13-Step Succession Planning to Strengthen Your Not-for-Profit

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Written By Graeme Innes

It’s not every day you get insider governance tips from an experienced non-executive director, director and chair.

But recently we had the great pleasure of hosting Graeme Innes for a webinar about non-for-profit succession planning.

In it, Graeme shared 13 tried and tested steps to organisational succession planning for your NFP boards and committees.

In this blog, we go over Graeme’s valuable insights for managing your organisation’s transitions, crises and succession.

13 Steps for Succession Planning

Like a business, organisations need to grow to survive.

A key part of that growth is renewal. You need the same old faces to become fewer, with just as many new ones coming in.

Renewal is a recognised principle from local government to huge supermarket chains, and is just as important for not-for-profit organisations.

But while renewal is essential to any organisation’s survival, it doesn’t happen on its own.

Here’s how your organisation can make it happen in 13 steps.

Step 1: Review the constitution

Formalise succession planning in your constitution, articles of incorporation or  association.

This might be an existing constitution that you can refer to, or you might create or modify your constitution to include important succession planning steps.

Consider the ideal maximum terms for board or committee members such as chair, deputy chair, secretary and treasurer.

The Australian Institute of Company Directors recommends three terms of three years, so nine years in total. But two terms for a total of seven years is also common practice for not-for-profits.

Step 2: Establish nominating & governance committee

The nominating and governance committee typically includes:

  • 1 chair
  • 2-3 directors or members
  • a high-level staff member or volunteer with corporate memory of the organisation

This committee crafts job descriptions for all positions that need to be filled, including director, member, chair and deputy chair.

The committee also performs other important succession tasks, including:

  • assess risk
  • evaluate upcoming known departures
  • plan for scheduled vacancies
  • prepare for emergency vacancies

Step 3: Prepare for emergency vacancies

Committee Members can leave unexpectedly.

This may be due to illness, resignation or termination, or even by someone passing away.

A scandal or crisis may cause a leader to step down.

Leadership can also change due to something as simple or common as someone moving interstate or taking on a new job.

Situations like these are common, so you’ll need an emergency vacancy plan to ensure orderly succession.

Step 4: Set planned vacancies

You could set a “use by date” for board or committee members.

Though it may sound a bit odd at first, this practice ensures your organisation has leaders with the right skillsets.

A vacancy plan that is based on skills and is orderly is clearly in the best interests of your organisation and the community it serves.

In this way, vacancy planning forces boards and committees to renew themselves without making things personal.

Step 5: Stagger out retirements

Once you’ve set terms in the constitution, it’s easier to go about planned board renewal.

If your organisation is new, you don’t want everyone leaving at the same time after nine years.

Instead, put a clause in the constitution to make sure you have a steady and orderly departure of long-term board or committee members.

Have an open conversation or negotiation at the board table. Who might leave after three or six years? Someone with a really useful skillset at the start might become less valuable as time goes on. 

The chair is best to tap people on the shoulder, inform them that they’ve made a great contribution but it’s time to move on. To set an example, the chair could openly set the time that she or he would leave.

If negotiations become difficult, pulling names from a hat is a fair and legitimate alternative.

Step 6: Create a skills matrix

Your board or committee will need skills across a range of areas.

These might include:

  • finance
  • law
  • marketing
  • industry/sector
  • community engagement
  • governance
  • strategic planning
  • risk management.

Create a skills matrix that covers all the skills your unique organisation will need at this time and in the future.

If your organisation has staff, then sector experience may not be as important as long as the board members have a broad understanding of the sector.

For example, a health organisation may not need a doctor on the board if it has qualified staff. Yet, a chair with extensive governance experience would be key.

Step 7: Audit your skills

Once you’ve created the skills matrix, use it to assess whether your organisation’s needs are being met by your existing directors or committee members.

You can do this by getting directors and members to assess themselves against the matrix, rating their competence in each skill on a scale of 1 to 5.

Because people will vary in how confident or modest they are, it’s worth weighing up the self-assessment against people’s evaluations of each other.

With your skills audit complete, you’ll be able to see the gaps in your governance, strategic thinking and engagement.

You can then aim to fill these gaps with strategic choices in future incoming directors or members.

Step 8: Have a recruitment strategy

It’s important that existing executives or leadership don’t become “kingmakers” for organisations.

Kingmakers tend to appoint lookalikes — people of identical demographics and skillsets.

Your organisation is better off looking further afield to secure diverse people with timely and relevant skillsets.

For example, a festival committee may include people with hospitality and tourism expertise, fundraising and sponsorship skills, or festival volunteers who have a commitment to the organisation.

With a recruitment strategy in place, you can better secure the right people for the job and strengthen your organisation.

Step 9: Pick internal candidates

Looking inward for your future leadership might be the right strategy for your organisation.

Candidates from within the organisation are already passionate about the organisation. And, with a bit of coaching, they could fit leadership roles well.

One way to source candidates from within is by creating a mentoring and training program that prepares such candidates.

With a program like this, even your younger or less experienced candidates can eventually become confident leaders.

Step 10: Pick external candidates

Your nominating and governance committee is responsible for picking internal and external leadership candidates.

You can look for external candidates in places such as:

  • Local networks
  • Universities
  • Chambers of commerce
  • The Australian Institute of Company Directors (AICD)
  • Pro bono Australia
  • Or other platforms

Step 11: Renew your governing body

To successfully plan for succession, you have to continue to appoint new members to the governing body.

Set one meeting in each calendar year for when outgoing members retire and incoming members are appointed.

September is a popular time to do this but consider what’s best for your organisation.

If your organisation has one key activity a year, it would be wise to make the appointment of new directors or committee members at the next meeting after the main event.

If you struggle to recruit members, it may be that your organisation is in decline and no longer valued by the community.

Step 12: Do onboarding

All organisations have corporate memory and this needs to be transferred to new members as they take on leadership roles.

New members need to learn how and why things are done, so training and mentoring are key parts of onboarding plans.

Off-boarding is also part of this plan. Log-in details, assets etc need to change hands, be recovered, or removed.

Step 13: Run induction training

Induction needs to cover systems, policies, practices, programs, and operations.

Include any documents that can guide incoming directors, such as:

  • Statement of works
  • Festival programs
  • Lists of assets (tangible and intangible)
  • Operating procedures
  • COVID-safe plans
  • Permits

How to create a succession plan for your NFP

Organisations start, grow and decline. While this is the way of the world, there are things you can do to strengthen your organisation while it’s still relevant.

Strategic succession planning is a way to ensure your leaders have the right skills to guide the organisation.

It also ensures that your organisation continues to fill a need in the community which it serves.

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