An evidence-based approach to succession planning for YWCA Muskoka - Executive and Board - looking ahead planning for a successor(s) report

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An Evidence-Based Approach to Succession Planning For YWCA Muskoka –Executive Director and Board-Looking Ahead-Planning for a Successor (s) Report

Jennifer Costello, MPA candidate School of Public Administration

University of Victoria July 12, 2013

Client: Beth Ward, Executive Director YWCA Muskoka

Supervisor: Dr. R. T. Marcy

School of Public Administration, University of Victoria Second Reader: Dr. L. Siemens

School of Public Administration, University of Victoria Chair: Dr. L. Davis

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OBJECTIVE

YWCA Muskoka is a nonprofit organization operating under the umbrella of YWCA Canada and World YWCA. This organization serves over 1,500 individuals (females, males, adults and children) in a rural community in Ontario. Currently YWCA Muskoka does not have a succession plan. For such a vital community organization, lack of effective leadership or a significant void in leadership could negatively impact both the organization and the community. In fact, YWCA Muskoka has already experienced this problem with the unexpected death of the previous executive director. The resulting difficulty provided the impetus for the organization to take a proactive approach to future leadership

transitions. The objective of this current research project is to provide YWCA Muskoka with an evidence-based approach to develop and implement a succession planning strategy for the executive director and board members’ positions.

Several methods were utilized to inform the project, including a web-based survey completed by local executive leaders of human services nonprofit organizations, a web-based survey completed by YWCA Muskoka board members and staff and the completion of Cameron and Quinn’s (2011) Organizational Cultural Assessment Tool (OCAI) by YWCA Muskoka staff. In addition, an extensive review of the literature on succession planning in nonprofit organizations was completed. These combined methods helped to achieve the objectives of this project.

KEY FINDINGS FROM THE LITERATURE REVIEW

The literature review revealed the following:

 Demographic changes are leading to a large segment of baby boomer executive directors leaving the nonprofit sector;

 The nonprofit sector is facing a severe leadership deficit which some have identified as a crisis;

 Nonprofit organizations seldom engage in succession planning;

 Succession planning is a good risk management strategy;

 Succession planning ensures the viability of an organization; and

 Lack of succession planning puts an organization at risk.

Findings from the literature review identified the following three best succession planning practices for nonprofit organizations: developing emergency succession planning,

departure-defined succession planning and strategic leadership development.

METHODOLOGY AND CONCEPTUAL FRAMEWORK

To guide the current research project, a conceptual framework based on the organizational behavior model was used to assess YWCA Muskoka’s organizational structure, leadership, culture and organizational interactions. The organizational behavior model is a “study of what people think, feel or do in and around organizations” (McShane, 2011, p. 4). Further, the study of organizational behavior helps us to “understand, predict and influence the

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iii policy governance model, span of control, centralization, formalization and

departmentalization. A transformational leadership perspective was used to investigate the organization’s leadership. Organizational culture was examined using Cameron and Quinn’s (2011) four cultural types. Open systems theory was used to gain a clear understanding of YWCA Muskoka’s organizational systems.

In addition to the literature review and the development of a conceptual framework, a 24-question web-based survey was distributed to 12 local human services nonprofit

organizations. The invitation to participate was sent to the identified executive directors. The survey contained a series of closed-ended questions designed to gather demographic data such as the age, gender, number of years to retirement and salaries of respondents. Open-ended questions were also asked to obtain executive directors’ views and opinions on the challenges, obstacles and barriers to the development and implementation of a

succession plan. Finally, respondents were asked to identify solutions.

Results of the survey were similar to those identified in the literature. For example, the majority of the respondents (71%) were female, all the respondents were between the ages of 50-65 years of age and 86% of the respondents planned to retire within the next five to ten years. The challenges identified were similar to those identified in larger national Canadian and US studies. These challenges included: an aging population, lack of funding, low compensation and lack of personnel available to assume leadership roles. A concern for survey respondents is the rural nature of the community, which attracts retirees or semi-retirees but results in an increasing number of younger workers leaving the area. This situation creates challenges in the attraction and retention of board members and the filling of board vacancies.

RECOMMENDATIONS

Based on the literature review and the results of the study survey, the following recommendations are made:

1. The formation of a succession planning committee;

2. The immediate development of an emergency succession plan for the executive director’s position;

3. The development of a plan for an interim director while the organization searches for a new executive director;

4. Development of a departure-defined succession plan for the executive director and Board members;

5. Linking of succession planning with the organizational strategic plan;

6. The changing of board by-laws to reduce board composition from a 15-member board to a 12-member board;

7. The initiating of alliances or partnerships with other local nonprofit boards to develop ways to address issues of sustainability, viability and ways to attract and keep younger board members; and

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iv The purpose of the current project is to provide YWCA Muskoka with an evidence-based approach to develop and implement a succession plan strategy for the executive director’s and board members’ positions. The literature review revealed that succession planning has several benefits and lack of a plan can place the organization at risk. Both the literature review and the survey conducted by the researcher revealed several challenges and obstacles nonprofit organizations face in the development and implementation of a succession plan. Several recommendations and resources are provided to assist YWCA Muskoka to develop a succession plan. Without effective succession planning organizations can fail. The results of this project have provided YWCA Muskoka with an evidence-based approach to developing a succession strategy and a roadmap for continued organizational viability. By implementing these recommendations, YWCA Muskoka and other nonprofit organizations can avoid repeating past failures and look forward to a future with successful organizational leadership transitions.

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LIST OF FIGURES/TABLES

List of Figures

Figure 1: Conceptual framework... 26

Figure 2: Elements of organizational structure... 29

Figure 3: YWCA Muskoka organizational chart... 30

Figure 4: Elements of transformational leadership... 33

List of Tables

Table 1: Muskoka’s permanent population 1996-2011... 6

Table 2: Muskoka’s projected population 2016-2031... 6

Table 3: Benefits and risks of choosing an insider... 16

Table 4: Benefits and risks of choosing an outsider... 16

Table 5: YWCA Muskoka leadership elements... 33

Table 6: The competing values of leadership and organizational theory... 36

Table 7: Open system theory application to YWCA Muskoka ... 37

Table 8: Results of Organizational Culture Assessment Instrument now (current culture)... 44

Table 9: Results of Organizational Culture Assessment Instrument – preferred culture... 44

Table10: Frequency of gender distribution... 46

Table 11: Frequency of age distribution... 46

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1.0 INTRODUCTION

Historically, nonprofit organizations deliver services that are not provided by the

government, meet gaps in services, address key community, national or international issues, influence social change and contribute to social well-being and social capital (Deitrick & Creager, 2006, p. 2). These organizations also “create and sustain a civil compassionate and well-functioning society” (Tierney, 2006, p. 5). Today, a nonprofit organization is seen as an employer, a service provider and a steward of communities (Ontario Nonprofit Network, 2012, p. 1). In Ontario, approximately one million people, 15% of the workforce, are employed in the nonprofit sector (Government of Ontario, 2012, p. 5). The services provided by nonprofit organizations are essential and vital.

