There’s much talk these days about the impending retirement of the generation we refer to as baby boomers. Newspapers, radio talk shows and other mediums are dedicated to providing thought-provoking fodder on how this crop of soon-to-be retirees will spend their future days. How will they squander their pensions? To what exotic destination will they travel? How much will their new condos cost? Of course, one would imagine a discussion on ‘leaving’ would, likewise, involve a serious dialogue on who and what is left behind. So many issues to resolve: who will take the boomer’s place at the head of the boardroom table? How will the organization function without the efficacy and strategic aptitude of Mr. or Mrs. Retiree? How can an organization ensure it finds talented people to fill their shoes?
Let’s say it together
It’s called succession planning, folks. And, from the sound of it, there’s a lot more talk to be had. In trying to provide readers with the nonprofit voice in this piece, I contacted a great many organizations: from large to small, from the health sector to education to social services and more. Alas, not one word was uttered. The responses varied: most had never engaged in succession planning so felt they had nothing to add, while others admitted they had never even heard the term. And yet, every expert I spoke with could not emphasize enough the importance of succession planning on the functionality and efficiency of every nonprofit organization out there. The disconnect is intriguing.
But I can explain…
Of course, the reticence toward succession planning is not entirely incomprehensible. “Most nonprofit organizations do not have formal HR departments, HR professionals or HR expertise,” explains Daryl Johnson, practice director, Compensation & Human Resources Consulting Services, at Meyers Norris Penny in Calgary. With vast experience designing succession plans for clients and in the process of completing a master’s thesis on the very topic, he adds, “many other competing HR demands prevent a more strategic and proactive approach to succession planning.” As a result, most organizations end up adopting a very reactive approach to governance, focusing their resources and activities around day-to-day demands of hiring, training and performance management.
Likewise, succession programs usually stem from very regimented environments. And, according to Kevin Jeffrey, since many nonprofits are not as tightly structured or don’t have the same formalized processes as larger for-profit companies, it’s quite feasible they are less inclined to implement succession planning. A director on the board of the BC Human Resources Management Association, as well as the organization’s past president, Jeffrey adds that outside influences can play a role too. But nonprofits don’t face the same external pressures of, say, public companies who, feeling the need to pacify analysts and others, adopt succession programs to demonstrate their stable and healthy corporate world.
Money matters
At the end of the day, cost may be the bigger de-motivator for nonprofits. “While a good succession plan is equally important for a nonprofit as it is for a for-profit organization, it may be more difficult for the not-for-profit to free up resources to invest in a succession program,” explains Janice Wooster, director of JMWooster Inc., a strategic consultancy based in Toronto. After all, succession plans don’t come cheap. In order to groom someone for a position, explains Jeffrey, “one spends an inordinate amount of time and resources ensuring the individual is trained in the right way, has the right management or operation skills, etc.”
Though that cost may be reasonable, since you are not sure which employee will stay with the organization and which will leave, it’s possible five or six other employees will be groomed as well. One can argue that all the training is good for the organization. “But,” says Jeffrey, “it’s just one of those things that make succession planning difficult.” As a result, Wooster says many organizations are reluctant to cough up the up-front cost for a succession plan until the need is urgent, even though, if managed well, it’s an investment that most definitely pays off. But let’s face it: the cost of things like recruitment and lost productivity are not factors that are currently measured and don’t usually show up on the P&L statements or the annual report. “The cost of not doing succession planning is not well documented or understood,” she says.
But at what cost?
But what of that opportunity cost? What are the potential consequences for an organization that doesn’t make succession planning the priority it deserves? It seems whether you’re running a for-profit or nonprofit, the decision to embark on a succession program comes down to good management. “I think part of any organization’s job is to continue looking for talent and finding the best place to put them,” says Jeffrey, adding, “any good organization is always looking around – both internally and externally – for people who they can move into senior and leadership roles.”
Alternative benefit plan
That said, some argue it may be even more significant for nonprofits to take planning to heart. “The consequences of not regarding succession planning as critical are that many nonprofits will continue to face ever-increasing difficulties in attracting and retaining leadership and key professional talent,” confirms Johnson. Why, you ask? Well, there’s an incredible level of competition among all organizations for the best talent out there. But nonprofits know they cannot woo prospects – or retain current employees for that matter – with high compensation packages, stock options and company cars.
Therefore, says Wooster, “In addition to offering both existing and potential employees a role in realizing a compelling vision and mission, nonprofits must also consider what other advantages they have to offer.” Providing high performing employees with a succession plan that offers career potential is one. But succession programs can also help nonprofits achieve their overall goals. “It’s important to have tangible evidence of value statements, and showing that you are prepared to invest in your people is a great way to promote a culture that demonstrates the ‘people’ value,” she says.
Succession 101
So if one accepts that succession planning is a road that must be travelled, what signposts should organizations heed along the way? Well, for one thing, considering the upfront investment and ongoing management costs of the programs, Wooster recommends caution. “I would want to be very sure the commitment from the top of the house was there before contemplating a succession program,” she says. And despite the costs, unless you have in-house expertise to handle succession projects, Wooster advises working with an external consultant. “They can assist you with your upfront planning and program development and provide the knowledge transfer you will need to effectively maintain the program.”
Meanwhile, Jeffrey, who also works as a consultant, stresses the importance of forward thinking. “Let’s look at where our workforce in the future is going to be and build in the structures, the support, the systems that are going to get us there,” he says. Once you begin to identify the types of people that will be needed you can begin grooming those right people. “It’s really about culture, creating a culture that allows the organization to think about the future.” Of course, the culture you create should ensure your organization devotes constant attention and reinvention to their program. “One key point to note is that many organizations still see succession planning as a one-time event,” says Johnson. But this should not be the case. On the contrary, he adds, “succession planning is a dynamic and ongoing process.”
No matter how you view it, there’s no time like the present to sit your board members down and engage in some much-needed internal dialogue. The word on the street is your organization’s future depends on it.
Elisa Birnbaum is a freelance print and broadcast journalist living in Toronto.
