We fired two EDs, and it nearly broke our board. How can other organizations avoid this trap?

Here’s the story:

"My board was in a situation where, due to performance issues, we voted to terminate our Executive Director. The vote was not unanimous, and the board members who voted against the motion (they wanted to keep the ED) were very upset with the outcome and the tone of the discussion, ultimately quitting. With a much reduced board, we went ahead and hired an Interim ED, which was a complete disaster, and unfortunately our board had to terminate that person too. Eventually we were able to move an internal manager into the ED role, and that person was successful, but it took us a few years to stabilize the organization and to rebuild our board. I have a feeling this happens more often than we know, and I can tell you it’s a nightmare! Hopefully other organizations can learn from this experience and avoid the upheaval of unexpected leadership transitions, made worse by a lack of board cohesion." 

 

Here’s my take:

It sounds like you’ve helped steward your organization through some difficult times! Leadership transitions are always a vulnerable time for an organization, and firing an ED is a big deal. But what stands out to me about your story is not so much that the board terminated two successive EDs (you’re correct, it’s more common than we think); it’s that the decision-making process was so contentious. 

I’d never expect a board to vote unanimously on a complex decision, and I don’t think it’s an inherently harmful outcome for one or two directors to step away from the board after a big change in direction. But when you have multiple directors resigning in protest after such an important governance decision, it’s definitely a red flag. I won’t speculate on whether or not it was the right decision to terminate your ED(s), but I am going to share some advice that might help other organizations navigate ED performance issues, and termination, in a more constructive way. 

The good news is that there is a lot that can be done to prevent this kind of ‘nightmare’ scenario for a nonprofit organization - but prevention really is the key. Reacting to a major issue without the right kind of infrastructure in place is a recipe for disaster.

Why an ED Performance Management System is essential to strong, stable governance

I don’t know the nature of the performance issues that led to your board’s decision to terminate the ED (or the interim ED). But I’m left wondering what the process leading up to that termination vote looked like? Did the board have clear expectations for the ED? Were those expectations communicated effectively? Was the board monitoring the ED’s performance regularly, and providing feedback and direction to the ED on an ongoing basis? Were performance concerns identified at an early stage, and did the board provide the structure, resources and support the ED needed to address those concerns?

Your answer to all of these questions may be an emphatic ‘yes’ - after all, it’s not impossible for a board to have a great performance management system in place and still need to terminate an ED. But I suspect that in this case, as is the case in so many nonprofit organizations, the performance management system was lacking. Even if a strong performance management system can't turn around an underperforming ED, it should at least provide enough context for board members to understand the rationale for dismissal, if and when it becomes necessary. 

If, however, the expectations for the ED’s performance were unclear, and ongoing monitoring and feedback had not happened, and there was no structured approach to help the ED understand and address the board’s concerns; well, one director might have a very different perspective on the ED’s performance than the next, since everyone would be relying on their own subjective assessment (which is all the more problematic if equity considerations are at play). That is how you might end up with a contentious decision about whether or not to terminate. 

Having a structured and documented approach to ED performance management matters, not only because it’s an important way for the board to fulfil its fiduciary duty, but because it helps clarify expectations and supports your EDs professional growth. All boards with staff should build out an ED performance management system, and it should include the following components:

• Clarity around expectations - Everyone needs to know what is expected of the ED. Some helpful infrastructure may include: a clear and specific role description for the ED, governance and operational policies (including executive limitations policies), a meaningful strategic plan, codified organizational values, a list of board-approved deliverables or outcomes (this might look like KPIs or a workplan), and formal board direction provided through resolutions at meetings.
• Monitoring and evaluation process - The board and the ED need to know how and when the ED’s performance will be assessed. Most boards do a fair amount of monitoring without realizing it - regular ED reports, quarterly financial reports, annual audits, and strategic plan updates are all part of ongoing monitoring of the ED. But a specific, structured and transparent approach is more fair and effective for everyone involved, so it’s worth codifying a policy and process for this governance work.
• Support for growth and development - It’s not enough for the board to simply evaluate whether or not the ED is meeting expectations. The board must be invested in supporting the ED’s professional growth and leadership skills. Providing constructive feedback to the ED on an ongoing basis is very helpful, but better still is to create space for an ongoing, back-and-forth dialogue between the board and ED. The board should work with the ED to identify professional development goals, and actively support those goals. And because it’s not unusual for performance concerns to arise in any workplace, having a structured Performance Improvement Process in place before those concerns arise is prudent. 

A good performance management system ensures clarity, transparency and good communication between board and staff. It provides a predictable playbook for establishing and monitoring performance expectations, and addressing any performance concerns, as they arise, in a constructive way. If performance concerns arise that can’t be resolved, a performance management system makes it easier for the board to make an informed, objective decision about termination, and avoids the extra contention that can come with unclear expectations and a reactive process.

How to approach ED Succession Planning to reduce destabilization from leadership transitions

Leadership transition is inevitable in every organization, so it’s absolutely essential for every board to have a succession plan in place for the ED role. But very few boards can actually tick this box. Create a succession plan! You won’t regret it!

Ideally, ED succession plans contemplate multiple scenarios, including: short-term, long-term and permanent exits from the Executive Director role; both planned and unplanned, and including both resignation and termination scenarios. The particulars of a good succession plan will vary from organization to organization, but generally you want to ensure that all critical functions of the ED role can be carried on without interruption, outline when and how recruitment and orientation will happen for a new or interim ED, and specify what key internal and external communications need to take place throughout the process. Some boards will delegate this planning to the ED, and review the plan annually. 

Beyond outlining the process for managing various succession scenarios, boards should also be assured that key organizational processes are well documented, and that all organizational assets (including digital files!) are accessible to the board chair or a designated staff person in an emergency. This is especially important for smaller organizations where the ED may hold a great deal of institutional memory in an informal way. Again, all of this can be delegated to the ED and monitored by the board.

Succession plans don’t have to be complicated. But, again, preparation is key - you don’t want to be making it up as you go. Having supported clients facing unexpected ED departures, I can tell you that managing an ED transition without a well-thought out plan can become a very stressful full-time job for the board. And hiring a new ED, whether permanent or interim, into a messy governance environment will seriously hamper their opportunity for success. 

Navigating difficult conversations with a divided board through conflict management

Sometimes organizational upheaval happens, no matter how well you prepare and manage things. And every board comes up against some big challenges that are difficult to navigate. Boards who are well versed in navigating complex issues, who tolerate and manage conflict, will fare best. 

One of the most common pieces of advice I give to boards is ‘have the hard conversation’; conflict avoidance is so deeply entrenched in the sector that most boards will go to great lengths to avoid open conflict or direct confrontation. Avoidance always causes more problems than it solves. Diplomacy matters, and sensitivity is important, but neither of those things are incompatible with conflict. 

All this to say, it's so important to make conflict management one of the skills that is nurtured and valued on your board. And like performance management and succession planning, the value is in the preparation. Don’t expect your board to figure this out when you’re in the midst of a conflict, practice this competency when things are running smoothly. And when the proverbial stuff hits the fan (and it always does!), you’ll be glad your board has developed the ability to have hard conversations in a constructive way. 

Big Takeaways:

• An ED Performance Management System ensures clarity, transparency and good communication between board and staff, providing a predictable playbook for managing expectations and addressing performance concerns.

• Leadership transition is inevitable in every organization, so it’s essential for boards to have a comprehensive ED succession plan in place. 

• Make conflict management one of the skills that is nurtured and valued on your board. When the proverbial stuff hits the fan (and it always does!), you’ll be glad your board has developed the ability to have hard conversations in a constructive way.