Most groups don't prepare for eventual CEO departure; small organizations without deep management strength are vulnerable.

Kaul

Ingersoll

Who's next?

Replacing a departing CEO is one of an association board's most critical tasks, yet most are not asking that question when it should be asked: While the current CEO is still in place.

Whether an association has a possible replacement in house or has to look outside, succession planning takes sustained effort and foresight, experts say. But it doesn't have to cost small associations an arm and a leg.

Such planning, when it does take place, typically occurs at larger organizations. But it's especially important for smaller groups that may lack the management bench strength to carry on effectively when a CEO leaves.

"Everybody should always think about succession planning," Charlie Ingersoll, a Washington, D.C.-based executive recruiter at Korn/Ferry International, told CEO Update. Korn/Ferry, like some other search firms, offers succession-planning services.

"[Boards] should always have an agenda item in their personnel committee in regards to succession," Ingersoll said. A timeline of the search process, a list of recruitment firms, the makeup of a search committee and a new CEO job description should be created and updated every couple of years, he said.

"You could have all this stuff in the can," Ingersoll said. "The chair of the search committee could take that folder and put dates into the schedule, review the job description one more time, post it and they're good to go."

‘Everybody's floundering around'

Pamela Kaul, president of Alexandria, Va.-based search firm Association Strategies, says associations can save months with proper preparation. Her firm also does succession planning.

"If there's no succession plan, everybody's floundering around about who should be on the search committee," she said.

"Every single organization needs to have a succession plan in place. It takes six to eight months to get their act together and it's part of the board's fiduciary responsibility to make sure a viable succession plan is in place," Kaul said.

The cost of such planning does not need to be prohibitive for small associations, she said.

"It doesn't have to be thousands and thousands of dollars, you can buy a day of someone's time to help you facilitate this," Kaul said. "I think it's good to get outside help because they can make sure you're asking yourselves the right questions and help you sort things through."

Jeremy Lurey, an executive coach who specializes in preparing possible in-house successors, agreed. He is CEO of Plus Delta Consulting in Los Angeles.

"There are affordable options," he said. "My philosophy ever since I left big-firm consulting in 2002 is meet my clients where they are. I'm happy to sell a $50,000 to $100,000 project but most don't need that. There are absolutely smaller solutions for smaller associations."

Lurey says he can help an association for as little as $5,000 to $10,000.

Grooming in-house candidate

But his work for the Alexandria, Va.-based Global Cold Chain Alliance—where he helped prep the organization's vice president to become CEO—qualifies as a major project. GCCA is an umbrella brand for four trade groups including the $4 million-revenue International Association of Refrigerated Warehouses and the $1 million-revenue World Food Logistics Organization. GCCA CEO Bill Hudson, who steps down in April, runs each association. He has been CEO of IARW for 31 years.

Hudson had told his board of his intention to retire, but the board asked him to hold off in order to get a successor in place. That began a three-year process that will culminate next year when Corey Rosenbusch, GCCA VP for seven years, becomes CEO. (Rosenbusch was promoted in November to president and COO.)

The board's five-member transition planning committee considered Rosenbusch a possible successor to Hudson, but felt he needed more preparation for the role, Lurey said.

"From the beginning the transition team said, ‘Yes, we want to groom him,' and we immediately initiated an executive coaching program," Lurey said. "We did a 360-degree survey to see how others were experiencing him. From there we identified a couple key areas for his development."

Lurey worked with Rosenbusch for several months, he said.

Hudson called the ongoing transition a success. He said a longtime executive builds a lot of board and member relationships and that a newcomer needs time to establish ties, too.

"The transition team wanted to make sure members were comfortable seeing [Rosenbusch] as CEO," Hudson said. "Many associations don't take the time or the expense to make that transition look and feel really good to members."

GCCA's approach is costly but worth it, Hudson said, as the association is paying two top-level executives at the same time. "It's a major cost to the association and the coach was pretty expensive," he said.

Lurey said properly grooming an internal successor can be more cost-effective than an external search. Beyond the substantial expense of a search, there are opportunity costs in training a new CEO from the outside, and there may be membership and staff turnover as an outsider comes in, he said.

"It is a pay now or pay later scenario," Lurey said.