Opinion: Think about the costs before you divorce

Peter Cardy, chief executive of Macmillan Cancer Support

In early May, The Guardian reported the announcement by the Grand Masonic Lodge that its chief executive had not been reappointed - normally an annual formality. The result of any appeal has not been reported.

The Masons are still a fascinating mystery even though they have opened up their business, and The Da Vinci Code will only have cranked this up.

But in this respect, the Grand Lodge has been far more open than most charities.

Most severances between charities and their chief executives take place in secret, with the board and employee finding it in their mutual interest to keep it quiet. On those occasions when I have been an adviser, mediator or observer, I usually find the root cause is the breakdown of confidence between board and chief executive. When that happens, no contract on Earth will allow both to stay for long - one or other has to go or the charity will be damaged.

Why are these events not uncommon? For the same reason that chief executives believe they should run charities and boards believe they should lead them: they are convinced they are doing good.

A difference of view between strong personalities can lead to divorce.

Before taking the irrevocable step, both sides should think about the costs - the direct costs alone are much larger than anyone calculates.

Compensation is only the starting point - add recruitment and the cost of an acting CEO, plus the equivalent of one or more years of salary. A new incumbent has to pay back all of that, as well as the time on the learning curve, before starting to return the cost of the change.

The hidden costs can be far greater. The interregnum can stall development for a very long time. The inbound chief executive is under pressure to act, but hasty changes often have to be unscrambled. The badly managed departure of the boss, for any reason, can lead to an unwanted shake-out among senior staff. The CEO will often be the best-known face among the volunteers, and a controversial change can lead to faction fighting.

Sometimes a change has to happen, but the pain can be reduced. First, in the contract the board and the chief executive should agree on a form of mediation that minimises damage. Next, CEOs should never imagine themselves in a job for life. Finally, all should pause and reflect that the interests of the beneficiaries are far more important than the egos of the leaders.

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