A significant milestone was reached last year that might have escaped your attention: the oldest Baby Boomer was obligated, by law, to begin taking the required minimum distribution from her 401k plan. She was the first of some 76 million Boomers who are now between the ages of 55 and 70 years old. Although the onslaught of Boomer retirees that was predicted 10 years ago that is just now materializing, due in large part to the Great Recession, the sheer number of Boomers who are leaving the workplace, or planning to “do something else”, is likely to cause a significant problem.

The unsettling effect of this upsurge is likely to be the cruelest in the nonprofit sector, with particular regard to the transition of top leadership. Unlike the corporate sector where succession planning and management development ladders identify the next leaders, nonprofits generally lack sufficient scale, budget and opportunities to integrate such strategies into their operations. Thus, when the chief executive officer departs, the nonprofit board is often thrown for a loop. A survey we conducted a few years ago indicated that 75% of the nonprofits we queried did not even have an “emergency plan” that would help guide the board in case of the chief executive’s sudden, unplanned departure. Under such circumstances, the risk of disrupting the organization’s critical relationships, funding sources and community credibility is greatly elevated, as you might imagine.

Transitions Are Inevitable
Obviously, nonprofit governing boards today are well advised to devote attention to the issue of executive leadership transition. Admittedly, this can be tricky. If the board has a CEO who is performing well and the organization is thriving, why would you even bring it up? Even delicately broaching a conversation with the CEO about his or her plans for the future might be extremely uncomfortable for both parties. But here is the reality. The question is not if your CEO leaves the organization, it is when. Whether it happens on the watch of the current board (“Tell me it’s not so, Joe”) or those who succeed you, having a clear plan for managing top leadership transition is simply good business practice.

Organizations that are led by a founder CEO present an even greater challenge. Over time, the identity of the founder and the identity of the organization become interlocked. In the minds of key stakeholders, funders and the community, they become one and the same. The chief executive generally earns a level of respect and influence in the organization through years of successful relationship building, both internally and externally. When the founder steps down, the board quite naturally might question whether the organization can survive without its leader or if they can even find a successor who is as qualified. The fact that most founders have personally recruited most of the Board only magnifies the concern.

What’s the Big Deal?
There is no question that a change in leadership at the top of any organization must be acknowledged, and accepted, as a big deal. The board and chief executive must work in close partnership knowing that leadership transition planning will require a great deal of focused attention, additional time and heightened commitment from both parties.