However, in the current climate of reduced government funding and decreased donations from the private sector, many nonprofit organizations are competing for scarce resources while struggling to maintain stability, sustainability and organizational effectiveness. At the same time, these organizations are seeing an increase in need and demand for services and have difficulty meeting those needs (Government of Ontario, 2012, p. 10). In addition, the individuals needing these services are also competing for the limited resources and services offered by government agencies and nonprofit organizations. These increased demands on resources have resulted in shortages in a number of other critical areas, not the least of which is human capacity building. There is a concern that lack of human capacity building could result in a leadership deficit for senior positions (Government of Ontario, 2012, p. 20). This leadership shortage could lead to nonprofits facing a leadership crisis by not having enough leaders to assume leadership roles such as executive directors (Carman, Leland & Wilson, 2010; Linscott, 2011; Tierney, 2006; Toupin & Plewes, 2007). One nonprofit organization at risk of a potential leadership crisis is YWCA Muskoka. YWCA Muskoka is a nonprofit organization operating under the umbrella of World YWCA and YWCA Canada. Today, YWCA Muskoka serves over 1,500 individuals in 25 locations, facilitating programs for women, girls, men and boys (Farlow, 2010). YWCA plays a vital role in delivering services such as leadership and entrepreneurial workshops to the community. However, YWCA Muskoka currently does not have a succession plan. Should the organization lose key staff such as the executive director or board members for a prolonged period, it could face a leadership void, potentially transforming from an active, vibrant organization to an ineffective, unsustainable one. Given these potential

consequences, the need for the organization to develop an effective succession planning for replacing the executive director and board members is clear.

The primary objective of this project is to provide YWCA Muskoka with an evidence-based approach to succession planning for the executive director and board members. An evidence-based approach allows for fact-based decision making, using the best evidence for nonprofit succession planning to guide actions, in contrast to an approach that is based on tradition, convention, belief or anecdotal evidence (Dello Stritto, n.d). For the purposes of this report the definition of evidence-based approach used is:

“the process of creating an answerable question based on the client or organizational need, locating the best available evidence to answer the question, evaluating the

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5 quality of the evidence as well as its applicability, applying the evidence, and

evaluating the effectiveness and efficiency of the solution” (Social Work Policy Institute, n.d.).

To achieve this objective, challenges, obstacles and barriers faced by the nonprofit organization in developing and implementing a succession plan are identified.

Recommendations and options are based on suggested best practices for developing and implementing a successful strategy.

The report is structured in the following manner. Section one provides an overview of the client and the project’s objectives. Section two focuses on the demographic and economic profile of Muskoka and a profile of YWCA Muskoka. Section three provides a literature review including definitions of succession planning, reasons for succession planning, three approaches to succession planning and processes for developing and implementing a succession plan. A discussion of the themes found in the literature review, including the urgency for succession planning, the lack of planning, potential leadership void or crisis, executive director and board succession planning is also provided in section three. Section four presents a conceptual framework for succession planning that accounts for

organizational structure, leadership style, organizational culture and organizational systems. Section five focuses on the methodology, outlying the research design, process, limitations of the data and analysis. Section six is an analysis of the findings. Finally, section seven concludes with recommendations.

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2.0 BACKGROUND

2.1 DEMOGRAPHIC PROFILE OF MUSKOKA

The District of Muskoka (located in the province of Ontario) is a rural* area, spanning a geographic area of 3,816 km2 and made up of three main towns and several smaller

communities of towns and villages. However, a unique feature of Muskoka is its population of permanent and seasonal residents. Permanent residents are those who live in the area all year, while seasonal residents (usually cottagers) reside in the area for part of the year (usually the summer months). Government funding decisions tend to be made on the basis of the permanent population, which puts Muskoka organizations at a disadvantage. The District of Muskoka’s permanent population is relatively small (as per Table 1). However, the District of Muskoka Demographic Profile (2011) reported while the permanent

population in 2006 was 59,980, the seasonal population was 75,626 for a total population of 135,606**. Therefore, for several months of the year nonprofit organizations in

Muskoka could potentially be serving a population more than double the size of that for which they receive funding.

As shown in Table 1, the permanent population has steadily increased. Table 2 shows the continuous increase in the projected population.

Year Permanent Population

1996 50,312

2001 53,106

2006 57,563

2011 58,047

Table 1: Muskoka’s permanent population 1996-2011

Year Projected Population

2016 67,739

2021 72,984

2026 77,755

2031 82,465

Table 2: Muskoka’s projected population 2016-2031

*For the purposes of this study, rural refers to the population outside urban centers with a population of 1,000 or more (The Daily, Statistics Canada, 2002).

**There are variances in numbers used in the different reports as some reports include the First Nations Reserves in Muskoka and some reports do not include the First Nations population.

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7 Because of the combined permanent and seasonal populations and a reputation as “cottage country,” Muskoka is often viewed as a large and affluent region. However, a review of other data shows a different picture. At a local leadership summit Gardner and Williams (2012) summarized recent trends in the region.

These trends include:

 An aging population;

 An increasing large number of lone-parent families who are earning less money;

 Among the parent families is an increasing number of female-headed lone-parent families who experience additionally high unemployment and earn even less money than their male counterparts;

 590 children living in low-income situations;

 Renters with housing affordability issues;

 People who are living alone often live in inadequate housing and experience social isolation; and

 High unemployment among young adults (Gardner & Williams, 2012, p. 23). Gardner and Williams also point to other demographic characteristics of the area. For example, the median age of community members is 47; the median income in 2005 was $22,985 (below the provincial rate of $29,335); three of every four lone-parent families are headed by females; there is a high rate of seasonal employment; and one in every five adults does not have an educational certificate, diploma or degree. Additionally, social assistance rates for the area have dramatically increased. In 2007 Muskoka’s monthly social assistance caseload averaged 537 and in 2012 the monthly average rose to 988. Rates in September 2012 were 94% higher than rates in September 2007 (Gardner & Williams, 2012, p. 16). The implications of these trends point to the important role human services organizations play in the community and the need to ensure their continuance through effective leadership succession planning.

2.2 ECONOMIC PROFILE OF MUSKOKA

The District of Muskoka has a mixture of manufacturing, construction, public sector, tourism and service sector employment. Tourism and the service industries make up much of the local economy and employment. These sectors provide employment to one-third of the local labour force (The District of Muskoka Economic Profile, 2011). However, employment in these sectors is mostly seasonal and dependent on external factors such as the economy and weather. This seasonal employment results in a high rate of

unemployment: 8.6% in 2011, higher than the provincial rate of 7.8% (Gardner & Williams, 2012, p. 14).

