 Welcome to all of you. We're so glad that you've joined us today. It is Monday and we are here to kick off your week in a really strong way. We are talking about board governance during a CEO transition with Joel. Joel is joining us from pathway associates, and we're excited to have this conversation with her but before we do, we of course want to make sure that you know who we are. Julia Patrick, CEO of the American nonprofit Academy, thanks to her. Again, we are 400 plus episodes strong and continue to have these amazing conversations with thought leaders across the nation. I'm Jarrett Ransom your nonprofit nerd CEO of the Raven group and honored to continue to serve alongside Julia as the co host of the nonprofit show and we would not be here and have these conversations if it were not for our dedicated sponsors. You can see our presenting sponsors right in front of you. These companies exist for one main purpose, and that purpose is your mission. They exist in your community. They are here to help you move your goals forward. If you have not checked them out, please make sure that you do because they are phenomenal companies. Again, ready to help and serve you in your community. And again, today's guests so thrilled to have Joel, can she polsky with us today consultant with pathway associates welcome Joel. Thank you so much for having me did such a great job with my last name I know it's intimidating and difficult. Well the practice was good. The purchase was really needed. Thank you so much for that I would love for us to start off Joel if you would tell us a little bit about pathway associates, the services you offer and kind of that geographic area that you serve. Thanks for that so pathway associates started over 20 years ago as a consulting firm focused on the nonprofit sector, founded with two founders who are still engaged in the company. We initially to provide fundraising support and over the years that consulting business has really expanded to helping organizations with nonprofit financial solutions grant writing governance work executive searches coaching strategic planning and capital campaign so it's the breadth and depth of everything that nonprofits need. And we're based in Salt Lake City and a lot of our client bases here in Utah but really across the Mountain West. Love it. I would imagine that as a console consultancy consultancy that you start doing one thing, and then you like weave a web of all these other things that you learn about, and then as you grow in time. It just makes sense to add to your, you know, you've added to your knowledge base but to add to your portfolio. Absolutely Julie I think that when organizations have, you know, come to a consultant for help, it's often about something very specific and once you dig in, let's say a capital campaign. You can then start talking about well where's the board readiness for a capital campaign talk to us about your major gift program talk to us about your strategic plan as we're trying to develop a case statement for you and so I think some of these other issues but opportunities emerge with organizations and then they identify that they have other areas of need. Yeah. Well, I think it's really cool that you have been able to see that growth and provide that assistance to your clients and to the nonprofit sector, and today we really want to dig into the concept of CEOs transitioning out. And I guess you could say transitioning in or across through our you know our sector. But let's start with what are you seeing in terms of some of the national trends around this, this change. Yeah, and I'll talk about that in a second Julie I just wanted to say that my experience has been 25 years in the not for profit sector and I've had the opportunity to wear every hat from you know variety of staff roles to executive director and CEO. And to consult it to professor to board member myself and so that all informs the way I approach my work and the way I approach this topic and so I think a lot of us have heard about the great, you know, resignations that were anticipated as baby boomers. And actually the youngest baby boomers born in the mid 60s are rapidly approaching that retirement age. And those experienced leaders as they're entering those golden years employers have to plan ahead and have a strategy to fill those leadership gaps. I think it's been anticipated and for sure the for profit sector has also been talking about this and, frankly, is not always more prepared but often more prepared than the not for profit sector around this topic. It's true it really is and I think that you know, Jared and I have really noticed the discussion around compassion fatigue, I mean the great resignation, a lot of CEOs that were probably planning to transition but then they held on because of the pandemic and so you've got people that are like, you know, okay time I'm out of here go you know I mean it's really an interesting flux. It is I was reading an article recently that actually during times of recession and during times of great strife, you actually see that percentage of resignation decline and so I think that there were exactly what you said CEOs executive directors who were anticipating and then felt like oh no I can't given where we've been but it's still happening all around us and really important this is why we're talking about this today for organizations to think through how they can be prepared and what we see is that often the not for profit sector isn't as prepared as the for profit sector, often lack, you know, budget and opportunities to integrate into their strategies and then not preparing when someone says they're, you know, they're resigning and the board is often thrown into this, you know, tizzy or into a loop of like, oh no, you know now what do we do. And they're very I read an article a while back, it was a very small percentages of organizations that have a plan, should that happen. And so, making sure that we, you know, once it happens that we're there to support organizations and boards. Isn't that scary that we don't often have that plan and I think that's, you know, we all talk about this bus you know we need to document our systems we need to make sure that we know what we have and what's working so that our organization is ready for, you know, moving forward. And then often we forget that at the top, right, I mean we hear that often within our own board development, but then we often neglect the CEO at the top to think, is this person going to be with us