Christian Leadership Alliance

Dealing with Difficult Situations

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Succession Planning

Leadership succession planning for the nonprofit or church ministry is one of those areas that is often neglected in the development of board policies. The mistake is to minimize the impact of a leadership change on the organization. A lack of policy to deal with succession will no doubt lead to speculation and concern among staff, key donors, and other constituents.

This sort of planning both for an emergency and a planned separation should be a standard board policy and part of the routine planning of any ministry organization. The need for a policy is not contingent upon the age of the incumbent in the leadership role, but rather is a reasonable and necessary step in the development of the organization as it matures.

The major themes that should be covered in a succession policy are:

• An emergency plan to be invoked in the event of the death or disability of the key leader;
• A planned retirement provision, which would also include adequate provisions for the termination of the executive at the determination of the board;
• The notice period expected for a voluntary retirement.

One of the other elements that should be covered in an adequately defined succession plan is the care provided by the organization for the spouse of the executive if the individual dies in office. This should include provisions for key man life insurance and any split of the proceeds on death, medical insurance coverage for the surviving spouse for a period of time, etc.

This begs a clear question of what determines the need for key man insurance for the senior executive. Key man insurance is usually term life insurance that is taken out on the life of the senior leader to benefit the organization and the leader's spouse. There is a growing trend toward this sort of insurance for the men and women who run organizations because of the inherent cost to the ministry, both in operation and in potential loss of revenue, in the event of the death of the key executive.

Other topics that are important in a succession plan are incentives that are in place to retain the CEO to a normal retirement date, as well as a severance policy in the event of a termination of the CEO.

It should also be determined whether or not an interim CEO or an acting CEO is necessary in order to have a period of time for the board to go through a reasonable search process to fill the position. If an acting or interim CEO is chosen, it's important that the individual not be a candidate for the full-time position in order to avoid exposing the organization to a lot of potential political maneuvering. The individual may or may not be a member on staff or on the board of the organization. The term of office for the interim period should be clearly designated, and the communication linkage with the board of directors must be established and clear.

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