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QUESTION 4: Are We Well Prepared to Name Our Next CEO?

By John Pearson

Emergency Succession: The Elephant in the Room?

Yikes! “Three-quarters of board members aren’t prepared for CEO succession, and fewer than 1 in 4 have a written succession plan.”

That discomforting news is one of 12 highlights (including low lights) from ECFA’s Nonprofit Governance Survey Comprehensive Report: Unleashing Your Board’s Potential, by Warren Bird, Ph.D. (Check out the library of free ECFA research findings and download this 60-page report by clicking here.)
Even during this COVID-19 marathon—is it possible that your board might be looking for its next CEO? It’s certainly possible. Read on!

QUESTION 4 of 14: Are We Well Prepared to Name Our Next CEO?
Owning Up: The 14 Questions Every Board Member Needs to Ask, by Ram Charan (Order from Amazon)

Ram Charan reminds us that every board member “knows deep down that nothing is more important than having the right CEO at all times.” This fourth chapter in Owning Up is bursting with must-read sections. Here’s a taste:

• Succession planning is a long-term, ongoing process, for healthy organizations. But it may take two to three years of diligent work and preparation when replacing the CEO.

Start with strategy—not people. “When the succession decision is about a year away, the board should take another hard look at the external environment and the business challenges and translate them into specific criteria for the CEO job.”

• “Generalities such as ‘intelligent,’ ‘visionary,’ ‘strategic thinker,’ or ‘great with people’ will not be very helpful.” Instead, says Charan, the board must identify three to five “non-negotiable” characteristics. “Without them, a candidate cannot even be considered.”

• The perfect search is rare. “The test is not only whether the board can make the right decision, but also how quickly it can admit that it did not.” Yikes.

• The elephant in the room? “Too often, boards are reticent to address the elephant in the room: emergency succession.”

While Owning Up’s 14 questions address life (and elephants) in the corporate boardroom, Christ-centered boards will appreciate these bare-knuckle reality checks. I’m encouraging every board chair to make Chapter 4 required reading for every board member.

Plus, enrich this critical competency with the four short videos and viewing guide in the
ECFA Governance Toolbox Series No. 4: Succession Planning—Eleven Principles for Successful Successions (“Every CEO is an Interim CEO”). Note, especially, these principles:
• Principle 1: Avoid Buses and Boredom! (Emergency Succession)
• Principle 2: Discern Your Board’s Succession Values and Beliefs
• Principle 7: Trust God and Discern Direction! Wisdom on Ending Well

In the ECFAPress book, Stewards of a Sacred Trust: CEO Selection, Transition and Development for Boards of Christ-centered Organizations, David McKenna raises the stakes on CEO succession with this:

“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.”


BOARDROOM DISCUSSION: Do we have prayerful, discerning, competent, and succession-savvy board members in place—so we’re prepared for our next CEO succession, whenever that might come?

MORE RESOURCES: Check out these helpful ECFA resources:

BLOG: Click here to read the guest blog by Reid Lehman from Lesson 9 in Lessons From the Nonprofit Boardroom, “Serve with Humility and Experience God’s Presence. One board chair creates a holy moment for his CEO Search Committee.” (Click here to read the chapter online.) Lehman notes that “board leadership is a ‘group sport.’” Read Reid's reason.

• TOOL: Download the ECFA Governance Toolbox Series No. 4: Succession Planning—Eleven Principles for Successful Successions and view one or more of the short videos at your next board meeting or board retreat. For the color commentary on each of the 11 principles, click here for the index to the 11-part blog series.

 

This article was originally posted on the “Governance of Christ-Centered Organizations” blog, hosted by ECFA.
John Pearson, a board governance consultant and author, was ECFA’s governance blogger from 2011 to 2020.
© 2021, ECFA and John Pearson. All rights reserved.


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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