forever. Surely they will be right and that's just simply not the case. And I'm seeing that more and more throughout the nation as Julia mentioned whether it's compassion fatigue or there was a retirement plan in place that they were like okay I'm going to pause that retirement plan, because right now I'm going to lean in during the pandemic. So we are seeing this more and more and I'm curious, Joel if you can talk to us about how do the board members typically respond to a CEO transition. Yeah, I think it's often, you know, with panic like we've talked about. We've seen it play out a few different ways. It's either with like, okay we know what's going on here, and we as a board are going to figure this out and we're going to tackle it. And we can talk a little bit about what that means both the day to day work of the organization and leading a search that the board says we're going to handle this. I think some boards are thrown into like deer and headlights. What are we going to do. How are we going to handle this. We have totally relied on the CEO or executive director for everything that's working in this organization and now what. And then you've got other boards who say, Okay, I know what we need to do. We need to hire, you know, we need to do the following things. I would say the last is probably more rare in my experience. The last two is really what I've experienced happen. And I want to talk today a little bit about sort of the pros and cons of those, those situations. Yeah, and I would agree. I think the latter is the last that you hear. I've seen many board members, you know, kind of like want to sweep that news under the carpet and just forget that the CEO or the executive director said that that they're would like to start the succession plan and it's like no, no, no, I didn't hear that let's just pretend that didn't happen. So do talk to us about these pros and cons what what are you seeing and what do you coach your clients. I just want to add there's that other dynamic which I experienced where a CEO who's been there for a long time abruptly departs. Right. And so there's that situation also and usually, you know, a complicated HR circumstance that no one's talking about is a quick departure. I became interim CEO at an organization that was an exactly that situation. And so sometimes there isn't the opportunity to plan. But if you've had these conversations, then you can be a little bit more prepared for it when and if it does happen. I just wanted to add that into the mix as well that sometimes the boards are kind of suddenly in front of them and they really didn't anticipate it and it wasn't that the executive director CEO was talking about it ahead of time. You know, that's a great point and we have brought up before when there is financial mismanagement or something else that might take place that the CEO resigns or is fired, you know, what not so. And thank you for bringing that up because it's not always roses and rainbows it could be something that takes some kind of a crisis communication plan and to communicate with your constituency base in a very, you know, very careful way. So talk to us now if you will about these pros and cons what are some good things that the board should be looking at and doing and what are some things that really isn't the board's role. Yeah, I've had so many these situations in the last few months and I think it's interesting to surface them I had a friend who's on a board of a nonprofit here in Utah and he called me and said, you may have heard our executive director left pretty abruptly. And, you know, I love your advice, and what I should go back and talk to the board about and he said the board is already stepping in and filling staff roles. They're a smaller nonprofit, somewhat social service delivery kind of organization and a lot of the board members are there because that's their passion so they've stepped in to fulfill some of these staff needs and I just listened and said, Okay, and he said, and then you know we're going to be starting a search, and the board, you know is ready to do that so he was taking me through this and I will tell you, Jared and Julia that I said to him, Wow, here's what I'm anticipating for your board, pure and utter exhaustion. There are tiers who often have full time jobs, families, personal lives, all of those things and now they're stepping in and doing staff roles. And they're going to manage an executive search, let's put aside that they may not have the skills to do that let's just look at the time and I said to him, you realize the actual the most important job for the board is when that person starts. And what I've experienced is if as a board you're stepping in and filling staff roles and leading the search yourself. In the time you need to do the job of onboarding and setting up that new executive for success. You're done. You're saying, I'm out. I'm exhausted. I've ignored my life for the last nine months. I can't do this. And so what then happens is a new executive or CEO comes in, and they don't have shared expectations with board members they don't have the components that they need to be successful. And so that is a great example of where I said, Oh, I hope that works out for you but here are my concerns on the flip side of that I had a client who I've done some governance work with call me executive director, you know had an opportunity come. She'd been with the organization about seven years was not expecting to leave a great opportunity she decided to take it. She called me first and then I had a call with her incoming chair, and he said, Well, what do we do. And I said, Here's some things I want you to think about. Is there someone internally who could serve as an interim because this transition is happening pretty rapidly she gave about three weeks notice. And she's going to make herself available, but the new organization needs her to start. So the first question I asked is, Is there someone internally who could take over as interim. It didn't sound in this situation like there was so I said, We can help you at pathway, I do a lot of interim work right now I'm an interim CEO I do not typically and Jared and I've talked about this do multiple interim roles at a time, because it's very difficult. And so the first thing was someone internal to be an interim or someone external, and then we talked through what that could look like the time the pricing. And then my second question is, How are you planning to manage the search. And so, you know, sometimes a