Navigating a Founder Transition

[In this article, the term founder encompasses those individuals who have had significant and long-term impact on an organization, as well as those who were responsible for creating the organization.]

Organizational development experts suggest that there is a strong relationship between the life cycle of an organization and its style of leadership, and my experience with first generation organizations supports this theory. During the first stage of an organization’s growth and development, generally called the “founder stage,” organizations are deeply dependent upon the entrepreneurial traits and drive of their founder. It is often hard to distinguish a founder from the organization he or she created, particularly when organizations bear their founder’s name.

A successful transition from the founder stage to the next stage of organization’s evolution—sometimes referred to as the “organizing stage” because it is characterized by organized and strategic growth—can be difficult for a founder to navigate. This transition requires that a founder develop a new leadership style—one that is consensus-driven and less controlling. In this stage, a founder needs to be able to work as part of an effective board/staff leadership team that shares the vision, skills, resources, and commitment to achieve the organization’s mission. It is not surprising that some founders do not recognize or are not willing to accept that they can no longer rely solely on the individual abilities and personal energy that it took to build their organization.

My experience suggests that there are three types of founders in transition: founders who are ready to retire or move on; founders who recognize the need to change and move with their organization to its next stage; and founders who cling to the same passionate entrepreneurial leadership they used to build the organization. And, it is not unusual for founders to exhibit characteristics of each of the three types throughout the founder transition process. Most of my encounters with founders in transition have been around building the organizational capacity needed for the transition. These organizational challenges combined with changes needed in the management style of the founder/leader often result in rough seas for the organization facing a founder transition journey.

Avoiding the Founder Transition Tempest

Before setting sail in the founder transition sea, organizations need to prepare for the journey, focusing on board development, planning, and staff development.

Board Development

Marshall Rutter, former board member of Los Angeles Master Chorale, stresses that “an organization facing a founder transition must have a strong, independent board in place to take a leadership role.” Often, founder boards are very dependent upon the founder and not equipped to plan and manage a successful transition. They have few active board committees and sometimes function as volunteer staff, rather than as a governing body. To get your organization ready for a transition, develop a strong board with members who are clear about their roles and responsibilities, understand the organization they are being asked to govern, and are equipped for the challenges ahead.

Planning

The same single mindedness and determination that inspired a founder to create an organization can become a liability when the organization needs strategic thinking and planned growth, rather than reactive and crisis-driven decision-making. Founders who make a successful transition recognize that they must put their energies into building an organization that can be sustained and that is not dependent upon them. One of the ways organizations can avoid a founder transition tempest is by establishing a strategic planning process. In fact, as Marshall Rutter notes, “the key to a successful transition is planning.”

Early in the planning process, founders and founder boards must address hard questions about life after the founder: Will the founder’s vision and passion be sustainable as an organization that lives on beyond the founder’s tenure, or last only as long as the founder remains involved? What is the organization’s value in the community? What would the community lack if the organization were not part of it? Understandably, founders have a hard time asking and answering questions about a limited life for the organization they created, but these questions must be seriously addressed during the process of planning for the future.

During the planning process, an organization focuses on its vision, mission, values, and long-term goals and creates a picture of what success will look like. This picture makes it easier for the board, staff, and the founder to understand and articulate what kind of leadership it needs for the future. Planning can empower a founder to look beyond what the organization is and what has worked in the past to what is possible in the future. Some founders see a new and exciting role for themselves in the future, while others find confidence that the organization has a future without them, freeing them to move on.

Staff Development

Often founder driven organizations lack an adequate and appropriate staff structure to sustain the organization during a transition. This reinforces a founder tendency to keep a tight control over the organization and not delegate responsibility. Founders seek staff who shares their passion and commitment to their dream. This often results in overworked and underpaid staff, including the founder. To prepare an organization for a successful founder transition, board members must ensure that the organization has the infrastructure it needs to operate effectively and independently of the founder.

This step usually involves a commitment by the board to raising funds to expand the operating budget to pay for the increases in staff positions, salaries, and fringe benefits necessary to build the staff structure needed to support and sustain the organization. This is an investment in the organization’s capacity both to achieve its goals and to develop the resources that will be needed to support the increased costs.

Tips for Managing the Founder Transition Journey

Once your organization is ready to embark on a founder transition, there are steps that can ensure your journey is a smooth one.

When the founder plans to move on…

Establish a board leadership transition team to be responsible for overseeing the process.

This team is responsible for developing an action plan to guide the transition process, from announcement of the departure of the founder through the start date of the new leader. This plan should include a timeline and comprehensive budget for the process. The transition team should include board members and community stakeholders with knowledge and expertise in the field, as well as human resource, executive search, or change management experience. Clarify the roles and responsibilities of transition team members and the responsibility for decision-making up front.

Phoenix Boys Choir's former executive director Mary Ann Pulk, a member of the search team that successfully recruited Georg Stangelberger from the Vienna Boys Choir to replace retiring founder Harvey Smith, stresses the importance of recruiting a strong search committee that shares the organization’s vision for a new leader. She also learned from her experience that “organizations must allow enough time for the recruitment process and create a realistic budget with adequate funds for expenses, from recruitment through relocation.”

Clearly define a role for the departing leader in the transition plan.

Once a founder has made the decision to move on, usually s/he begins the process of separation from the organization. It is important to define in advance the departing leader’s role and responsibilities in the transition and clarify expectations in writing so that there are no misunderstandings. This should include the founder’s role, if any, in the recruitment of a successor.

