nonprofit executive succession planning: an israeli perspective

Nonprofit Executive Succession Planning

An Israeli Perspective

ISTR 2014, Muenster

Shalom I’m Gil Bozer

In the beginning

• A key player in the economic & political

arenas.

• Growing size and importance in the Israeli

economy as well as in civil society.

• Increased focus on effectiveness & efficiency.

Israel Third Sector in Numbers

35,000 1,600 390,000

53 30 16 30

Israel Third Sector in Numbers

35,000 1,600

1. # of nonprofits

registered in

Israel 390,000

16 30 53 30

Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010

Israel Third Sector in Numbers

35,000 1,600

2. # of new

nonprofits every

year

390,000

30 53 30 16

Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010

Israel Third Sector in Numbers

35,000 1,600

3. # of

employees

390,000

30 53 30 16

Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010

Israel Third Sector in Numbers

35,000 1,600

4. Annual

turnover in

Billions (USD) 390,000

53 16 30 30

Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010

Israel Third Sector in Numbers

35,000 1,600

5. % of public

finance from

total sources

30 53 16 30

390,000

Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010

Israel Third Sector in Numbers

1,600

6. % of Self

income from

total funding

sources 35,000 390,000

30 53 30 16

Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010

Israel Third Sector in Numbers

35,000 1,600

7. % of

donations from

total funding

Source: Central Bureau of Statistics-NPOs Income and Expenditure Survey 2007-2010

390,000

30 53 30 16

A deliberate and systematic effort by an

organization to ensure leadership continuity

in key positions, retain and develop

intellectual and knowledge capital for the

future, and encourage individual

advancement.

Source: Rothwell, 2001, p.6

What’s this all about ?

Importance of Succession Planning

Sustainability of an organization requires a

succession of high performers to fill key positions

and to meet future talent needs.

Evidence suggests that succession

plans are associated with higher

organizational performance via

smoother transitions

Organization can

rise to the height of

its people

Relevance increases with the size of the

organization…

“When you look at the fact that over 64 million workers will exit from the workforce by year 2010, this puts employers in a talent deficit

dilemma”

Bea Fields, “The Top 10 Strategies for Attracting Gen Y as Employees into Your Company

The

managerial

challenges of

the executive

leadership role

• Executive directors (EDs) have to maintain the

financial stability of their organizations (fund-raising).

• EDs have to manage the work of volunteers, who are

not employees in the conventional sense.

• EDs function in a vulnerable position between their

boards of directors and their organizations’ staff.

• EDs are pressured to satisfy the demands and fulfill the

expectations of multiple stakeholders.

The unique challenges of integrating the realms

of mission, resource acquisition, and strategy Herman, 2010, 157

Method • Data was collected using The Global Survey of

Executive Succession (GSES) in Nonprofit

Organizations (Santora, Sarros, and Cooper, 2009).

• 9 succession planning indicators were to assess the

extent to which our participant nonprofits plan

organizational transference of executive authority.

• The questionnaires were distributed to nonprofit

organizations identified through a range of Web sites

focused on the charitable and nonprofit sector.

• 100 questionnaires were received from Israeli EDs.

Profile of Executive Directors N % Mean SD

Gender

Male 38 52.8

Female 34 47.2

TOTAL 72 100

Mean Age (in years) 76 46.4 9.1

Educational Level

High School 1 1.4

Certificate/Diploma 2 2.7

Bachelor’s Degree 17 23.3

Postgraduate Degree 53 72.6

TOTAL 73 100.0

Founder of Organization

Yes 15 20.5

No 58 79.5

TOTAL 73 100

Tenure as ED in current organization (in

years)

73 6.4 5.1

Profile of NPOs N %

Service Type 77

Labor organizations 1 1

Environment 1 1

Civil society, law, social change, and politics 21 27

Health 6 8

Education and research 21 27

Philanthropy 2 3

Welfare 21 27

Culture and leisure 2 3

Infrastructure organizations 2 3

Full-time employees 75

1–5 21 28

6–10 10 13

11–20 9 12

21–30 11 15

31–50 6 8

51–100 6 8

101–200 5 7

>200 7 9

N % Mean SD

2011 operating budget

(in millions) 69 4.8 11.1

$100,000 or less 3 4

$100,001–$250,000 11 16

$250,001–$500,000 9 13

$500,001–$1,000,000 11 16

$1,000,000–$2,000,000 9 13

$2,000,001–$5,000,000 9 13

$5,000,001–$10,000,000 10 14

$10,000,001–$25,000,000 4 6

More than $25,000,000 3 4

Funding profile 76

Primary source government funding 13 17

Primary source donations 26 34

Primary source philanthropy 9 12

Primary source fund-raising 16 21

Primary source self-income

(membership/activity/service fees) 9 12

Combination 3 4

Profile of NPOs

Findings

• Most Israeli nonprofits do not plan for executive

succession.

• Only a third of the nonprofits have a policy regarding

internal applicants for senior management positions.

• 36% of respondents reported that their board is likely

to recruit an internal replacement.

Findings

• Previous EDs have been internal in only 34% of the

respondents to that indicator.

• 21% of the EDs reported that they advise their boards

of directors on succession planning often or always.

• 20% of the Eds are involved with board in the selection

process of their incumbent.

Succession Planning Indicators Succession Planning Indicators N n %

1. The organization has a succession plan. 70 11 16

2. The organization has a formal (written) succession plan. 70 5 7

3. The organization has a deputy. 73 32 44

4. The deputy will replace the executive director. 73 9 12

5. A policy exists regarding internal applicants for senior

management positions.

72 24 33

6. The board is likely to recruit an internal replacement. 67 24 36

7. Previous EDs have been internal. 52 17 34

8. The ED always or often advises the board on succession

planning.

62 13 21

9. The ED is involved with the board in the selection of an

incumbent.

64 13 20

Discussion

• Results provide warning data about the issue of

internal succession and manifest the lack of succession

planning structural practices in the Israeli third sector.

• Findings suggest that the role of deputy director in the

participating nonprofits is not perceived as crucial for

the governance of the organizations.

• It is evident that nonprofits do not look inside their

own organization for executive replacement.

Discussion

• These results echo those of previous studies of U.S.

nonprofit organizations (e.g., Froehlich et al., 2011;

Santora et al., 2011).

• Creating a strategic leadership development plan is

one of the greatest challenges for nonprofits which are

dependent on a single leader and cannot develop

prospective successors from within the organization.

• The significance of executive transitions will become

more urgently felt as the large baby-boomer

generation is now reaching retirement age.

You can predict the future by inventing it…

Future Research

• Further research on nonprofit succession issues at the

board level merits further consideration.

• Conducting comparative cross-country analyses to

determine similarities and differences among nonprofit

EDs and boards to determine their actions on

succession issues.

• There is a compelling need for nonprofit governing

bodies to connect succession to strategy. This will

allow the organization, its staff, and its constituents an

equal share in the benefits of a coordinated strategy.

Thank You!