Leadership Succession Planning

1. Leadership Succession Planning The Opportunities and Pitfalls Confidential: Intellectual Property of Littleford & Associates

2. The Board’s Strategies Reward, motivate and retain your CEO Compensate your CEO equitably and fairly If a search is necessary, consider internal succession if there is a viable inside candidate

3. 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 risk Boards want to retain their executive directors and executive directors want to hold to their jobs, but that is beginning to change

4. Current Search Trends More than ever in challenging economic times Boards want experienced seasoned leaders The 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 Confidential: Intellectual Property of Littleford & Associates

5. 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 Confidential: Intellectual Property of Littleford & Associates

6. 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 Confidential: Intellectual Property of Littleford & Associates

7. 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 stability The Board already has trust in this individual Confidential: Intellectual Property of Littleford & Associates

8. 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 Confidential: Intellectual Property of Littleford & Associates

9. Considerations The real and intangible costs of a search are high The best candidate MAY be in house Boards tend to choose a polar opposite individual to the one who is leaving Few 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 Confidential: Intellectual Property of Littleford & Associates

10. Succession Planning The search is exciting but the transition will enable the chosen candidate to succeed Most boards never develop a succession/transition plan A wise board will form a small transition committee made up of a few members of the search committee Appoint, if possible, the chair of the search committee to be the next board chair Confidential: Intellectual Property of Littleford & Associates

11. Role of the Current CEO Many 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 committee Many 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 Confidential: Intellectual Property of Littleford & Associates

12. 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 Confidential: Intellectual Property of Littleford & Associates

13. Role for the Outgoing CEO While 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 Confidential: Intellectual Property of Littleford & Associates

14. 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 Confidential: Intellectual Property of Littleford & Associates

15. Key Elements of Planning Succession planning is ultimately a function of wise boards acting under good governance principles Succession planning depends on a healthy search including viable internal candidates Succession 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 Confidential: Intellectual Property of Littleford & Associates

16. The Insider Question Managing the feelings and aspirations of insiders who apply and are not chosen will be important Disappointed internal candidates may need to leave in order for the succession to work Keep the board transition committee in place for a full year Warn the new CEO of key personalities and pitfalls, something the insider will know but over which outsiders often stumble Confidential: Intellectual Property of Littleford & Associates

17. Summary Smart succession planning focuses on both search and transition Qualified inside candidates always deserve serious consideration Remember 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! Confidential: Intellectual Property of Littleford & Associates

18. Summary The biggest reason for the termination of the CEO is loss of institutional memory on boards The 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 Confidential: Intellectual Property of Littleford & Associates

19. Global Issues - Local Solutions John C. Littleford 1-800-69-TEACH John@JLittleford.com www.JLittleford.com