Leaderless

August 1, 2008       Thomas McLaughlin      

One minute she’s there, the next minute she’s . . . not there. What do you do when the CEO goes poof?

Back up for a moment. Who is the “you” in the previous sentence? By convention, it is usually the board president who must decide what’s next when the CEO disappears. Presumably the board president has had at least some inkling of the impending departure, whether it was voluntary or involuntary.

Either way, it doesn’t matter. Someone has to be in charge, someone has to decide what to do, and the board president sits in the most logical seat to figure out what comes next. Metaphorically speaking, this is where board presidents earn their money. Here is a handy cheat sheet.

What’s the message? Short of death, CEOs don’t just disappear without a reason. The obvious question is why they disappear, followed quickly by the second obvious question of why now? Depending on the circumstances, many other questions will follow on those. Your first job is to frame what just happened for everyone else. For these purposes, it doesn’t matter if the departure was voluntary or not. With a small group, such as the executive committee and possibly with other senior executives, your job is to craft a message.

Transparency is the backbone of the nonprofit sector, but this is a situation where a little opaqueness might be good for everyone. There could even be contractual or legal considerations restricting what all the parties say (suits and counter-suits involving boards and former CEOs are a major source of directors and officers’ liability insurance claims). In many cases, the message could be that there will be no message. But whatever the situation, the first step is to forge a leadership consensus on the answers to those first two questions.

If possible, try to get an agreement with the departing executive that will prevent disparaging comments in both directions. If nothing is in writing at this point, take it as another bit of evidence in support of a management contract for the next CEO.

Talk about it With the message as a backdrop, the next step is to talk about the departure with internal stakeholders such as staff and consumers (as appropriate). This is your first opportunity to shape the dialog, because the most pressing need is to look ahead instead of getting caught up in telling and re-telling of the past.

Keep in mind that, in addition to wanting information, people in the organization will need to process the loss. This is a good time to err on the side of too much availability. Funders, especially major ones, also need to hear from you, especially those who perhaps held the previous executive in higher regard than the organization.

Is the media interested? The media will be interested in the departure at some nonprofits. Note the extensive media coverage (including in this publication) of the American Red Cross’ frequent CEO changes in recent years. High-visibility organizations will always be of interest to at least the local media when the CEO departs, especially abruptly.

If there is even a slight chance that reporters will be knocking on the door, have a media plan for dealing with it. Such media plans are routine fare for communication and crisis specialists, but it’s not a bad idea to take the initiative and write a proactive press release for local consumption if there is a chance that the development will be of media interest.

Appoint an interim CEO In the Western hemisphere we haven’t yet figured out how to run an organization by a team, so the next step is to appoint an interim CEO. This could be you or covered by an interim CEO from the board of directors. It could also be someone else from the executive ranks of the organization.

It will be crucial to be very clear about the time frame and expectations with an interim CEO. As well, it is crucial to be very clear about whether the interim CEO will be a candidate for the permanent position or not.

Learn what you don’t know Filling a vacant CEO position is like trying on someone else’s tailored clothes in the dark. You don’t know what you don’t know, and you might not even know how to turn on the light. It won’t be possible to gain all of the information you need to have to be truly effective, so you need to approach the task with humility and the ability to differentiate what you have to know from what would be nice to know.

Find a quick victory Any new CEO, even an interim one, needs to build credibility and social capital as quickly as possible. The best way to do this is to produce a quick victory. This could be anything — bringing in a sought-after grant, starting a program, solving a long-term problem, etc. Quick victories are likely to be small or symbolic given the short time frame and the interim CEO’s newness, but they are still important because they give early credibility and a bit of breathing room to tackle the less tractable issues.

Focus relentlessly on the future There will be pressure to look backward to the good old days, even if they didn’t seem all that good when they were happening. The interim CEO and the person’s colleagues and board members can counteract that by focusing relentlessly on the future.

An interesting thing often happens during the interim’s tenure. The knotty, minor problems that formerly seemed so critical tend to recede a bit. This is partly out of respect for the interim’s difficult position and partly because the interim CEO might not have enough institutional knowledge to be helpful or even to appreciate the issues. Along with this trend comes a kind of limited time-out on the longer-term matters. The interim person will still probably feel the same urgency as an incumbent CEO, but for different reasons.

Incidentally, the CEO position should be having its largest impact on long term leadership matters. The interim CEO is well-positioned to judge the balance between long-term matters and short-term demands that the predecessor created, and to make recommendations for altering that balance to the search committee and ultimately the permanent executive.

Keep the board close The board of directors put you in this position, so it should be your primary source of support. Keep the members fully informed and use individual members’ skills as necessary. Try to get someone else to head up the search for a permanent CEO. You already have your hands full.

Keep the senior staff closer You succeed through your senior staff or your managers, depending on the size of the organization. For that reason, keep them close. Over-communicate with them, and they will almost certainly respond. While you’re at it, take advantage of your proximity to do a first-hand assessment of the group. This will be helpful information for the new person.

Act like your own headhunter A good executive recruiter will ask good questions. They need to quickly get up to speed on the organization’s current state to be successful in the search. You can take advantage of your newness to the position to re-examine all those things you took for granted and to learn the things of which you were never sure. Doing this will help you calibrate the requirements for the replacement CEO.

An organization can easily lose its rhythm when a CEO leaves suddenly. On the other hand, the clichĂ© is also true that a big loss can be an opportunity. It’s up to the interim CEO to make sure that that opportunity doesn’t go poof, too. NPT

Thomas A. McLaughlin is a national nonprofit management consultant with Grant Thornton in Boston. He is the author of the book Nonprofit Strategic Positioning (John Wiley and Sons, 2006). His email address is thomas.mclaughlin@gt.com