By Mark Oppenheim
We’re holding a free live Nonprofit Board Clinic on January 15th (click here to register), and there are opportunities for individual Strategy Alignment counseling (click here for details).
Nonprofit CEO searches are infrequent, and most board members experience such a seminal event just once during their service to a particular nonprofit. This article provides a useful orientation for when that moment arrives.
Important steps in a CEO search include: forming a Search Committee, selecting your search approach, and managing the search process. Here’s a rundown of how to proceed.
Forming a Search Committee
A CEO Search Committee is a governance entity, not a staff entity. Its role is to run the search, and after selection to support the new CEO’s transition to being fully accepted by the org’s board, staff, funders, partners and those served by the nonprofit.
While staff have a critical role during the search process (a subject for another article), staff generally do not serve directly on a Search Committee for three reasons:
- Conflict of interest – selecting your own boss is a form of self-dealing, which can conflict with IRS regulations and State & Federal laws governing nonprofits;
- Some very desirable candidates won’t participate in a search where staff serve on a Search Committee, and that can result in suboptimal candidate pools; and
- Candidate and board confidentiality concerns – the Committee must be free to discuss staff performance and organizational change in a protected environment because the CEO will be empowered to lead and adjust the organization in service to mission.
Exceptions to this general rule include when shared governance agreements exist. Universities will often assure faculty and student representation on Search Committees. There can also be board agreements with unions to have them represented in CEO Search Committees, and some public/private partnerships can have particular requirements.
Committees ideally should have 4-7 members because larger committees become unwieldy. The profile of Search Committee Members should map to important board and community constituencies, and as a group the Committee should have the professional skills needed to evaluate candidate competencies (finance, fundraising, program, etc). Search Committee Members must be trusted by other board members so that their recommendations are accepted when the full board takes up a final vote on their recommendation for CEO.
Selecting your Search Approach
The boards of small nonprofits with budgets below $1.5m should generally run their CEO search themselves, perhaps with an outsourced helper, simply because professional fees for recruiters are unaffordable at that operating scale and doing it yourself is very instructive. The exception to this rule is when a small nonprofit organization must rapidly grow to achieve a certain scale, which generally means there is some sort of capacity-building grant or other funding source that will support a professionally executed search. Doing a search right yourself involves lots of hard work, but it can be very rewarding. As annual operating budgets approach and exceed $2m, nonprofit boards require professional help in the form of a recruiter or a retained search firm.
If want an outsourced recruiter to provide certain support without undertaking a full-on search, select someone with experience that you trust and pay them on an hourly basis. Avoid contingency search arrangements, because contingency approaches have perverse incentives that negatively affect the quality of the candidate pool.
The outsourced recruiter approach has some limits. It may yield lots of resumes, most of which you or the recruiter will eliminate. Candidate quality will likely be uneven. Outsourced recruiters generally gather limited intel to verify claims on resumes, in part because most won’t have the sector knowledge required to do that. The burden, therefore, is on the board’s Search Committee to detect candidate strengths and weaknesses. Still, a good outsourced recruiter can be a huge step up for a board struggling to conduct a search.
If you decide to go the retained search route, be careful about selecting a firm.
Various recruiting firms that serve nonprofits seem to provide similar services, because the visible elements of recruiting have certain standard milestones: meetings, resumes, interviews and references. Below the surface however, there are huge differences in the reach, rigor and analysis of different search workflows. Search firms should target candidates based on evidence from observers in the field, but this is becoming rare because it’s expensive to do that… and working in this way is certainly not profit-maximizing for a search firm.
There is currently a kind of AI-to-AI dance going on in recruiting, where AIs shape resumes that are scanned and selected by applicant tracking systems powered by other AIs. Fact checking steps are minimized. Then leaders are selected from these pools based on their charisma and their ability to perform, charm and present in interviews. 18 months later the cycle starts over.
You can counter this by ensuring that your search firm has the expertise, skeptical mindset and commitment-to-cause needed to evaluate a candidate’s technical abilities and accomplishments in your terms. Avoid firms that optimize for their own profit and growth.
Managing the Search Process
A detailed breakdown of the search process is a topic for another article – below we will cover some essentials, with the process beginning after the Search Committee is formed (described above).
One note – if you decide to hire an expert and also attempt parts of the following yourself, you will end up increasing costs and time invested and confused frustration can result. If you hire an expert, use their expertise.
Essential steps in the process include:
Determine what CEO success looks like for the next 3-5 years. Start engaging members of the board, staff and your nonprofit’s constituents to identify the new CEO’s objectives and the organization’s deliverables for the next 3-5 years. Be as specific as possible about metrics, but don’t be inflexible on how success is delivered, because you are really deciding priorities, not the methods by which a new CEO will deliver desired results. By clarifying your objectives for the next years, a CEO search acquires direction and focus. People in most organizations will have a range of different and sometimes competing views. All perspectives need to be taken into account for the search to ultimately be successful.
Create materials for the search. Based on the above and guided by your organization’s specific operating context, create a position description, scripts with information used when talking with candidates, source lists of people to be targeted and then approached, and an evaluation rubric that is also later used in candidate interviews. Each of these elements has particular standards that are followed, and each is used in particular ways to advance the search. Whether a search is executed directly by a board or through a firm, these elements are really important components of a successful search.
