Lessons From the Front Line for Nonprofit CEO Successions

(Illustration by iStock/erhui1979)

As the baby boomer generation’s leadership era comes to a close, the nonprofit community is already feeling the effect. According to our research, approximately eight out of 10 CEOs of Jewish charities will retire in the coming decade, and figures are likely to be similar at nonprofits servicing other communities. CEO successions can be daunting for volunteer boards—and frankly, many are not handled well. We recently set out to share the stories of several successful nonprofit leadership transitions in the hope that their stories could act as models and provide inspiration for other nonprofits.

We interviewed dozens of board members, outgoing CEOs, staff, donors, and other stakeholders at six nonprofits to reconstruct how organizations have overcome common succession challenges. Reflecting on these stories, we uncovered several important lessons for boards and their search committees.

Reframe the Succession Conversation

CEOs often don’t like to discuss stepping down, especially if they are long-serving and facing retirement. As Jeffrey Sonnenfield wrote eloquently in his book The Hero’s Farewell, the end of a CEO tenure can feel like “a plunge into the abyss of insignificance.” Boards often share this reticence, whether squeamish about an emotionally laden topic, or worried that it will signal a lack of confidence in the chief executive. As a result, many CEOs outstay their welcome, either stymieing the ascension of a talented heir or dropping their level of performance and effectively retiring in—instead of from—the corner office.

A solution is for boards to view CEO successions not as an event but as a process in which long-serving CEOs are given time and space to come to terms with stepping aside. Take the example of Ruth Messinger, who stepped down in 2016 as CEO of American Jewish World Services (AJWS), a nonprofit focused on international development and justice. When the board first broached the topic of planning her succession in 2013, Messinger simply refused to engage. “I told them that the only way I was leaving my office was feet first,” Messinger recalled in her interview with us.

Over the course of three years, however, and with the help of her board, Messinger reframed her departure to match her image as a leader, seeing her succession as her last great act as CEO. First, she realized that by continuing in her role she risked losing her talented COO, thereby damaging the organization (instead, her COO eventually replaced her). Second, the board helped her realize that her abdication didn’t need to be a retirement. While there is always the danger of boards creating “empty roles” for outgoing CEOs, AJWS’s trustees saw an opportunity for Messinger to continue in an altered role, and, crucially, they allowed the incoming CEO to decide the precise scope of this new position.

The evolution took years and involved many difficult conversations, but Messinger eventually became an enthusiastic supporter of the transition plan. After the promotion of her COO was announced, the board feted Messinger with a gala event in Manhattan, during which a Rabbi performed a blessing over Messinger and the incoming CEO as they held hands.

Don't Just Open the Door for Women, Push Them Through It

Academics have shown that women are, in general, more averse to risk than men—which is likely a main reason why they may be reluctant to put themselves forward for demanding CEO roles. In one study, Sarah Fulton, an associate professor of political science at Texas A&M, asked state-level legislators how high the odds of winning would have to be for them to consider running for Congress. She found that for women, the odds had to be at least 20%. Men, on the other hand, were willing to jump into a race if the chance of winning were larger than zero.

In the nonprofit community, women often self-select out of the top role. The problem is often exacerbated by dense and unrealistic CEO job descriptions and boards that are reluctant to push female candidates for fear of being disrespectful of their purported desires. But sometimes even qualified and ambitious women need a little nudge.

In 2013, Stosh Cotler, now the CEO of the progressive Jewish nonprofit Bend the Arc, was certain that she had no interest in the top job. A successful COO, she nonetheless remembers being filled with doubts when the board approached her about applying for the CEO role: “Do I even want to be a chief executive?” Cotler asked herself. “I’ve never done a job like this before. I don’t have the experience I need. What if I fail?” Ironically, Cotler was well aware of the literature around female self-doubt. “Women go through a job description and if we don’t feel like we can do everything that is listed, we don’t apply,” she told us. “I knew this was a danger, but I still did the same thing at first; I couldn’t help it.”

The board's stroke of genius was identifying Cotler as a possible CEO even before she saw the potential herself. Cotler benefited from their patience and persistence, and the chair had multiple conversations with her, addressing her concerns straight on: She did have gaps in experience—particularly in fundraising and public relations—but the board would provide funds for an executive coach and support her as she honed these skills.