Overall, permanent residents have become increasingly reliant on the services provided by government agencies and nonprofit organizations. The projected growth in population and the present economic profile reveal that government agencies and nonprofit organizations will continue to play a vital role in the community. A prolonged void in leadership,

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8 ineffectual leadership or loss of any of these local human service organizations could

significantly and negatively impact the community. Therefore, ensuring the continuation of local nonprofit organizations is crucial.

2.3 PROFILE OF YWCA MUSKOKA

YWCA Muskoka began in 1994 with the objective to “create a safe, inclusive community advancing gender equity through leadership, partnership and advocacy” (Farlow, 2010, p. 4). As a small nonprofit organization it is part of a larger organization (one of 33 members- associates of YWCA Canada) operating independently with its own governance, executive director, a 15-member board of directors, approximately three full-time and three part-time staff and approximately nine casual staff. Today, the organization serves over 1,500

individuals. Services are delivered in 25 locations throughout the Muskoka area. YWCA Muskoka facilitates several programs for women, girls, men and boys such as Girls

Unplugged, Quest (program for boys), Women in Business and Men in Business.

YWCA Muskoka is a fairly new organization, with its second executive director. As a whole, the organization has little experience dealing with planned strategic leadership transition. In 2009, the agency experienced an unexpected leadership crisis with the untimely death of its first executive director. The organization did not have an emergency succession planning in place. To fill the leadership void, a senior staff member provided organizational leadership until a new executive director was appointed. The unplanned departure of its leader and a void in leadership became the impetus for the organization taking a proactive approach to future leadership transition. Further, to achieve its vision, mission and values it is important that YWCA Muskoka ensures continuous effective leadership and future leadership transition.

Despite being a small and fairly new organization, YWCA Muskoka has proven its resilience, adaptability, creativity and innovativeness. However, it is vulnerable to both internal and external circumstances. One external factor that contributes to its vulnerability is a lack of predictable, reliable funding. The agency relies heavily of government grants and donations from community partners (YWCA Muskoka Annual Report, 2012). Funding affects the viability and sustainability of any organization and could influence the recruiting and hiring of a future executive director. Other potential challenges for the YWCA

Muskoka include demographic changes, the rural nature of the community, a potential small pool of candidates to fill vacant board positions and possible difficulty filling the executive director’s position.

The changing demographics of the workplace will provide challenges for organizations. The workforce is aging and millions of baby boomers, defined as those born between 1946 and 1964 (Moskal, 2008, p. 12) are retiring, resulting in fewer workers, a skill shortage, and the loss of senior and middle managers (Carson, 2009; Ibarra, 2005; Molloy & Johnson, 2010; Wolfred, 2008). As many organizations face the challenges of replacing middle and senior managers, attempts will be made to evaluate and reassess availability of human capacity and leadership. Small nonprofit organizations such as YWCA Muskoka have additional pressures as they have a smaller workforce and fewer middle managers to groom for leadership roles (Adams, 2004, p. 6).

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9 YWCA Muskoka is not immune to a leadership crisis, such as losing and not being able to replace its executive director or board members. Similar to other small nonprofit

organizations, it can be affected by the present demographic challenges. Lack of planning and ineffective leadership place organizations at risk. Conversely, planned and effective leadership transition provides several benefits. Succession planning and successful leadership transition are not impossible for small nonprofit organizations if a proactive approach is taken to prevent a leadership void or crisis. Therefore, it is necessary for the sustainability of small nonprofit organization such as the YWCA Muskoka that effective successful succession planning occurs.

2.4 YWCA MUSKOKA BOARD OF DIRECTORS

YWCA Muskoka board of directors operates as a policy governance board with 15 members who are initially appointed to a two-year term with the option of renewing their term to serve for a maximum of six years. A member who has served six years and is appointed as the board’s president or vice president can serve an added three years. Under its constitution, males, to a maximum of two at a time, are permitted to serve on the board. However, they cannot be the board’s president. The board is mandated to have 25% of its directors under the age of 30 (YWCA Muskoka, web site).

Board members are recruited through advertisements placed in local newspapers, e-newsletters, the YWCA Muskoka web site and word of mouth. Potential members are interviewed by the Governance Committee. Members are selected based on skills, geographic representation and age representation (Ward, 2012, personal conversation). Currently, the board has 10 active members, with two leaving at the end of March 2013, and will be seeking seven new members (Ward, 2012, personal conversation). However, the board faces several challenges in recruiting and keeping board members. One such challenge is there can only be two males on the board at a given time, thus reducing a large pool of potential board members. In addition, 25% of the board of directors must be age 30 or under (YWCA Muskoka web site), a demographic that is becoming increasingly in short supply in Muskoka. Further, most members of this younger age group are focused on developing their career and are more likely to move, making them unable to either complete or extend their term in office.

Although the Board can operate with 10 members and still be in compliance, having fewer board members makes it difficult to achieve a quorum at board meetings and to carry out the board’s functions. Further, fewer members are available for committee work, placing an added burden and responsibility on those who are left. The recruitment and retention of board members will need to become a priority.

In summary, the previous leadership crisis at YWCA Muskoka, coupled with the emerging trend of residents’ increasing reliance on the services provided by human service

organizations, creates an imperative for leadership succession planning. In addition, the economic and demographic challenges of the area highlight how vital nonprofit

organizations such as YWCA Muskoka are to the community. Therefore, it is important nonprofits engage in succession planning as a means of responding to present and future

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10 organizational needs (Garman & Glawe, 2004, p. 124), ensuring organizational

sustainability (Chapman & Vogelsang, 2005, p. 3) and addressing organizational viability and growth (Chavez, 2011, p. 16).

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3.0 LITERATURE REVIEW

The purpose of the current project is to provide YWCA Muskoka with an evidence-based approach to succession planning. To inform the report and recommendations, a literature review on succession planning in the nonprofit sector was undertaken. A review of the current literature on succession planning serves several purposes. First, a literature review provides an understanding of what succession planning is and why it is important. Second, it provides key information for understanding the historical context of succession planning and provides information on previous research conducted on succession planning. Third, it may identify drivers of and potential pitfalls of succession planning. Finally, a literature review could provide information on best succession planning practices that may apply to this current setting. Together, these will inform the research instruments and

recommendations needed to develop the succession planning strategy for YWCA Muskoka. Sources for the literature review include studies, discussion papers, peer-reviewed articles and articles by academics, practitioners and consultants. The material for the literature review was obtained utilizing the University of Victoria on-line database including

ProQuest, Sage, Ebsco Host and Wiley to access articles and e-books. The key words used for the literature review search included nonprofit, succession planning, board succession planning, leadership, culture and systems theory.

