In 1991 Jack Welch, then chief executive of General Electric said, "From now on, choosing my successor is the most important decision I’ll make. It occupies a considerable amount of thought almost every day."
It was 10 years before Welch announced his successor, which prompts the question whether charities are giving enough time to thinking about the crucial subject of succession planning. Ultimately, an organisation's success is determined not by its capital and assets but by those who govern it. If governance is weak then the edifice will invariably crumble.
Good stewardship is not just about the here and now; it is about ensuring the sustainability and efficacy of the charity for the years ahead. In recent times, charities have become more adept at building breadth into their boards; skills audits have become common. But what organisations have in breadth they often lack in depth, and all too often there is no obvious existing trustee who can take on the role of chair. This is not acceptable.
The Trustee role is complex and there are pressures the modern board faces that eluded their forebears. Of course the board needs to ensure that the organisation delivers public benefit, but this is being doing in a regulatory environment where The Charity Commission has become more enthusiastic about scrutinising the sector.
The reputation of charities with the public is also being tested; research from IPSOS Mori commissioned by charity think-tank New Philanthropy Capital last October showed that one in three members of the public has little trust in charities — and the bigger the organisation, the less respect it enjoys. The Panorama exposé of Comic Relief, which was found to be investing in arms and tobacco funds, did a great deal of damage to the public’s trust of the sector and its reputation, as did the Daily Telegraph’s comments on chief executive salaries. The trustees, and particularly the chair, have plenty to think about.
There is also continued economic pressure and much of the sector’s work, particularly where charities are sub-contracting in partnership with for profit businesses, is placing strain on cash flow, compliance and reputation.
If a chair has a six-year fixed term of office, they and the board need to be thinking about who is going to replace the chair from early on. Foresight and planning will ensure there are people on the board who are being developed to step up to the role. It also means that if there isn’t a suitable candidate or someone who is willing or confident enough on the board, then new trustees should be recruited.
It’s important to deal with any egos on the board, as there is no room for ‘colonels’ – trustees excellent at giving direction and opinions, but not much action - or the ‘gong hunter’: someone who is only looking for an honour or using the charity as a vehicle for securing a lucrative non-executive role. Having trustees not up the job is not acceptable in these days of increased regulation and scrutiny.
The general approach to succession planning that we’ve come across tends to be quite erratic, with some organisations placing themselves under enormous pressure and risk by leaving it right up until the last minute. When we are briefed about a role for a new chair we always ask ‘what about the vice chair?’ Commonly, we’re told either that one does not exist or that there is simply no one ready. Too few organisations are running their board recruitment campaigns with an eye on potential successors to the Chair.
Here are ten practical suggestions:
- The board must collectively accept responsibility for succession planning
- Ensure the board is high performing; this will retain and attract members
- Be clear on your charitable purpose
- Ensure there are no egos on the boards
- Ensure there are defined terms of office
- Conduct a formal skills audit
- Create a compelling reason for people to join you
- Test the market for suitable candidates – don’t rely on the old boy’s network
- Ensure a proper induction
- Put succession planning high on the agenda
Not all organisations will take such a long-term approach as Jack Welch, but putting these principles into practice should ensure good succession planning for your chair.
Ian Joseph is chief executive of Trustees Unlimited