Naming the Internal Successor: Stepping up from CFO/COO to CEO

In selecting the next chief executive to lead a nonprofit organization, search committees often limit their expectations to how the role could be continued without making waves. They often make a hiring decision based on institutional knowledge, rather than future challenges.  Inherently, they focus on keeping the status quo, and select the internal COO or CFO candidate, who had not developed or demonstrated the ability to lead.

A robust succession plan would have served as a roadmap for talent management, prior to the leadership transition; unfortunately, countless organizations often have not provided the executive coaching to enable the internal CFO or COO to succeed as CEO in an external leadership role.  From our recruiting experience, we suggest that in the process of assessing talent for a leadership transition, the board would be wise to keep the terms leader and manager quite distinct – if the board wants the next chief executive to create new ideas, and engage stakeholders in revenue generation.

CFO’s and COO’s are good managers, adept at overseeing resources through planning and organizing the activities and operations of the organization – while CEO’s are leaders that challenge the process, inspire shared vision, enable others to act, model the way and encourage commitment internally and externally. Often the CEO and CFO/COO have worked as a strong complementary team, with clearly defined internal and external roles. This partnership is often endorsed as “successor planning”.

When the unprepared internal candidate has been selected as successor to the chief executive, the COO-turned-CEO or CFO-turned CEO often departs after a limited and frustrating tenure. The search committee must then engage once again in a long, expensive search process and manage stakeholder and community confidence.

Nothing is more central to a dynamic organization than its capacity to cope with complexity, ambiguity, uncertainty and change. In this era of rapid change, it is imperative for a nonprofit organization to be more future-oriented, more concerned with selecting the proper direction and selecting the most capable leader.

Today’s nonprofit leaders have to be capable of dealing with revenue generation and sustainability issues that demand courage, decisiveness and action. This makes the distinction between leadership and management quite critical to an organization’s succession planning, as distinct from successor planning.

Authored by Priscilla Rosenwald