When Does Interim Nonprofit Leadership Make Sense?
With proper planning, attention, and openness to change, an interim ED can overcome challenges that can derail a nonprofit’s best-laid plans.
Article Highlights:
At a time of a leadership transition, planned or unplanned, more and more organizations are using interim leaders (aka interims) to help the board address organizational challenges, large and small, that may have existed during the tenure of the previous leader.
Even if a nonprofit organization does not have any glaring deficiencies, interim leadership — either provided by a professional interim leader, or sometimes a board or staff member with capacity — can allow the board to obtain an objective assessment of the structures in place for achieving its mission and insight into what they should be looking for once they start the search for their next leader.
Scenario 1: The Interim Leader Provides Damage Control and a Path Forward
Take the extreme case of a nonprofit board who was caught completely unaware of serious and potentially harmful actions by an ED, ones that may involve negligence and legal implications.
This was the case for one nonprofit that catered to a regional business community, offering paid memberships for the benefits it offered. An ED transition was not at all planned: It was initiated by employees bringing troubling concerns about the leadership directly to the board.
It was immediately apparent that there was the need for the board to conduct a thorough, investigative audit of the organization, so they hired a firm specializing in financial malfeasance and organizational development.
The issues at hand went beyond organizational inefficiencies and cultural miscues; rather, it was apparent that illegal actions may have occurred, along with toxic behaviors.
The firm’s recommendations covered three main categories: Business culture; financial health; and transparency for the stakeholders. These recommendations created a road map for the nonprofit to address immediately and into the future.
To do so, the board unanimously agreed that, given the tumult, the nonprofit needed to hire an interim leader, so that the next ED “would not inherit this mess” and that they would be “set up for success from the start.”
Also, the board determined that the interim should possess the following attributes: Strong communication skills, a high level of emotional intelligence, and a diplomatic demeanor. Indeed, the board found an interim who met these criteria after they were presented with three vetted choices by an interim placement firm.
As is typical of these arrangements, the interim was given the authority to hire new staff and terminate employment of existing staff if needed. However, one of the biggest challenges for the newly configured organization was creating a new, healthy workplace culture — not a small feat.
This entailed building trust, enhancing communication, and showing the board’s ongoing commitment to remedying the noxious situation. As an objective outside professional leader, the interim leader was able to attain these objectives in less than six months.
The interim also participated in the early stages of the permanent ED search, helping the board’s executive committee to jump-start the process. This was done primarily to reduce the costs of the ED search: The interim leader and the executive committee took steps to identify an initial group of eligible candidates, which was then given to the outside search firm to vet.
While interims are typically not heavily involved in the ED search, in this case, the budget constraints were a driving factor.
Several best practices came into play here:
- The nonprofit engaged an interim only after a thorough investigation by outside experts.
- The ideal attributes of the interim were carefully deliberated; this step enabled the chosen candidate to execute organizational change and, importantly, help build back the trust that was violated. Plus, the interim’s role was malleable and aligned with the board’s objectives.
- Lastly, there was a deep dive into the toxic organizational culture: The effects of past leadership’s harmful behavior were identified and then mitigated as quickly and effectively as possible.
Scenario 2: The Interim Leader Guides the Nonprofit Through a Planned Transition
In many other cases, natural turnover of EDs through retirement, career advancement, or life changes can benefit from an outside interim during a leadership transition.
The reasons are not propelled by dysfunction, egregious behavior, or poor performance. Rather, the nature of this change may allow time and space for a thoughtful planning process where goals and milestones for the organization can be refined and organizational strengths can be assessed. The outgoing ED may even actively participate in the search for an interim and/or the permanent replacement and all key staff and stakeholders can be involved in a collaborative manner.
A relevant example involves the merger of two nonprofits in the financial sector that resulted in a leadership transition. It was a cooperative, albeit complex, merger: The EDs and their respective boards agreed that a new ED — one not affiliated with either nonprofit — should eventually lead the newly merged organization. And the boards required that an interim take the helm during the process and allowed one to two months for the interim search.
Since interims focus on the organizational infrastructure rather than programming, the boards preferred an interim who was not from the financial sector but could handle the cultural issues with proven expertise and deftness. Independence and objectivity were essential. One stakeholder relayed that it was understood that “soft management issues can take longer to placate” in merger situations. Plus, the departure of an effective ED, merger or not, can stir a lot of emotion; thus, engaging an interim “can give space for an organization to grieve.”