board may say look, we have an executive recruiter on our board, and they're going to take it on pro bono, you know, there are situations where that can work and I never recommend a one size fits all for organization so starting with the interim question and then going to the search question how are you planning to manage it. And if they're not sure, then I talk about some options which I'm happy to go into now if you want me to. Yeah, I would love for you to and I'm curious if you can give us just an idea of how long this transition typically takes right so regardless of how the CEO or the executive director leaves by the time the new hire is in place. What are you seeing as that timeline. I'd like to tell people it's an average of around six months and the reason so I did a search this past summer for a nonprofit a CEO search and they wanted the person to start like yesterday. The executive director had held on and he was exhausted and ready to move on and so I think they approached me in April we started in May. We had an offer out and accepted by August, that was pretty aggressive. I will tell you it the search was not short changed, but it was aggressive. So I like to say to people think in terms of six months and some of it has to do with the organization. Can you get your search committee together. Are you responsive to what if you're hired or consultant or you're doing it yourself are you being responsive and have a timeline that you are really adhering to you know where's your readiness as an organization. In terms of interim about the same I would say averages six months I'm in an interim CEO role right now and I will end up being in that position about nine months. The other interim roles I was in it was about eight months so it really just depends on the circumstances of the organization but I think six months is a pretty fair timeline to think in your mind and typically interim come in part time, not usually full time. Yeah, let me ask you this, are you seeing that, or concerned that with this great resignation and the labor issues that we're confronting that that that timeline is going to go up. Or do you feel like it's, it's going to hold pretty consistent at that six, six to nine months. That's a great question Julia you know I know I can speak in Utah we have I think the lowest unemployment in the country. It is definitely an employee market. And you never, you never want to settle. You know, I always say to organizations you're worth it, and your mission is too important, right, you get to decide what you want for that future leader and hopefully you've engaged stakeholders across the board who get to give input to who that future leader should be. But I always say if you have an interim in place that's working for you, the work is continuing it is not stalling although as an interim CEO there are some decisions where I think, hmm, I really would like that to be the permanent CEO. Our work is moving forward and in fact, for where I'm interim CEO we're going to be moving forward and hiring a VP of finance, I would have loved for that to have been a decision for a future CEO. We need that position and we're moving forward and so I always say to boards and to organizations, take your time, do it right. And so I hope that that average time isn't increasing but if it needs to, in order to find the right fit, then you give it that time. Yeah, and if you have an interim, you're not rushed and if you're not a board trying to fulfill all these roles. You know, then it's a little bit easier to swallow a longer time frame. Yeah, I typically say nine to 12 months as that interim to make sure that you know everything's all the systems processes all of that is in place and that we're not hiring of course at that deficit, but we're truly hiring the next person that can be set up for success. And I did see during the pandemic during the height of the pandemic I will say, I think many interim stayed past what they thought they would, because there was so much uncertainty, right and so it kind of went alongside or parallel if you will, to that CEO that wanted to retire and just said you know what, I will put that on pause right now. I think that board leadership, we saw that with board leadership, you know, yes, board chairs that stayed on, you know, finance committees that held it, held it together, you know, stayed intact and I think that was a natural thing. I think the smart move frankly, I know the organization I'm the interim CEO our board chair staying another year there's been too much going on as you said Jared and so much change in the way business is operating that adding in too much transition can be really jolting for an organization so I think you're sort of nine months to 12 months is true when you think about sort of the onboarding and those pieces. As an interim, for example, I will stay on when the new CEO comes on as long as needed. There is a, you know, sometimes there is a sweet spot of not staying too long as an interim which I have experienced in from a variety of angles. So you want to be really conscious of being able to hand over the reins right and see keep let people see that person as the next leader. Good. Wow, you know we don't have much time left and it's which is, but I want to get to, I know I was asked, even for us, even. Um, I want to talk to you and dig in a little bit deeper about this board interaction and yeah, what to look for I mean I thought it was such a great story to recount about the poor board that's like okay, Betty's going to do this lose going to do that Michael's going I mean and then they don't have anything left in the tank for when. Yeah, yeah, especially Julia also experienced that with the organization that I was a part of when the CEO left abruptly. It required so much from the board and the executive committee, and I became the interim and they hired a search firm, but it went on for quite some time and by the time the CEO started, they were still exhausted even though they had an interim and they had to hire a search firm. So just being aware of that. And that was one thing that I started to mention before, you know, one way to prevent some of this is to think about hiring a search firm that focuses on the nonprofit sector. And there are wonderful firms around the country that have a lot of credibility and success working with nonprofits pathway associates I lead our executive searches I'm in three right now to right now, excuse me. I'm in three positions, not just CEO positions. And I think just