Is It Time for Your CEO to Step Down?
By David Hinsley Cheng
The increasingly complex nonprofit environment makes run-of-the-mill leadership a risk to any organization that is interested in taking their mission to the next level.
Nonprofits that are going through a transition need exceptional, progressive, enthusiastic leaders who can not only guide them through change, but also forecast future challenges and keep staff energized every step of the way.
There comes a time when a CEO loses the capacity to lead. However, it’s less about the CEO not having the technical skills to continue leading their organization. This is because it’s not uncommon to have a longtime CEO in a complex mission-driven environment who may not have the technical skills to address a brand-new issue facing the sector, but is skilled at putting people and systems in place to ensure that the organization doesn’t fall behind. In a situation like this, the CEO may still possess the leadership and the vision to elevate the organization during times uncertainty and change.
While there are many reasons why a CEO may need to step down, from illness to controversy, there are several overlooked signs that may indicate that your organization may need to start thinking about what role, if any, your current CEO should play in leading your organization into the future. Here are some of them:
Your leader doesn’t have a “winning spirit.” Can you imagine the impact that a coach who has zero interest in victory has on their team versus one who is passionate about winning the championship? In nonprofit spaces, the championship or “win” could be a variety of things such as raising money to solve a problem in society, finding a cure for a disease or expanding important programs in a community through new funding models. Leaders who are passionate about winning motivate their teams to victory. They inspire them to stand tall in the face of adversity. Once leaders lose enthusiasm for the work that they are doing, it won’t be long before the organization loses its own impetus to accomplish more in its community and in the sector.
Your leader is unable to innovate and help the organization stay relevant. Organizations that are able to maintain relevance and disrupt the status quo are better positioned to tackle new challenges. Today, there are new channels of communication and technology that visionary leaders must embrace in order to reinvent their organizations, ensure relevance and cultivate new relationships in the sector. This is especially true when it comes to fundraising. In the past, grassroots fundraising used to be about organizations connecting with one grassroots donors, and getting them to contribute, but now organizations are connecting with a core donor with a big social network to incite “peer fundraising,” which requires a collaborative effort. It’s no longer about creating one-on-one engagement. As the ALS Association showed with its viral and successful “Ice Bucket Challenge,” it’s important to engage potential donors with unique, interactive, and memorable movements and experiences. An innovative mindset is key to reach new audiences, and broadcast an organization’s messages, needs and goals in profound ways.
Your leader fails to recognize high–performing internal talent. I once spoke with a client who told me that his company’s greatest asset was “the people within the four walls.” He said, “My job is to make sure that they come back the next morning.” His revelation made a lot of sense to me. Without high-performing employees who wake up every day eager to elevate your organization’s mission, an organization can easily crumble. Being able to recognize passion and enthusiasm in people, and making sure that their “greatest assets” come back to work the next day ready to deliver their best are overlooked leadership qualities that boards should pay more attention to. Rising stars in an organization must be developed, managed, and supported in their roles. They must also feel and know that they are appreciated, otherwise they may take their talents elsewhere. Leaders need to recognize when passion is coupled with ability and then create the last ingredient: opportunity. If a CEO doesn’t provide opportunity to high potentials, they’re failing the staff and putting the organization at risk to losing good talent.
Your leader dismisses important workplace dynamics, trends and employee needs. In addition to not recognizing promising talent, organizations can also lose key employees if they are not aware of workplace trends and their employees’ pressing needs. The Nonprofit Times 2016 “Best Nonprofits To Work For” report outlined some of the key drivers beyond salary and compensation that attracts talent to an organization, including employee recognition, having confidence in the leadership, and having the right equipment, technology and resources to the job well. Flexible work schedules, tuition assistance, working remotely (with technology), paid maternity leave and leadership development programs have also been cited in numerous reports, especially those involving millennial talent. These perks don’t necessarily mean employees are working less; in some instances, we see them working more-only they are working more efficiently and effectively in a way that benefits both themselves and their employers. If leaders refuse to embrace this change in climate, they will lose out on sizable portions of talented younger executives because they’re holding on to old notions of what work used to be.
Your CEO was your leader of yesterday, but is not your leader of tomorrow. Sometimes executives are brought into organizations to fix problems, but they may not be able to run the organization effectively once those problems have been fixed because that’s not their interest or their strengths. Other times, they may fix one or two issues, only to find that there are other problems that they are not prepared to take on. If your organization is going through a maturing process or has become a much more complex entity, you need to think about your nonprofit’s current situation and what its next steps should be to achieve growth and relevance today, tomorrow and years to come.
It would be unfair to put an organization’s troubles solely on shoulders of a CEO when it’s the entire leadership’s responsibility to ensure that the organization is successful. Boards must also understand that leaders are never going to know all of the answers all the time and that there is no such thing as a perfect leader.
While there are many factors that may suggest that you may need to start thinking about new leadership, it’s ultimately up to your board to determine how these issues are affecting your bottom line. It’s a difficult, but necessary conversation that too many boards put off until it’s too late. Boards should instead be open and honest about their expectations and future goals so their CEOs are not blind sighted by the need for change. Comparably, CEOs must not hide the fact that they no longer have the capacity to lead, and recognize that having self-awareness of their incapacity is a fundamental part of successful succession planning.
David Hinsley Cheng is the managing partner of DRG. He is a central player in realizing the firm’s vision to provide expert and ongoing counsel to organizations navigating a C-suite transition. He has more than 20 years of experience across all areas of the nonprofit sector, including human services, associations, advocacy organizations, voluntary health organizations and hospital foundations.