3.1 DEFINITION OF SUCCESSION PLANNING

A review of the literature on succession planning reveals a wealth of information on what is involved in succession planning and how it should be done. However, only a few

definitions of succession planning were found. Garman and Glawe (2004) describe

succession planning as “a structured process involving the identification and preparation of a potential successor to assume a new role” (p. 120). Jarrell and Pewitt (2007) defined succession planning as “the plan an organization employs to fill its most critical leadership and professional positions” (p. 298). Another definition offered by Boyne, Ashworth and Powell (2001) is “the turnover in managerial and political elites” (p. 859). Finally, Charan, Drotter and Noel, as cited by Santora, Caro and Sarros (2007), describe succession

planning as “perpetuating the enterprise by filling the pipeline with high-performing people to assure that every leadership level has an abundance of these performers to draw from both now and in the future” (p. 26). Although definitions of succession planning vary, an emerging theme is that succession planning is planned, purposeful and involves a change in

leadership. For the purposes of this report, succession planning in the nonprofit context will

be defined as “the plan an organization employs to fill its most critical leadership and professional positions” (Jarrrell & Pewitt, 2007, p. 298).

Over the years the various views of succession planning have changed. Mehrabani and Mohamad (2011) provided a historical overview (1950-2009) of various theories and research conducted on succession planning. These views of succession planning included a focus on management development or chief executive director succession, linking

candidates’ potential to position needs and identifying and developing a pool of potential successors (Mehrabani & Mohamad, 2011, p. 372). Mehrabani and Mohamad’s historical review also shows that effective leadership has become more critical over time because organizations are confronted by changing missions, experience more revenue uncertainty

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12 and are generally operating in a turbulent environment (Ingraham, 2006, p. 380). A key finding of the HR Council for the Nonprofit Executive Sector, Executive Director survey was, “Leadership skills was the most important attribute that prospective executive directors needed to possess” (2012, p. 44). Regardless of how succession planning is viewed, effective leadership skills are necessary for those leading organizations. A lack of qualified candidates with these skills could create a leadership shortage, leading to a leadership deficit. A potential leadership crisis could be compounded without proper succession planning (Carman, Leland & Wilson, 2010; Toupin & Plewes, 2007; Tierney, 2006). This potential leadership deficit is creating urgency for nonprofit organizations to engage in succession planning (Froelich, McKeee & Rathage, 2011). However, Wolfred (2008) suggests that despite the urgency and need, organizations, and nonprofits in particular, rarely engage in succession planning (p. 3).

According to Ingraham (2006) succession planning is a problem for all sectors (p. 375). Supporting evidence is found among scholars and practitioners. For example, Murphy (2006) looked at succession planning at a large Canadian police force. He reported on a study which examined a succession planning process focusing on executive motivation and succession planning (p. 253). Murphy identified several themes from the study: a lack of confidence in the executive development programme; a desire for executive development to be more developmental in nature; a negative image of executives; and a lack of information on the executive development process (p. 253). Reeves (2010) noted “formal planning for successors in public bureaucracies generally is not considered” (p. 61). A similar

observation was echoed by Jarrell and Pewitt (2007), who suggested that for myriad reasons succession planning is rarely employed in the public sector (p. 297). Whitmell (2002) also observed that despite the aging of members of the library profession, succession planning had not yet become a priority and the library profession needed to locate, entice and groom people to move the sector forward into the future (p. 1). Santora and Sarros (2001) note in order for organizations to reduce some of the tension associated with leadership departure organizations must plan for executive succession (p. 107). Despite these findings there remains a reluctance to engage in succession planning.

3.2 WHY IS SUCCESSION PLANNING IMPORTANT?

According to Fibuch and Van May III (2012) the two primary drivers of succession planning are: 1) no person is indispensable and 2) change happens (p. 44). Whether it occurs because of a planned event or a crisis, change is inevitable. At some point, all leaders leave their organizations, either voluntarily or involuntarily. Therefore,

organizations must prepare to manage and facilitate change. Ill-defined or unprepared leadership transition, whether at the executive director level or board level, could lead to a rush to hire a new executive director or to fill board positions (Chapman & Vogeslang, 2005, p. 2), which could place the organization at risk. These risks include:

 loss of funding;

 loss of key staff/board members;

 a drop in morale;

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 loss of key relationships, interruption of services; and

 a damaged public image (Chapman & Vogeslang, 2005, p. 2).

These risks can be mitigated by a well-developed and defined leadership transition plan such as succession planning.

Regardless of how succession planning is viewed, the literature points to the importance and benefits of succession planning as a risk management strategy for nonprofit

organizations. These benefits include:

 Ensures the viability of an organization;

 Executive’s job becomes more “doable” because leadership is shared;

 Energizes and reassures a board; and

 The entire nonprofit sector becomes stronger and more efficient (Wolfred, 2008, p. 3).

Others have reported additional reasons why succession planning is crucial. For example, Chavez (2011) notes “an active and continual succession management plan is vital to organizational sustainability” (p. 15). Richtermeyer (2011) suggests succession planning “ensures continuity of leadership and provides a solid foundation for the board, employees and managers” (p. 19). Overall, succession planning ensures good risk management and improves organizational stability, viability and leadership continuity. As demonstrated, there are numerous benefits associated with engaging in succession planning and many risks when succession planning is not undertaken.

Succession planning is one way to manage change, and as previously mentioned the two primary drivers of succession planning are: no person is indispensable and change happens. The literature on succession planning suggests that several other factors could affect change and potentially lead to a leadership shortfall in the nonprofit sector. One such factor is the impact of changing demographics, particularly retirement among baby boomers. Murphy (2006) observed that with baby boomers retiring, organizations will “experience

unprecedented numbers of senior personnel retiring, and failure to be proactive and strategically address succession planning will result in crisis management” (p. 263). Tierney’s (2006) study of leadership needs for nonprofits reported, “Over the next decades organizations will need to attract and develop some 640,000 new senior managers, and... by 2016, almost 80,000 new senior managers will be needed annually” (p. 2). Similar findings were noted in a national US study by Bell, Moyers and Wolfred (2006). These researchers found three quarters of survey respondents, the same percentage as in their 2001 study, plan to leave their jobs within the next five years (p. 3) and only 29% of the executives had discussed succession planning with their boards (p. 5). A national Canadian study of 1,251 nonprofit leaders found that half of the executive directors surveyed planned to leave their current positions in the next four years (The HR Council for the Nonprofit Sector, 2012, p. 16). There is consensus among some scholars that because of the demographic changes a leadership shortfall or crisis is inevitable.

