By John Pearson

Note:This is the tenth of 11 blogs featuring practical wisdom from the new ECFA Governance Toolbox Series No. 4: Succession Planning. Free to ECFA members, you can download the resource and video by clicking here.

Principle No. 10 - Plan for Plan C: Your CEO Is Terminated

What do board members fear the most? They fear having to terminate a CEO on their watch. The common wisdom is “Hire slower, fire faster.” But few follow this counsel in nonprofit organizations. Even fewer in nonprofit ministries.

We want grace to abound. We serve the God of second chances (third, fourth, and fifth chances!). But the day may come—for any number of reasons—when you’ll need to terminate your CEO. And here’s the problem: there’s no board member course on “7 Principles for Exiting Your CEO.” (Who would sign up for that one?)

The board’s most important role is to ensure that they have the right CEO in place. Ram Charan emphasizes this in Owning Up: The 14 Questions Every Board Member Needs to Ask:

“There is nothing more important for a CEO than having the right strategy
and right choice of goals, and for the board, the right strategy
is second only to having the right CEO.”

When it’s time for a CEO to exit, it’s time for board members to execute their fiduciary and spiritual duty. No one, except the board, has this God-given stewardship responsibility.

BOARD DISCUSSION: “Never hire anyone you can’t fire,” warns Donald Rumsfeld in his treasure chest of wisdom, Rumsfeld's Rules. At your next board meeting—with the CEO in the room—have a frank discussion about what conditions might be present that would require the board to exit the CEO. Ensure that the discussion is healthy and helpful.

Sometimes the lack of humility in a CEO is mentioned as one of the contributing factors (or is a foundational character flaw) that causes boards to terminate a CEO. For preventative work on this issue, read the blogpost, “Serve With Humility and Experience God’s Presence,” and Patrick Lencioni’s insights in The Ideal Team Player: How to Recognize and Cultivate the Three Essential Virtues. (Guess what? Humility is one of the three virtues.)

TO DO TODAY: Download the Facilitator Guide and inspire a board member to review the helpful checklists for “Plan C.” Remember: every CEO is an Interim CEO.

DOWNLOAD: ECFA Governance Toolbox Series No. 4: Succession Planning – 11 Principles for Successful Successions: “Every CEO is an Interim CEO.” The toolbox includes
• Read-and-Engage Viewing Guide (20 pages) – photocopy for board members
• Facilitator Guide (10 pages)
• 4 short videos (4-5 minutes each)
• Additional resources and succession planning tools

MORE RESOURCES: Follow the “40 Blogs. 40 Wednesdays.” color commentaries on Lessons From the Nonprofit Boardroom. Click here.