start-up, so an arbitrary number of years for leadership terms, while easy, doesn’t make good sense. The bellwether for when leadership should turn over has everything to do with what the nonprofit currently requires.

Instead of prescriptive term limits for executives, I endorse that nonprofit organizations build into their planning and evaluation processes explicit conversations about this issue and develop policy and plans to guide a consistent leadership succession process. And such processes should apply to all major executive staff, from executive director to development director, administrators, CFOs and program directors. Evaluation processes for these positions should be developed with criteria defined to drive optimal performance by the nonprofit – this too will change over time and so must the evaluation process and criteria for each executive position.

And to circumvent much of the high emotion that can surround the topic of leadership succession, bring all executive staff aboard with full awareness of the nonprofit’s values, plans and process in this area so that individuals understand that it isn’t personal to them, but rather, simply the way the nonprofit does business.

The biggest problem in the area of leadership succession is that too many nonprofits just plain get comfortable when things are working well - the “don’t rock the boat” mentality kicks in – and they forget that at some point things will change. Perhaps setting term limits would help make sure this doesn’t happen. But even better is remembering that the only constant is change and being prepared for those predictable changes should be the nonprofit’s standard procedure. The need for executive staff turnover is one such predictable change. Not only does it make sense to plan for this to foster innovation and organizational relevance, it is one of the smartest ways to avoid crisis, highly emotional, or at worst, litigious situations.

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Expiration Date on Governance

May 27, 2011 Rebecca Reynolds Business, governance, Government, Leadership, Nonprofit Organizations

Ever noticed that governance only lasts so long before it shows signs of aging? Those signs that governance has lost its luster, its relevance, its meaning, some of which include:

1) Decisions don’t hold in the organization – they are second-guessed or ignored.

2) Decisions seem to made willy-nilly, in a duplicative manner, or take forever.

3) Governing bodies are apathetic, contentious, or both.

4) People complain about not knowing how decisions are made or how they can affect them.

Governance reaching its expiration date is a routine happenstance in organizations. What isn’t so routine is the ability to recognize the early symptoms of past-due governance and do something about them before the organization experiences what can result: low productivity, morale problems, and leadership turnover. The odd thing about governance is how little explicit attention is paid to it when, in fact, it drives one of the key assets of any organization: the ability to crank out robust, well understood, actionable decisions.

For this reason, at the outset of a consultancy, one of the first questions I ask is how well does the organization make decisions? Fortunately, people don’t need governance expertise to answer; everyone in an organization is usually aware of how well decision-making works. Think about your own. If your response is a grimace or a roll of the eyes, governance is likely at its expiration date.

One board I worked with complained bitterly that things weren’t getting done, board membership was down, and meetings were poorly attended. Staff pointed to board and board to staff as the source of the problem. When I asked if the board had committees and how they were working, the reply was they had them, and they used to work well, but now they rarely met and produced little. Why doesn’t a solid set of committees, with clear charters and a roster of able members last? Why does governance have an expiration date? The answer is simple: things change.

For instance, say you and I are going to dinner. The decision about where to go will be made fairly easily and will not require much governance, in other words, we won’t need formalized process, roles, responsibilities, or authority to make the decision. However, if you and I need to meet for dinner once each month, the decision about where to go may need a bit more governance. That is, if I always choose the restaurant, without an explicit agreement about this role giving me the authority to do it, you may become unhappy and after a few months, revolt. Or worse, you stop showing up for dinner.

Then let’s say we ask ten others to join us in our monthly dinner – now the governance needs to be designed in such a way as to consider all involved, be transparent to them, and perhaps even be written down to ensure adherence to what was agreed. People like clarity about how decisions are made; the more complex the organization and its decisions, the more important governance becomes.

And, no matter how well it is designed, just like planning and leadership, governance  needs to be reviewed and refreshed from time to time. This is because there are many factors in play affecting governance that are in a constant state of flux. For instance, world forces change (e.g. new restaurants open), internal culture shifts (people with food allergies join in), people move about (some of us come from the suburbs), and skills develop (a few of us take a cooking class).

The more an organization understands that decision-making is one of its most prized assets, the more attentive it should be to governance. An organization’s ability to see its governance as simply the mechanism that produces efficient decision-making, and then to analyze governance effectiveness and redesign it when indicated, is an organization well-suited to today’s pace of change.

If governance seems like a bureaucratic annoyance, consider how decisions are made in your organization. Without clear, relevant governance, chaos reigns and people get cranky. Great governance, on the other hand, operates invisibly, all the while creating trust inside an organization and inspiring confidence outside it.

Is it time to check the expiration date where you are?

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