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14 However, other scholars do not agree that a leadership deficit will occur solely because of demographic changes. Rather, they say a leadership deficit will occur because of a lack of planning for executive transition. Froelich, Mckee and Rathge’s (2011) study on executive succession planning found “planning and preparation did not match the levels of interest and concern for executive succession” (p. 3). A similar finding was echoed in a study by Cornelius, Moyers and Bell (2011) that demonstrated executives and boards were still reluctant to talk proactively about succession planning, and only 17% had a documented succession plan (p. 3). The HR Council for the Nonprofit Sector (2012) found that despite nonprofit boards recognizing that their executive director might leave in the near future, most boards did not have a succession plan in place (p. 8). These observations have led to many scholars believing that a leadership crisis is imminent.

Because of a perceived impending leadership deficit or crisis, organizations will not a have a choice of whether they engage in succession planning. But, is there a pending leadership deficit or leadership crisis? What are the implications of a leadership deficit or crisis for the nonprofit sector?

A review of the literature reveals that there is a perception among some scholars that within a fairly short period of time many baby boomers will be leaving the workforce, creating a gap in leadership, especially at the executive director level. The concern is that this gap in leadership will result in a leadership crisis. However, not all scholars or practitioners believe that a leadership deficit or crisis is imminent. A recent study by Cornelius, Moyers and Bell (2011) found current world events had created a “drag effect” (p. 2) which could slow down the projected rates of executive turnover. For both personal and professional reasons executives are not in a hurry to leave organizations. On the personal level losses in retirement account values could delay the departure of executives (Froelich et al., 2011, p. 7). On a professional level executives are reluctant to leave as they are concerned that the latest economic recession, resulting in downsizing and smaller budgets, has affected the stability of organizations. One respondent in the Cornelius, Moyers and Bell (2011) study reported, “The economy has significantly stressed our organization” (p. 2). Additionally, some executives are hesitating to retire because of a “perceived lack of an appropriate successor” (Cornelius et al., 2011, p. 2), which confirms the concerns regarding the lack of planning. As a result, demographic changes, lack of planning and lack of preparing a successor could slow down the number of leaders leaving organizations, thereby averting an immediate leadership deficit or crisis.

If the proverbial leadership deficit clock is ticking (Toupin & Plewes, 2007, p. 129), then finding the right leader for an organization is critical. Organizations must be proactive in replacing their leaders. Further, if a nonprofit organization faces a leadership deficit, it will be harder to find the right person, especially on short notice. Succession planning is the ideal way to address a leadership deficit. As noted by Whitmell (2002), the goals of succession planning are to attract and retain people and to determine the leadership skills needed now and in the future (p. 3). However, the question remains: who should be

responsible for executive transition? For example, when replacing the executive director of an organization, should the board of directors have the leading role in the hiring of a new executive director, since they are the “sole body with authority for hiring and firing the

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15 chief executive” (Allison, 2002, p. 341)? Unfortunately, boards are often not equipped for such a task and therefore see it as an unwelcome burden (Allison, 2002, p. 347). Choosing an executive director is one of the most crucial decisions a board will make. Lack of a planned, purposeful leadership transition process could lead to a rash or inappropriate hire, placing the organization at risk.

Whether or not a leadership deficit or crisis is imminent, organizations will need to address leadership transitions and gaps. As previously mentioned, this reluctance to plan is seen in many sectors and is a concern for both scholars and practitioners. Executives continue to leave their positions either willingly (for retirement or for another position) or unwillingly (death or being fired). The negative effects of not having a succession plan are well

documented in both case studies and research. Despite these findings, organizations appear reluctant to engage in executive leadership transition and in succession planning.

3.3 CHOOSING A SUCCESSOR

One reason for this reluctance to plan might be found in two common issues raised in the literature: who should initiate the discussion on succession planning and how should the successor be chosen?

For a board, one of the most challenging aspects of recruiting a new executive director is deciding whether to hire an internal candidate (insider) or an external candidate (outsider). Santora and Sarros (2001) defined an internal candidate (insider) as an “individual who is currently employed by the organization and is promoted into the position of Chief

Executive Officer” (p. 107). An external candidate (outsider) is defined as “an individual who has not had any direct executive experience within the organization” (Santora & Sarros, 2001, p. 107). Santora (2004) identified several issues with choosing a successor. These include: should the incumbent be replaced with an insider or outsider? What are the implications for the selection process? Should the organization establish a ‘horse race’ where several candidates compete for the position? Or should a candidate be ‘anointed’ as the heir apparent? Under what conditions should an outsider be considered to lead the organization (p. 158)?

The decision of hiring an internal or external candidate can be a difficult one. There are both benefits and risks associated with each choice. Choosing an internal candidate

signifies maintenance of the status quo, whereas hiring an external candidate might signify change. Therefore, a risk when choosing an internal candidate is that this decision could lead to organizational stagnation. Similarly, an external candidate could initiate change for which the organization is not ready. Table 3 highlights some of the benefits and risks of choosing an insider.

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Benefits Risks

Maintain the status quo No change and organization remains stagnant Insider has more intimate knowledge Person might not be the best fit

Less costly, no recruitment cost Candidate might not have the skills and experience to lead future change or manage

future organizational needs

Table 3: Benefits and risk of choosing an insider. (Ingraham, 2006; Mamprim, 2002;

Santora, 2005; Santora, Caro & Sarros, 2007; Santora & Sarros, 2001). Table 4 highlights some of the benefits and risks of choosing an outsider.

Benefits Risks

Signifies change Costly as recruitment involves a search

Different leadership style Possible change to organizational values or culture

New direction Loss of critical organizational knowledge

Table 4: Beneifts and risk of choosing an outsider. (Ingraham, 2006; Mamprim, 2002;

Santora, 2005; Santora, Caro & Sarros, 2007; Santora & Sarros, 2001).

Researchers such as Santora and Sarros (2001) suggest that even with advanced training or education, internal candidates are rarely chosen to become Chief Executive Officers or executive directors of their own organizations (p. 109). Middle managers are unable to break the “glass ceiling” (Santora & Sarros, 2001, p. 109) chiefly because of political and social issues (p. 107). Despite this observation, there is still ongoing debate in the literature as to whether a successor should be chosen internally or externally. Some of the concerns surrounding the debate include: if the decision is made to hire an internal candidate, how will the person be chosen and who will choose the person? Should the current executive director choose the person and publicly name them? How will this affect other employees? What if the board of directors rejects this person? What is clear from the literature is that there is no one best approach for choosing a successor. Organizations will need to assess what their organizational needs are and what is best for their organization. For example, an important consideration is whether they want to maintain the status quo or create change. Organizations will continue to struggle with the decision of internal or external hires; however, they can be proactive by having a succession planning strategy in place that addresses some of these issues well before the need to replace the leader occurs.

