The Opportunities and Pitfalls Confidential: Intellectual Property of Littleford & Associates

Leadership Succession Planning

The Opportunities and Pitfalls

Confidential: Intellectual Property of Littleford & Associates

The Board’s Strategies

Reward, motivate and retain your CEOCompensate your CEO equitably and fairlyIf a search is necessary, consider internal

succession if there is a viable inside candidate

Current Search Trends The global recession had prompted fewer prospects

to “go looking”,The global recession also prompted fewer boards to

“go looking”, most wished to avoid the riskBoards want to retain their executive directors and

executive directors want to hold to their jobs, but that is beginning to change

Current Search Trends More than ever in challenging economic times

Boards want experienced seasoned leadersThe pool of available experienced and respected

leaders is shrinking as some executive directors retire and others stay put

The market for searches is picking up but it varies by country and region


Search Firm’s Recruitment Strategies

Attempt to interest sitting leaders who have no intention of leaving

Offer the possibility of a creative and competitive compensation package

Think outside of the usual “stable” of candidates and sell the lesser known, but qualified candidates


The Advantages and Disadvantages of Internal Succession

The internal candidate knows the school culture and already has political capital with key constituents

The transition period likely will be less than the three year average

The internal candidate may know too many of the “warts” and making the tough decisions may be difficult especially if they affect former colleagues

The school may feel it wants a “fresh” approach from an outsider


When to Consider Internal Succession

There is a strong leader among the administrators who demonstrates most of the traits, qualities and skills of a CEO

He/she already has a powerful following among constituents

He/she is likely to be lured away to be the CEO at another school or similar organization

There is a need for stabilityThe Board already has trust in this individual


How to Assess the Likelihood of Internal Succession

Hire an outside consultant to conduct focus groups with a cross section of key constituents with the goal of gauging the internal candidate’s degree of support as well as his/her leadership strengths and challenges

The outside consultant reports the findings to the board

If the candidate possesses the needed support and skill set move to appoint that candidate as CEO and avoid a costly search


ConsiderationsThe real and intangible costs of a search are highThe best candidate MAY be in houseBoards tend to choose a polar opposite individual to

the one who is leavingFew schools/organizations recognize that potential

internal candidates must always be handled VERY carefully whether ultimately chosen or not

Disgruntled and disappointed internal candidates can become adversarial toward the new head


Succession PlanningThe search is exciting but the transition will enable

the chosen candidate to succeedMost boards never develop a succession/transition

planA wise board will form a small transition committee

made up of a few members of the search committeeAppoint, if possible, the chair of the search

committee to be the next board chair


Role of the Current CEOMany search consultants would say that historical

evidence points to excluding the current CEO from most the search process and search committee

The current CEO should not serve on the committeeMany founders/long term directors struggle to let go

and giving them too much power in the search is one sure way to have the search fail

However, excluding the current CEO from involvement at key points is dangerous


Engaging the Outgoing CEO Appropriately

Ensure that the CEO meets all candidates but does not vet out prospective candidates early in the resume game

Ensure that the CEO supports the choice of the new leader or the existing management team may undercut him/her


Role for the Outgoing CEOWhile wanting to give space to the new CEO, it is

important to keep the prior one onside especially if that person lives locally or is retiring and not moving on

Consider the possibility of a consulting role for the outgoing CEO IF the relationship between the new one and the retiring one seems solid


Severance Package Wise boards will ensure that long term executive

directors, who may have lost earning power over time, do not enter retirement with insufficient assets

What is an appropriate severance package for a retiring long term CEO in good standing?

Is the board even aware of the departing CEO’s financial condition?

Wise boards will also honor the outgoing CEO as it sets a precedent and tone


Key Elements of PlanningSuccession planning is ultimately a function of wise

boards acting under good governance principlesSuccession planning depends on a healthy search

including viable internal candidatesSuccession planning ensures that the new leader

embodies most of the traits and skills needed Ensure that new CEO can meet the organization’s

goals with his/her skill set and do not hire just on “chemistry” and charisma


The Insider Question Managing the feelings and aspirations of insiders

who apply and are not chosen will be importantDisappointed internal candidates may need to leave

in order for the succession to workKeep the board transition committee in place for a

full yearWarn the new CEO of key personalities and pitfalls,

something the insider will know but over which outsiders often stumble


SummarySmart succession planning focuses on both search

and transitionQualified inside candidates always deserve serious

considerationRemember that 80% of all CEO’s of non profits are

“fired” within 5 years and 90% of non profit searches hire outside candidates

Remember that only 10% of hires are insiders and only 10% of them are fired!


Summary The biggest reason for the termination of the CEO is

loss of institutional memory on boardsThe second reason for termination of the CEO is

undertaking too many changes too quickly for the internal staff to absorb and support

The third reason for termination of a CEO is an incident or crisis that the catches the board off guard and then poorly manages


John C. Littleford1-800-69-TEACH

[email protected]

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The Opportunities and Pitfalls Confidential: Intellectual Property of Littleford & Associates