bringing in a professional can often prevent some of what we're going to talk about now so it's something for organizations to really think about. So that we don't lead to these issues with the board. So one thing to really think about that I have experienced as a staff person, as a board member, as a consultant in every way, and that is board overstepping. It's natural. I always say to staff members, board members don't want to overstep. They are busy. They've got their own lives. They see a gap that they think needs to be filled and they're trying to support and help. But one ends up happening is what where there used to be a good potentially a good hopefully delineation between staff roles and board roles that gets really blurred in a transition where there isn't an interim. Because the board, you know, often is big and there are multiple people and they're going to multiple staff members because they don't have that conduit that they used to have in the CEO. I never recommend that board members not have relationship with staff members, but this is something different. It's me as a board member, maybe not the board chair calling a staff member directly and saying I need you to do this. So it becomes directive and that is very hard for staff members to manage. It is very hard often for the board chair. They are exhausted. They are helping make decisions about hiring and all kinds of things that they wouldn't normally get involved in. So that is a challenge both ways in what I've experienced and very often I'm coming to organizations after that fact. And so there is some unraveling that needs to happen. Another piece to really think about is staff culture. It is hard. I've been there to be a staff person in a CEO transition staff members are often thinking for better for worse. What does this board know about what we need in a CEO. It is hard, even if there is a good relationship between staff and board and confidence and all of that. The staff is in the day to day. The board is not shouldn't be. And so how you care for and hold the staff culture in a transition is something to really pay attention to. And again, something an interim can really help with. And then lastly, it's your other stakeholders. It's your donor confidence. It's thinking about the messaging in the community, which also an interim a search firm can help support. So thinking about that piece. And then we touched on this a little bit. What happens when you get that new executive director CEO. How are you setting that person up for success. What's your onboarding plan. What is your plan the first week that that person comes to establish shared expectations with the board and shared communication plan between you as the executive and the board shared communication plan and shared expectations are the two most important things that will prevent lack of success for an executive director and CEO in my experience. Great points. Yes, I that is so critical and I have seen it happen all too often where the new hire comes in, and there's just misalignment, you know, that the board is thinking one thing. The exact the new executive director is thinking another and then the staff has their own, you know, separate opinions. And so, so great points that you've shared with us do well and so, so grateful. I'm curious if you could talk to us a little bit because I know another opportunity that is happening within this succession planning is really mergers and acquisitions. And in fact, Julian, I don't mean to put you on the spot but we had the Utah association, Utah nonprofit association representative on last year sometime. And she was mentioning that across the state of Arizona, there was a very large percentage of organizations stating that they may not make it through the pandemic the global health crisis. Julia, do you remember what that statistic was. So that was not Arizona that was Utah. And I think that at that time what what they had done is they had conducted a study of a poll very early on in the pandemic so let's say it was late spring early summer. And she had deep concerns that it could be as high as 30% of nonprofits that we're saying we don't know if we're going to be able to move forward through our season. And in Utah, you have a really active nonprofit sector in the summer so that's even more appalling because you know there are some states that have, you know, different, different cadences to when they can fundraise and it was a huge concern. And so we've been talking more and more and seeing more and more about that merger and acquisition. And I've seen a little bit of that I think that nonprofits were surprised. Overall, the clients I've talked to have been surprised with where their revenue ended up at the end of 2020. People anticipated and this is, you know, a generalization but what people anticipated in spring or summer of 2020 hadn't necessarily come to play when they got to January of 2021. Having said that, I think it will be really interesting to hear where fundraising lands at the end of this year. And so that is something that I'd heard that concern, it kind of plateau, you know, kind of was going up and then plateaued as people discovered that actually the donor community had risen up, and that revenue was actually better than anticipated. I haven't seen a lot of data. Now that we're in October of 2021, and things have continued. I'm really curious to see where that lands towards the end of the year. I think it's going to be really an amazing. I mean, it's been an amazing 24 months, but especially as we move through. Hey everybody, this has been an amazing conversation Joelle, can't you pull ski, I mean, I really enjoyed this and I think that you've given us some great insights to think about through the lens of being a consultant. Here's Joelle's information pathway associates.com has a lot of great information on their website so check them out you might find that there's a fit. Again I'm Julia Patrick I've been joined by my sidekick. My nonprofit nerd, your nonprofit nerd, the nonprofit nerd, Jared Ransom, CEO of the Raven group. Again, we want to thank all of our sponsors but wait before we do. Jared, this is really exciting talk about this. This is our survey so we did the fall survey last year and we are hoping every one of you that has seen the nonprofit show will please provide us some feedback. It won't take more than three minutes so if you have your phone handy go ahead and scan it over this QR code. 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