In addition to engaging in succession planning, other suggestions found in the literature for addressing a potential leadership deficit include providing opportunities for mentoring;

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17 leadership development and training; job rotation; job cross training; creating occasions for board and staff members to interact; and encouraging baby boomers to stay in the

workforce longer (Reeves, 2010; Toupin & Plewes, 2007; Tierney, 2006). Evidence provided by Santora, Sarros and Esposito (2010) suggests these solutions might be problematic for small to mid-sized nonprofit organizations. Santora, Sarros and Esposito (2010) found that small to mid-sized nonprofit organizations do not:

 Have adequate finances to support leadership development activities;

 Have human resource departments to coordinate leadership development initiatives;

 Have formal strategic plans that includes leadership development initiatives;

 Often provide upward mobility for employees;

 Groom insiders for future leadership roles; or

 Provide leadership development through a competency-based approach (p. 18). Scarcity of money and time (Price, 2005; Tierney, 2006) and flat organizational structure with limited room for internal mobility (Linscott, 2011, p. 32) were also identified as potential issues for small to mid-sized nonprofit organizations. Nonprofit organizations will need to address these human capital issues.

A more recently suggested approach to addressing and building leadership capacity for the potential leadership deficit is the “integration of a new generation of younger people” (Government of Ontario, 2011, p. 20), attracting young people to work in the nonprofit sector (Kunreuther, 2005; Kimreuther & Corvington, 2007). However, those who have suggested this solution have noted that this approach is not without its own set of challenges, saying it will be difficult to attract young people to the nonprofit sector. Froelich, McKee and Rathge (2011) report that young workers are not attracted to the nonprofit sector because of 1) a lack of technology or tangible amenities; 2) task overload making it harder to achieve work-life balance; and 3) lower salaries and high student loans (p. 7). Kunreuther and Covington (2011) suggest other factors such as the traditional models of organizational structures and leadership, the long hours of work and low wages are keeping younger people from entering the nonprofit sector (p. 4). In addition, job insecurity and the absence of pensions and benefits also contributes to nonprofit organizations being less able to recruit and retain the talent they need (Government of Ontario, 2011, p. 20). The available literature clearly shows that the profile and

expectations of younger workers and future leaders of nonprofit organizations is different from the profile and expectations of current leaders. Filling the potential leadership gap is a complex and challenging issue. Multiple approaches and solutions will be needed to

address this issue. Change is coming, and it is time to rethink nonprofit leadership. Research suggests that changing demographics have the potential to contribute to a leadership deficit. Further, recent world events such as the economic recession have affected nonprofit organizations, leaving them more vulnerable to external influences. Cornelius, Moyers and Bell (2011) reported “the recession has amplified the chronic financial instability of many organizations, causing heightened anxiety and increased frustration with unstable funding” (p. 6). A Trillium Foundation survey cited by the

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18 Government of Ontario (2011) found that 75% of organizations surveyed reported “feeling the effects of the recession” (p. 6). Organizations are experiencing competing and

contradictory challenges. On one hand, resources are limited and on the other hand, demands for services offered by nonprofits have increased. These competing and

contradictory challenges make the need for effective leadership even more crucial, which in turn means that succession planning is critical.

3.4 THREE APPROACHES TO SUCCESSION PLANNING

Succession planning has been referred to as “a passing of the baton or torch” and a “relay or horserace” (Froelich, McKee & Rathge, 2011, p. 5; Santora, 2004, p. 185). A review of the literature reveals that succession planning takes many forms and approaches. The three best succession practices identified in the literature are emergency succession planning,

departure-defined succession planning and strategic leadership planning.

3.4.1 Emergency succession planning

Wolfred (2008) notes that emergency succession planning “ensures that key leadership and administrative functions, as well as agency services, can continue without disruption in the event of an unplanned, temporary absence of an administrator” (p. 4). Quick (2010) defines emergency succession planning as “a process that is in place in the event the executive suddenly departs – either permanently or for an extended period of time” (p. 5). Quick’s definition is more encompassing than Wolfred’s as Quick recognizes the departure could be either temporary or permanent.

3.4. 2 Departure-defined succession

Departure-defined succession planning is “a process that is in place for a future planned retirement or permanent departure of the executive” (Quick, 2010, p. 5). Wolfred (2008) stated that departure-defined succession occurs when a “long-term leader has announced his or her departure date two or more years in advance” (p. 4). Departure-defined

succession planning should be in place before the announced departure of the executive.

3.4.3 Strategic leadership development

Strategic leadership development is “a process that promotes ongoing leadership

development for talent within the organization” (Quick, 2010, p. 5). Compared to Quick’s definition, Wolfred (2008) offers a more comprehensive view of strategic leader

development. He suggests this approach “is an ongoing practice based on defining an agency’s strategic vision, identifying the leadership and managerial skills necessary to carry out that vision and maintaining talented individuals who have or who can develop those skills” (p. 4). Wolfred recognizes that not all organizations will be able to recruit internally. Historically, nonprofit organizations have a flatter organizational structure and, as a result, have fewer candidates to draw from (Linscott, 2011, p. 31; Santora & Sarros, 2001, p. 107).

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3.5 IMPLEMENTING A SUCCESSION PLAN IN THE NONPROFIT

SECTOR-EXECUTIVE DIRECTOR

Numerous studies confirm that most nonprofit organizations lack a succession plan for the executive director or the board of directors (Carman, Leland & Wilson, 2005; Chapman & Vogelsang, 2005; Hall, 2006; Price, 2005). As previously mentioned, poorly managed leadership transition can put an organization at risk. Quick (2010) notes that before an organization embarks on a succession plan, the first step is to measure the organization’s readiness for succession planning (p. 7). Quick (2010) proposes that organizations address the following nine questions:

1. Is your organization in a position to implement a succession plan that was previously adopted or approved?

2. If your executive is suddenly unable to serve or retires, have you identified candidates for the job?

 If the answer is yes, is that talent prepared? Do they have the required leadership style, financial knowledge, contacts and necessary experience to take charge of the organization and continue to provide clients and funders with uninterrupted

services?

 If the answer is no, what is your plan for hiring another executive who understands how to lead your organization and continue to provide uninterrupted service to your clients and funders?

 Does everyone within the organization know who will be the acting executive until the board can meet and appoint someone officially?

3. Would your organization be able to sustain a decline in income or fundraising activities without the executive? Is the executive the primary fundraiser? Do board and staff work with the executive to maintain relationships with funders?

4. Do funders trust that the organization can succeed without the current executive? 5. Does the board have the right mix of talent to effectively hire a new executive for your organization? How committed and supportive is the board to the success of the executive?

6. Will the organization lose institutional knowledge and contacts if your executive suddenly leaves?

7. Is the executive’s current level of responsibility realistic, or has the executive, in good faith, taken on too much responsibility at the expense of staff development? What skills need to be replicated in the new executive versus those that could be developed among staff or board members?

8. Does your current executive understand and possess skills and expertise necessary to lead your organization in today’s resource-constrained world?