Cotler also gained confidence from a benevolent form of peer pressure. In 2004, she had been in one of the first cohorts of a Jewish leadership training program. Along with the knowledge imparted through instruction, such leadership training programs promote gender equality long after they are over through the power of their alumni networks—as female graduates rise within professional ranks, they bring other graduates up with them by acting as supporters and advocates. As she considered the CEO position, Cotler called on a variety of people in her professional network for advice; all pushed her to make the leap.

Finally, when Cotler decided to put herself forward, the board put her through an extensive interview process. “They didn’t hold back, they didn’t coddle me, they didn’t make it a rubber-stamp interview, which I deeply appreciate,” she recalled. Paradoxically, the probing reassured her. “I wanted to make sure for my own sense of confidence that I wasn’t being hired because it was the easy thing to do.”

Your Search Shouldn't Be a Black Box

CEO successions at nonprofits can be like funerals or like marriages: They can be an opportunity for the organization and the community it serves to come together, or they can be an opportunity to splinter apart. Hopes for the future—as well as grievances about the past—often need to be aired, but shutting down debate and deliberating in secret can create problems. By contrast, a bias for transparency can go a long way toward ensuring community buy-in and support when a successor is announced.

When Combined Jewish Philanthropies of Boston (CJP) moved to replace their CEO after a 31-year tenure, it ran a special website to regularly update the community on the search. The two search chairs fielded hundreds of phone calls, held town halls with search committee members around Boston, and distributed an online survey to an email list of more than 25,000 CJP supporters for additional feedback. The search committee was composed of a diverse group of high-achievers from Boston’s Jewish community; two of the highest-profile members (Aron Ain, the CEO of the workforce management company Kronos, and Shira Goodman, then the CEO of Staples) acted as co-chairs, helping give it even more credibility. Before the public announcement of the CEO hire, Ain and Goodman called all the organizations’ seven-figure donors to inform them of the choice, and the reasons behind it.

Crucially, however, the outreach didn’t end after the deal was inked. The CJP board created what they called a “transition cabinet” for the new CEO: a group of a dozen or so strategic advisers such as former board chairs, search committee members, and other longtime stakeholders to act as a resource and assist the new CEO with his cultural inculcation. The benefit flowed the other direction, too—these stakeholders were able to liaise with the Jewish community in Boston and reassure them about the new CEO’s readiness for the job.

Don't Paper Over the Cracks

The unemployment rate in the U.S. is at its lowest in nearly 50 years, and in such a tight labor market, boards might be tempted to downplay the challenges facing their organization in conversations with CEO candidates. But this approach runs the risk of hiring the wrong fit for the role and having to undertake the cost of another search. Honesty here can truly be the best policy. In his book “Principles: Life and Work,” Ray Dalio, founder of the Bridgewater Associates hedge fund, articulates this view succinctly: “Show candidates your warts.”

In 2016, a Jewish Community Center (JCC) in the Midwest faced years of budgetary decline and other shortfalls. Some board members worried about being able to hire a talented executive, given their distance from major talent clusters like New York, Boston, or San Francisco. But at the advice of their board chair, the board approached candidates with honesty, presenting candidates with benchmarking figures for similar-sized JCCs that showed the JCC in last position in terms of budget deficit, near the bottom for staff morale, and lower for fundraising and board development.

Their honesty was rewarded with an executive whose profile at first blush might seem unlikely for a JCC deep in the middle of the country: an Orthodox Jew from the Northeast. The organization’s bad news turned out to be music to the new CEO’s ears, a turnaround specialist: “I actually find it more exciting to go to an organization that really wants help and wants to be turned around and wants change,” she told us. Had she not fully grasped how dire the situation was, she likely wouldn’t have relocated to the Midwest.

It’s Never a Straight Path

A discovery that surprised us during our research was how even CEO searches with successful outcomes went through difficult phases: false starts and periods of sloppiness, conflict, or doubt. There is no shortage of guidelines and advice for boards for CEO searches, and all of it is valuable. But we also came away from our research realizing that conforming to every best practice just isn’t realistic. Because a CEO search is a human and dynamic process, boards shouldn’t feel as if they are failing if their search enters a rocky or slow period. As Marcella Kanfer Rolnick, executive chair of GOJO Industries who served on the board of AJWS at the time of the organization’s succession process, put it, “You have to move slow to move fast.”

So, if you’re about to embark on overseeing a leadership transition, take heart: Your execution doesn’t need to be flawless. If you begin to feel as if you are losing your way, our research shows that this is a winding path. Do your best to stay on it.

Read more stories by Gali Cooks & Eben Harrell.