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.

Another policy that should be thought through is the stance of the board toward the idea of promotion from within. First of all, it needs to be determined if that is a reasonable policy or not and, if so, how the board and the CEO can help develop internal talent. But the board should not be bound in its decisions by a preference to help younger leaders prepare for senior leadership.

Another key element in succession planning is the expected role of a search committee and whether the ministry should engage a search firm. If the policy is to anticipate using a search firm, then a reserve fund to cover search costs might be created.

Another element of a good succession planning policy is the preferred overlap of service with the new CEO. It is strongly suggested that this should be a limited time and not bind the new CEO with a long-term required affiliation with the outgoing CEO. There is always hope that there would be a good, amicable relationship and the potential for a long-term support, but it should not be a requirement laid upon the new CEO.

There are many resources available for the development of the various policies that have been highlighted in this article. One of the key centers for this sort of information is The Andringa Group, TheAndringaGroup.com. On that Web site is a questionnaire, as well as other materials that provide a good beginning point for any board that is struggling with the development of a succession plan. Having a succession plan is an important first step toward a smooth shift in authority. This can ensure that the staff feels secure and confident about the future direction of the organization.

This article reprinted with permission from the Engstrom Institute; © 2009 Christian Leadership Alliance - 800.727.4CLA. Visit CLA's website to see what they offer your organization to help build leaders and enhance organizational effectiveness!