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20 9. Are there other positions besides the executive that would leave the organization vulnerable should they depart? If so, what plans are in place to address their departure? (Quick, 2010, p. 7)

As noted in the literature review, developing and implementing a succession plan is not without its challenges. To reduce some of these challenges Quick (2008) suggests boards should also consider these questions:

1. Should the successor be chosen internally or externally? 2. What are we really looking for in a new executive?

3. How can we address concerns by the current leadership staff who may be nervous about a new executive joining the organization?

4. How long should we plan for the process to take? 5. What do we do in the interim?

6. Who will serve as the organization’s main contact? (p. 8)

It is essential that organizations engage in this dialogue well before the sudden or planned departure of an executive or board member(s). This planning reduces the possibility that the organization will react in a way that could potentially put the organization at extreme risk. In addition, planning ensures organizational stability for both staff and external

stakeholders. As previously mentioned, among best practices identified in the literature is the development of an emergency succession plan, developing a departure-defined succession plan and looking at strategic leadership development (Quick, 2010; Wolfred, 2008).

3.5.1 Developing an emergency succession plan

Developing emergency succession planning is crucial for small nonprofit organizations, which are more vulnerable to change and tend to have fewer layers of management. The following is one suggested strategy for developing an emergency succession plan. Wolfred (2008) recommended taking the following steps:

 Identify the critical leadership and management functions of the executive director;

 Agree on which functions should be covered by an acting director, the extent and limitations of his or her authority, and which functions a second manager should cover;

 Agree upon who has authority to appoint an acting director;

 Agree upon standing appointee(s) to the position of acting director (with first and second back-ups) and compensation for the acting director(s);

 Develop a cross-training plan for the identified back-ups that ensures they develop their abilities to carry on the executive director’s key functions (this might be difficult for very small organizations);

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 Agree upon how the board will support and supervise an acting director;

 Draft a communications plan to be implemented in the event of an emergency succession (who gets notified and how); and

 Outline procedures to be followed in the event that an emergency absence becomes a permanent unplanned absence (p. 8).

Additionally, an emergency succession planning committee should be formed to identify the core executive functions, provide comments on a draft plan, present the plan to the full board for review and adoption; and have procedures to manage the transition if the absence becomes permanent (Wolfred, 2008, p. 8).

3.5.2 Developing a departure-defined succession plan

Departure-defined succession planning is for the future permanent departure of the

executive, allowing for organizational sustainability and continued success (Quick, 2010, p. 11) and sets the groundwork for a successful search for new leadership (Wolfred, 2011, p. 9). Before developing a departure-defined succession plan, Quick (2010) suggests, the following questions should be addressed:

1. Is the organization ready for a change in leadership style, if required, to ensure sustainability, capacity effectiveness and achievement of the strategic plan? 2. How committed and supportive is the board to a new successor? Is the board open to new ideas from the successor and are they willing to explore new alternatives?

3. Has the departing executive fully addressed personal and professional barriers in a manner that allows them to embrace the departure and fully support the transition? 4. Has the successor been prepared to assume the executive role, or has the

successor been more of an administrative support for the outgoing executive? Has the successor developed credibility and trust with key stakeholders, including funders and staff?

Departure-defined succession planning allows the organization to review its vision, strategic direction, culture and leadership requirements. To ensure an effective leadership transition, Quick (2010) suggests the following steps:

1. Address the personal and professional barriers for the departing executive; 2. Update the job description to ensure executive responsibilities and hiring requirements promote organizational sustainability;

3. Form a succession planning committee with clear roles and accountability; 4. Define internal and external communication plans;

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22 6. Promote succession transition of new executive; and

7. Approve the departure-defined succession plan (Quick, 2010, p. 29-34).

3.5.3 Strategic Leadership Planning

Strategic leadership planning ensures ongoing leadership is available, creates a culture that promotes ongoing leadership development and creates a “capacity-building plan” (Quick, 2010, p. 12). Strategic leadership development can present challenges for small nonprofit organizations that might not have the human or financial resources to ensure continuous leadership development. At the same time, leadership development should not be ignored or discouraged. Strategic leadership development allows organizations to be proactive in planning for leadership transition. The following is a step-by-step process for strategic leadership development.

1. Create and approve a three-year strategic plan that includes objectives for leadership talent development;

2. The board conducts an annual executive performance evaluation, including rating performance against strategic objectives;

3. The board conducts an annual self-assessment to measure performance of major governance responsibilities;

4. The executive and senior management conduct annual evaluations of staff to ensure they are performing in their positions and have the necessary skills needed for success;

5. Develop the organization’s senior management into a high-performing team; 6. Staff, board members and the executive cultivate relationships with external stakeholders;

7. Create financial reserves to cover a minimum of six months’ worth of operating capital;

8. Develop awareness of financial management systems to meet industry standards; and

9. Develop operational manuals for administrative systems and ensure they are accessible and current (Quick, 2010, p.12-14).

These three approaches provide a framework for small nonprofit organizations to start the process of addressing succession planning. Organizations will need to adapt these plans to fit their individual organizational needs. In addition to executive succession planning, it is equally important to make provisions for board succession.

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3.6 BOARD SUCCESSION PLANNING

Executive succession planning is essential; however, equally important is board succession planning. Brown (2007) noted that nonprofit boards are a critical asset for nonprofit

organizations (p.301). Jansen, Kilpatrick and Cvsa (2006) concluded from their research that high performance boards had three distinct roles. First, the board shapes the mission and strategic direction; second, the board ensures leadership and resources; and finally, it monitors performance and ensures prompt corrective action when needed (p. 25). Also, good boards recruit influential members, build coalitions, mobilize memberships and build organization brand (Jansen et al., 2006, p. 28). Nonprofit boards face many challenges including understanding their roles and functions. Additionally, members sometimes lack an understanding of the purpose and goals of the organization and boards they serve on (Gardon, 2011, p. 5). Varhegyi and Jepsen (2009) argue that recruitment of board members can be problematic for organizations especially as “succession planning for directors of boards is not a widespread practice” (p. 249) and boards struggle with identifying and cultivating new members (Carman et al., 2010, p. 99).

Similar to ED succession planning, board succession planning “ensures continuity of leadership and provides a solid foundation for the board, employees and managers” (Richtermeyer, 2011, p. 19). Additionally, board succession planning ensures “nonprofits continue their important role in the community, and succession planning is a critical

element of board effectiveness” (Varhegyi & Jensen, 2009, p. 262). Brown (2007) suggests that in order for boards to be effective they must be informed and engaged (p. 301).

Further, the current environment of increased organizational complexity and sophistication drive the need for high-quality, competent board members (Brown, 2007, p. 301).

