Succession Planning - NFP Myth or Must

Succession planning is not a new phenomenon in the business world where the process for identifying people to fill key leadership positions in commonplace. But as Lina Caneva reports it’s not so common in the Not for Profit sector – although the times are changing.

Jo Cavanagh OAM has spent the past 18 years at the helm of a Victorian community based Not for Profit, called Family Life.

She never thought it would be so long term. And she’s not finished just yet. But she’s determined, with the help of her Board to ensure that there is a succession plan in place that she has a vital role in.

Cavanagh is a Melbourne trailblazer, who has helped countless families in crisis, and was awarded the OAM for community service in January 2013. Finding her replacement won’t be an easy task by anyone’s measure.

Family Life began providing family support services for vulnerable people, children and at risk families experiencing difficult life transitions back in 1970.

The community owned and managed centre provides counselling, mediation, mental health services, support and community education services, outreach to homes, case coordination, research and evaluation, social enterprises and advocacy.

Cavanagh has set in motion a number of crucial innovations to prevent and support families in crisis, including SHINE, Community Bubs and PeopleWorx.

She helped Paul Currie and football legend Jim Stynes set up The Reach Foundation, and through her many roles has led programs of change and growth to promote community involvement for preventing child abuse and family violence.

Today, she oversees 125 staff, 400 volunteers and an annual budget of almost $10 million in the top job.

When Cavanagh started talking about succession planning with her colleagues she found that it’s not a well-oiled topic in the Not for Profit sector.

"Succession planning is so important, and needs more attention,” Cavanagh says.

“I never intended to stay so long but there have been so many opportunities for innovation and improving practice I have stayed to be part of meeting the next challenge, and then the next.

“Family Life has always been an innovative organisation as one of the developers of family support and the first family violence prevention and support programs. Innovation has continued through to our social enterprises providing employment pathways for young people.

“Now we need both an internal succession plan and to also be an attractive option in the marketplace.

“It’s a credit to my Board that it’s very effective and keen on the governance issues around succession and all Boards should be asking this from any CEO for the sustainability and stability of the organisation.”

The same applies for other senior positions in the sector.

“When Family Life experienced significant growth in 2005 in which we doubled in size, the need to focus on succession planning became obvious. Recruiting whole teams of people to come into the agency who not only had the skills and experience, but also were aligned to our values and community model to deliver in a new area, was very challenging,” Cavanagh says.

“We needed to be growing people within our organisation who could lead start-up innovations as well as scaling of successful programs into new communities.

“Getting a mix of fresh energy and expertise to build on the core, and in the context of a workforce shortage and ongoing government reform, has been a bumpy ride at times.

“Getting all the right people in the right seats on the bus, and heading together in the right direction, is a phrase I have used often.”

Cavanagh is already in the hunt for a Deputy as the planning starts to emerge.

“We are now recruiting for a Deputy CEO – Director of Services.” 

Cavanagh muses that having had the benefit of a Board which has invested strongly in growing her capacity to lead the agency, she now welcomes the opportunity to hand that on – and possibly take some of that long service leave she has accrued in the not too distant future.

“Having been the CEO for 18 years, many will expect it will be hard for me to 'hand over the reins'.

“On the contrary, now that we are good at identifying the people who are most likely to thrive in our organisation, and how to help them to grow themselves and others, I am looking forward to it!

“Part of the succession planning is around leadership and its an important part of governance. The Board’s role is to hire and fire but the CEO should have a view in the sustainability and legacy of the role and be actively interested in the succession planning.”

Susan Barton AM, the founder of the Lighthouse Foundation and 2009's Melburnian of the Year began her work with homeless kids 34 years ago. Barton agrees that succession planning is not common in the Not for Profit sector.

After volunteering in an orphanage in Sri Lanka, Barton, a mother of six herself, returned to Australia and began fostering children in her own home and developed the unique model of Lighthouse family care.

In 1991 the Lighthouse Foundation was officially formed to support and expand this work, and to eventually fulfil her vision of Lighthouses being open for young people in danger of homelessness.

Barton, as founder of the organisation, transitioned from CEO to a ‘figurehead’ role about ten years ago.

“Succession planning often has healthy challenges and learning experiences along the way.”

Barton says she discovered much about succession planning from being part of a group of ‘founders’ who have all had different experiences.

She says it’s not one-rule-fits-all – each organisation has its own wants and needs and there is a need to really look at each role within an organisation.

“I am blessed by working with articulate people who have authentic conversations about what the organisational and individual needs are and the best use of their time.”

Robert Powell is a family business specialist and partner at Grant Thornton Australia.

He says succession can also be an emotional issue for any organisation.

“Naturally, they can be reluctant to let go of control over their creation. This can be because the owner has so closely identified their sense of self-worth to the organisation that they fear for their future without it; or they may fear retirement itself, particularly if they have no meaningful plans.

“When succession planning does occur, there are two deficiencies which commonly arise.

“First, planning doesn't start soon enough. Usually a five-year time frame would be regarded as the minimum to employ a succession plan properly. Second, planning is not structured or formally documented.

“Even though leadership transitions are expected to become commonplace in the next few years, most groups have made no formal effort to prepare for one of the most important changes an organisation faces.”

There’s little research around the succession planning issue in the Not for Profit sector.

In the US, a national survey of 2,200 executive directors at charities commissioned by the Annie E. Casey Foundation found that more than half of their organisations had no succession plan, even though nearly two-thirds of the executives plan to leave their jobs within five years.

Other US studies suggest that the number of charities without succession plans may be much higher.

According to global recruitment agency Odgers Berndtson, there are five specific characteristics that both CEOs and Boards could find helpful in developing a successful and effective succession planning program.

1 Be proactive, not reactive
2 Make succession planning a priority, at all levels of the organization
3 Leverage a systematic approach
4 Be clear and flexible about what you need
5 Give potential successors a broad education