Retirement – Who Makes the Decision?

Posted on 26. Jan, 2018 by in Boards Behaving Better

Change in leadership often strikes fear at the very heart of an organization. It can throw the board, staff and leadership into turmoil. In fact, people go to great lengths to avoid disrupting the status quo. Sometimes, they even stay in dysfunctional relationships because it seems like a more palatable option. If we are overwhelmed by the fear of new leadership and we try to hold onto the way it’s always been, we expend a lot of energy resisting change.

Change in leadership is, indeed, a painful thought. But avoiding or postponing leadership change could put the organization in long-term jeopardy. What is most important is that the facts are faced and parameters put in place to ensure the organization will continue to thrive and stand on its own without the current leadership.

The organization’s vitality and sustainability are the key factors to be considered when thinking about leadership continuity. This issue of the organization’s best interests is often confused with the best interests of the founder/long-term leader. The organization is often held hostage to the retirement considerations of the chief executive, who may no longer be leading the organization into the future. Not surprisingly, we have seen a number of organizations that are holding on to leaders who have lost their passion and vibrancy, leading to the organization’s decline.

There is the example of The Philadelphia Foundation that lost its focus on mission and did not serve its constituents in a meaningful way. The community foundation did not grow its resources to lead innovative regional initiatives, nor provide substantial funding for their grantees’ organizational sustainability.  The Philadelphia Foundation is seen as a critical philanthropic resource for the large diverse Philadelphia region with significant challenges; as a major city, it ranks as the fifth largest city in the nation. Surprisingly, according to the Foundation Center, The Philadelphia Foundation is not listed among the top 25 Community Foundations in the nation, in terms of asset size or total giving. We learned that many of the top ranking community foundations serving smaller cities, like Pittsburgh, Boston and Hartford, have significant impact within their communities.

For more than a decade, the long-term President of The Philadelphia Foundation was not displaying robust leadership, but had requested a hiatus to consider possible retirement. Outside the foundation, everyone spoke of the board being “asleep at the helm”, out of touch with the foundation’s current lack of community responsiveness, compared with its greater significant potential.  When the leader’s limited functioning became too obvious to ignore, the board had to step in and create a hasty leadership change.

We have seen many boards reluctantly ask the long-term chief executive or founder if they have any retirement plans. When the board chair gets the unsurprising response that the chief executive has no immediate plans to retire – that is a discussion-stopper! But Boards should not acquiesce so quickly…

Frequently, long-term leaders who have not had authentic performance conversations with the board leadership believe that the organization is theirs to oversee – until they get tired of showing up. Boards are remiss in not having regular performance expectations and comprehensive performance reviews with long-term leaders. The performance review should focus on the health and sustainability of the organization, and have input from the major stakeholders. Conversations about retirement are challenging, but approaching leadership viability through consistent and vigorous 360 performance reviews will ensure that organizations are focused on growth and sustainability.

According to Bill George, author of True North, organizations derail when leaders are not able to lead others with deep curiosity, and keen judgment. So who makes the retirement decision?

Questions regarding retirement planning for the board:

  • Why is this the right time to transition to new leadership?
  • What will ensure the organization’s sustainability in the next 3-5 years?
  • A new chief executive will make changes to the operations and might move the organization in new directions; are you ready for this?
  • What will be the biggest challenges for a successful leadership transition?
  • Can the long-term leader envision letting go while still being embedded in the organization; what will be the most difficult aspects of stepping back?
  • In planning for the transition, what crucial responsibilities and relationships is the long-term leader prepared to share or hand off; what key relationships should s/he maintain?
  • How does the long-term leader want your organization’s stakeholders to describe their legacy?
  • How can the board best support the long-term leader through transition planning?

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