An important consideration when developing a board succession plan is board composition. Board composition and membership should be reflective of a mixture of experience, skills, demographics and stakeholder representation (Jansen et al., 2006, p. 30). However, the appointment of board members is challenging for nonprofit organizations as there can be a limited pool of candidates who have the skills, experience and knowledge required for the position (Brown, 2007; Varhegyi & Jepsen, 2009). Moreover, whether hiring an executive director or board members, nonprofit organizations tend to hire from within their small personal or professional circle (Linscott, 2011, p. 38).

To ensure the best candidates are appointed, practitioners and academics suggest several best practices when recruiting board members. Richtermeyer (2011) advises that a board should:

 Develop a set of core values for its culture and how it functions;

 Consider guidelines for board diversity/composition;

 Outline goals for the coming years and how they should be communicated;

 Decide whether term limits are appropriate and, if not what should they be; and

 Devise strong nominating committee practices (p. 19).

Brown (2007) also suggests determining the skills and competencies needed on the board and then developing procedures to facilitate the identification and selection of appropriate

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24 members (p. 303). Other best practices include looking at racial, ethnic and gender diversity (Jansen, 2006, et al., p. 30) and ensuring board members’ development through training, performance monitoring and evaluation of the whole board and individual members (Brown, 2007, p. 305). It is not necessary for most boards to engage in board emergency succession planning because a board is usually compromised of members who serve for a specified time. Unless the board resigns en masse, the probability that a significant number of members will have to be replaced at the same time is very small. However, boards should undertake departure-defined succession planning.

Similarly, boards should engage in strategic leadership development as a way of enhancing their effectiveness. Boards are being required to deal with more challenging issues and make more complex decisions; as a result, board members need to possess increased skills and competencies. Appendix A provides a matrix for board membership that can be used to assess gaps and board needs. Similar to the literature on executive director succession planning, the literature on board succession planning points to the many benefits of board succession planning. These benefits are: increased board effectiveness, stability and continuity, an affirmation of the importance of the organization in the community and the preservation of institutional memory (Chavez, 2011, p. 16; Cheloha, 2000, p. 7; Jarrell & Pewitt, 2007, p. 297).

It is difficult to predict if and when a leadership deficit or crisis will occur. However, there are mechanisms organizations can put in place to avert a possible leadership crisis. These include having a succession plan; changing the way nonprofit organizations conduct business; examining organizational structure and culture; offering non-financial incentives to attract and keep both younger and older staff; and looking for ways to relieve senior managers of the burden of running a nonprofit organization while giving younger workers the opportunity to develop leadership skills (Linscott, 2001; Petreschu & Clifford, 2010; Chmitz & Stroup, 2005). Organizations need to be forward-looking, cultivate the ability to adapt to change and to have the capability to back-fill critical roles when key players leave (Latif, 2010, p. 6).

The findings from this literature review have identified a number of challenges relating to succession planning in the nonprofit sector. The review has also highlighted gaps in areas where further research is needed. One area for future study is to document the effects the recent recession has had on nonprofit organizations. For example, are there fewer nonprofit organizations? Will fewer leaders be needed? Second, organizations may need to look at alternative models of operation such as common roof models or co-leadership models, and forming partnerships with each other and other government agencies (Government of Ontario, 2011). A third area for further research is how to attract, retain and provide greater leadership opportunities for younger workers in the nonprofit sector. As suggested by Kunreuther and Corvington (2007), it is time to rethink the leadership crisis.

The nonprofit sector in Ontario is a vital service provider, employer and economic

contributor (Ontario Nonprofit Network, 2012, p. 1). YWCA Muskoka is one of the many nonprofit organizations in Ontario that addresses the needs of local communities and provides vital services. The findings from this literature review have identified a number of

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25 challenges and opportunities relating to succession planning in the nonprofit sector, and as previously indicated, this organization is not immune to a leadership crisis. However, to what degree are these issues particularly relevant to YWCA Muskoka succession planning? To assess the relevance and potential impact of the various issues identified in the

literature, a research study was completed on local Muskoka human services nonprofit organizations.

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26 4.0 CONCEPTUAL FRAMEWORK

Although the YWCA Muskoka is not seeking to change its organizational structure,

leadership style, management structure or style, or organizational culture, these will impact the development and implementation of a succession plan. The theoretical framework guiding this research project is the Organizational Behavior model which is a study of what people think, feel, and do in and around organizations by focusing on individuals, teams and structural characteristics that influence behaviour in an organization (McShane, 2001, p. 4). Organizations exist for a reason and a purpose. How an organization carries out its purpose is determined and influenced by its structure, leadership style and culture.

Organizational behavior is examined using the open system theory to look at subsystems, the independence of these systems, the external environment and stakeholders. A

transformational leader perspective is used to investigate YMCA Muskoka’s organizational leadership Organizational structure is examined by looking at the formal and informal structures, the organizational hierarchy and organizational model. Finally, Cameron and Quinn’s competing values framework will be used to assess the organizational culture. 4.1 ORGANIZATIONAL THEORY

The current project seeks to provide YWCA Muskoka with an evidence-based approach to succession planning for its executive director and board members. Section two provided an understanding of demographics of the region and of YWCA Muskoka. Section three contained a literature review that provided a historical overview of some of the challenges and barriers to succession planning. The current section provides insight into the operations of organizations, their structure and their leadership (Anheier, 2005, p. 168). An

understanding of the various elements of an organization is necessary to develop a viable succession planning strategy. Figure 1 below provides a visual model of the various organizational elements of YWCA Muskoka that will be discussed.

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Figure 1: Conceptual framework

Theories, concepts or models typically provide a perspective for viewing, explaining, understanding, predicting, and influencing the world. Historically, organizational and management theories and concepts were borrowed from the for-profit sector and applied to the nonprofit sector (Anheier, 2000; Thach & Thompson, 2007). Some researchers and practitioners (Anheier, 2005; McFarlan, 1999; McShane, 2001) question whether business principles and practices from the private-sector are appropriate for the nonprofit sector. Their concern is that applying private-sector models to nonprofit organizations is

problematic. The challenge arises from the differences between the private and nonprofit sectors, most notably the fact that nonprofits are mission-driven rather than profit-driven (Anheier, 2005, p. 226), making them unique.

Nonprofits do not operate with the sole aim of a profitable bottom line but rather several competing bottom lines such as purpose, mission, objectives, environment, numerous stakeholder relationships and the structure of the organization (Anheier, 2005, p. 228.; Drucker, 1992, p. xv). Also, these organizations often vary in their tasks and roles (Anheier, 2005, p. 228). Further, different values play a significant role in nonprofit organizational behaviour (Anheier, 2005, p. 229). All these factors combine to make the

YWCA

MUSKOKA

ORGANIZATIONAL STRUCTURE ORGANIZATIONAL CULTURE ORGANIZATIONAL LEADERSHIP ORGANIZATIONAL SYSTEMS