Nonprofits typically attract individuals who are motivated by — and attached to — the mission and the vision, not solely compensation. In this particular case, the emotional impact was escalated because of the upheaval and uncertainty of the merger, not unlike what occurs in the for-profit sector.
Every aspect of the transition took longer than expected due to an unforeseen situation, including the completion of the merger and ED search, and thus the interim’s tenure was extended, as it often is.
Fortunately, the interim’s extensive HR experience, proven management skills, and specific training for dealing with nonprofit mergers made a positive difference as the two organizations came together.
Best practices were plentiful here:
- First, the boards understood that an interim would be the best leader to handle the complexities of the merger process, on both the operational and cultural levels.
- Then, choosing the interim carefully by prioritizing specific personal and professional attributes allowed the best candidate to emerge.
- Ultimately, the chosen interim was well equipped and fully supported by the board, and this enabled the newly merged nonprofit to weather the myriad of challenges presented by the merger and ED transitions.
Scenario 3: The Interim Leader Readies the Nonprofit for a New Direction
Lastly, some nonprofits need to correct structural issues before a new ED comes aboard.
In this category is a professional services membership organization with a lengthy history of serving its regional members.
The ED had been in the role for more than 10 years and indicators of dysfunction in the nonprofit continued to emerge. The organizational structure was flat, so the ED had several direct reports: There were no job descriptions; responsibilities overlapped among employees; and work performed was not consistently in alignment with the mission.
One board member described the nonprofit as “filled with chaos and high turnover.” Plus, the board was in the early stages of implementing a five-year strategic plan and, as it was rethinking its vision, the ED was not able to adapt.
This situation prompted the board to ask the ED to take a leave of absence, during which time the board led an organizational review: The board chair and another member conducted a comprehensive membership survey and had conversations with over 50 stakeholders. It was apparent that a new ED was required, and an interim should be engaged during the transition.
The board turned to a firm that specialized in providing interims that presented three individuals who were pre-vetted and who offered relevant expertise and desired attributes.
Based on the review’s findings, the interim received a strategic map, and was given full authority and responsibility to hire and cull the staff. The interim immediately changed the flat reporting structure, creating three director roles. They hired from outside the organization to lead the marketing communications, membership/philanthropy, and programming groups. While the board was informed of the changes, it did not manage the details of this process.
Also, the interim did not get involved with fundraising or philanthropy, since such relationships would need to be sustained beyond their tenure. Board members continued to communicate with the nonprofit’s membership, keeping them apprised of the transition and assuring organizational continuity.
The search for a long-term ED continued separately; it was completed in a thorough and timely manner, unencumbered by the prior deficiencies.
This example also illustrates best practices.
The nonprofit’s problems were so ingrained and inextricably intertwined, exacerbated in part by the lengthy tenure of the ED, that unwinding it all went beyond the board’s usual functions and required outside objectivity.
The board was kept informed and was given the opportunity to sign off on the interim’s restructuring.
Separately, there are other leadership transition scenarios where interim leadership from within the organization may be more appropriate.
Consider the ED transition within a high-functioning nonprofit with few organizational challenges. In these cases, a senior management employee — or a two-to-three-person team of senior staff — may be able to fill the leadership vacuum during an ED search.
This can work if the search process is expedited and lasts no more than a few months — although the temporary EDs need the bandwidth to accomplish two roles simultaneously. Also, they should not be candidates for the long-term position, since many leave if they do not get the job.
Alternatively, the nonprofit can choose to be leaderless during an ED transition, foregoing a temporary or interim ED.
In these cases, the board chair most often becomes the de facto ED at some point. This is not a best practice and does add a significant time burden to the board chair, but for some leadership transitions, it may be the only option due to various constraints.
Conclusion
Funders, be it institutional or individual donors, have increasingly high expectations of the nonprofits to which they donate. A nonprofit has a better chance of achieving its mission if it is well-managed, and the board and staff are comprised of high-caliber professionals who are working together effectively.
With proper planning, attention, and openness to change, a leadership transition led by an interim ED can overcome the challenges — both foreseen and surprising — that can derail a nonprofit’s best-laid plans and set the stage for the organization to thrive under its next long-term leader.
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Great example of the value of Interim Executives in a variety of situations. And of boards wise enough to use this solution for leadership during difficult transitions.