Hit the market. Once a position description is agreed and approved, hit the market in various ways. You don’t have to wait for all other materials to be perfect, as certain materials evolve during the search. “Hitting the market,” also called “sourcing,” is advanced by posts, emails, working recruiting platforms and (most importantly) through direct person-to-person outreach using various channels. NEVER trust just one method, one platform, one way of communicating. Each has advantages, so complete outreach is a matter of using all outreach mechanisms at volume. Least effective is posting and waiting; second least effective is active use of recruiting platforms which provide an incomplete and highly manipulated view of a nonprofit’s leadership options. The most effective approach is gathering person-to-person intel through networks that connect to different candidate profiles. Using a mix of these approaches, with emphasis on person-to-person intel, will yield the best results. Everything must be tracked in detail to ensure that threads are followed and that the effort is exhaustive. In terms of cost, person-to-person outreach takes the most time and will absorb about two thirds of the expense of the search if done right. Your best candidates are likely focused elsewhere, busy working, unprepared for a search, won’t see posts or will be unresponsive to them, and might even be uninterested when first approached. Engaging these folks requires time and work, and the market is unlikely to just fall at your feet and immediately yield what you seek. Invest time and be persistent if you want the best. Engaging third-best candidates is much easier, not better!
Evaluate candidates. Most searches stop after attracting the most conveniently engaged, ready-to-work, presentable candidates, but you shouldn’t. Get a full picture of talent that is out there so that you find the right person to lead. Definitely do not just focus on people who present well enough to play a CEO on TV. A great CEO has real skills, real accomplishments, real knowledge and a real track record. Be thorough as you seek desired attributes in candidates. View resumes skeptically – their content is increasingly shaped by AI and does not necessarily accurately reflect the candidate before you. Get details on each candidate’s accomplishments and the context in which those accomplishments were delivered. Collect evidence; try to verify claims; cross-examine candidates to ensure that they have the knowledge of workflows and other matters that is implied on resumes; look at career transitions and find out why those transitions happened; collect personal stories; learn about the person’s values. There are a thousand details to this process, and this is where you’ll succeed or fail in your search.
Have the Search Committee interview selected candidates and identify finalists. This step is separate from the candidate evaluation discussed above, which should have been done BEFORE the full Search Committee gets involved. Search Committee interviews are of central importance to a search, but this step in the process should be understood as being more about a candidate’s performance before a particular audience than about the under-the-covers substance that is so important to a great CEO. Substance should be evaluated beforehand, with data made available to the Search Committee. An interview by a full Search Committee will mostly test each candidate’s communication skills, interpersonal style, their ability to engage and even entertain an audience, grace under pressure, ability to answer questions in ways that satisfy the questioner, and a range of other important skills. Interpersonal Search Committee dynamics also play a role, as the interactions and relations among Committee members will affect the evaluation.
Involve other members of the board, staff and perhaps others in the finalist process, and convey their views to the Search Committee. This part of the process is completely tailored to each organization, and is a topic for another article. Suffice it to say that your organization’s different actors will have insight that is different than that contributed by Search Committee members. Interactions with finalists need to be appropriate and must be carefully orchestrated. Feedback should be collected and provided to the Search Committee. Such feedback is added to what Search Committee members have learned through the process, and is enormously helpful to Search Committee deliberations.
Decide on the leading candidate, then check references and shape an offer letter. There is an art to checking references – we try to take six from different perspectives. Document and save references for possible use later. There is also an art to shaping an offer letter that protects the parties, frames the initial part of the new CEO’s tenure, assures CEO accountability, and preserves flexibility while mitigating risk. We advise avoiding offers that have the appearance of a contract, as this format undermines work-at-will arrangements. We also advise that offers include certain specific protections for both organizations and candidates. The last step in this process segment is full board approval of the offer and formally tendering the offer to the candidate.
Announce the next CEO, then assure a successful transition. At this point, the involvement of a search consultant becomes a background affair, but they can still be invaluable as an on-call resource. Most important is the transition. The CEO must be supported as they take up management of the organization. During that process, the new CEO will become more intimately acquainted with their nonprofit’s people, operations, finances, earned and contributed revenue, constituents, partners and such. The initial phase of a CEO’s tenure is an extended affair likely to take about 18 months. Appropriate and sensitive support by the board can make a big difference to a new CEO’s success.
A last thought…
The CEO’s role at a nonprofit is to shape a financially strong organization with people who are motivated and energized in ways that advance the nonprofit’s mission. Leadership makes a difference, and the process for finding and engaging the very best candidates is where it all starts.
You’ll never regret doing it right.
Other useful guides for boards conducting leadership searches, include:
- Search Committee Chair’s Role in Managing the CEO/ED Search Endgame
- Analyzing Resumes when Hiring Nonprofit Executives
- Succession Planning & Management for Nonprofits – Part 1 and Part 2
- How AI Affects Recruiting – Part 1, Part 2 and Part 3 on AI-Produced Candidate Resumes, Cover Letters, and Posts