Although involving the departing artistic director on the search team worked well for PBC, Pulk suggests that “each organization must determine for itself the appropriate role for the departing founder in the search process. If the departing founder is part of the search team, he should not drive the process,” she notes. Organizations that rely on their founders to hand pick successors sometimes find they have a new leader that mirrors the strengths of the past rather than supports the needs of the future.

Organizations should also agree up front on the role of the founder after the new leader arrives. Clarifying expectations about the extent of the founder’s future role in all aspects of the organization and communicating them to internal and external stakeholders will help ensure a smooth transition for all involved.

Create a job description that clearly defines the skills and expertise required of the new leader.

As part of the strategic planning process, the staff and board will focus on the organization’s vision, specific long-term goals, and strategies to achieve them. The planning process helps to identify the type of leadership needed for the future and determines goals and expectations to be met by the new leader. A job description should clarify the skills, expertise, qualities, talents, experience, and education required and be used for recruitment, as well as to establish the basis for future evaluation.

Anecdotal information suggests that often the individual following a founder does not stay long in the position. Whether or not this is true, organizations that take the time to define clearly what is needed in a future leader and recruit to meet these requirements will have the best chance of success.

Prepare a profile to describe your organization to applicants.

This profile should offer applicants a succinct overview of the organization’s vision and mission, its history, an introduction to its staff, current programs, significant accomplishments, and honors. It should include an indication of the organization’s budget size, but does not need to include detailed financial information. (Financial statements and more extensive organizational information should be made available only to finalists.) This profile is an important recruitment tool and has many uses. The Phoenix Boys Choir posted their profile along with the position description on their website, which is how their new director learned of it.

Determine key indicators of a successful transition and closely monitor them.

During the process of developing the job description for a new leader, organizations should determine what a successful leadership transition looks like for their organization and establish specific outcomes that will indicate success. After these indicators of success are determined and communicated to the new leader, establish a performance evaluation schedule that includes one early in his or her tenure. Many organizations evaluate new staff after 90 days of employment; an early evaluation provides an opportunity to clarify any issues that have developed since the hiring process, make necessary adjustments, and build a foundation for continuing an open communication. It also provides a chance to clarify previously determined expectations that will be measured more formally in an annual performance review.

Develop a communication plan for the leadership transition process.

The goal of this communication plan is to keep all stakeholders fully informed about the transition process every step of the way, from the announcement of the departure of the founder to the hiring of the successor. Mary Ann Pulk adds that this important process of engaging and informing people must be inclusive, and she stresses the importance of keeping the staff informed and up to date throughout the process.

Keeping lines of communication open between the various internal and external stakeholders is a large job during a leadership transition, so someone must be in charge of implementing the plan. Having a clear communications plan enables an organization to avoid embarrassing situations, like the press making an announcement about your new leader before you have communicated the news to your major funders.

The perspective of the person who succeeds a founder…

The successor to a founder also has an important perspective to offer. Donald McCullough, who succeeded the founder of a major Washington, D.C., symphonic chorus, offers these suggestions:

• Be aware of how the organization is perceived in the community.
• Be clear about the artistic vision. Are you excited by the vision? Is the organization willing to revisit its vision?
• Know the reputation of the person you are succeeding, in order to have a better understanding of what might be expected. Is the person you are succeeding caring and nurturing, demanding and feared, or both?
• Learn about what roles the predecessor played and decide if you are willing to assume them.
• Learn about what kind of board is in place and what kind of commitment it has to the organization once the founder leaves. Will the board stay after the transition?
• Discuss what the role of the founder will be after he or she has departed.
• Agree on what the artistic director’s responsibility will be to any other artistic staff.
• Formalize your agreements in writing, including such things as whether a name change is necessary after the founder leaves.

Georg Stangelberger suggests that the manner in which an organization approaches the search process provides an important first impression of the organization. He says that a well-organized search process is indicative of the level of professionalism of the organization and was an important factor in his decision to join the Phoenix Boys Choir. “It is also important for the successor to show appreciation for what the founder has accomplished.” He also admired the way his predecessor handled the transition. “Harvey was so gracious to pull back from the organization totally in order to give me the chance to establish my leadership. I have known conductors who were happy that things did not work well without them, and I am so happy that this was not the case here.”

When the founder stays with the organization…

When a founder stays with the organization, ensuring a smooth transition can be just as great a challenge as the process of finding a successor. Getting the organization ready for the transition by developing a strong board, planning for the future, and putting an appropriate staff in place provides the founder with the infrastructure to support the transition. But most founders need additional tools to help them through this important transition process.

Founders in transition need a mentor or trusted advisor outside the organization to provide counsel and support. This is a stressful time for a founder and it helps to have a neutral person to lean on throughout the process. Also, both founder boards and the founder benefit from having a board member who has experienced a leadership transition in business. It is particularly useful to have a board member who has successfully made a transition with a family-owned business.

Founders in transition need to establish a different relationship with their newly strengthened boards. This process begins with increasing communication between the founder and the board, with the founder sharing more information, increasing the board’s awareness of challenges facing the organization, and seeking input and policies for addressing the challenges. Board meetings need to become more structured and focused on issues, and board members must become more active. The founder must depend on the board to effectively govern the organization, and the board must hold the founder accountable for achieving goals and fulfilling expectations for the transition. It is also important to monitor progress through formal performance evaluations.

The founder needs to learn to delegate authority and decision-making to appropriate staff. This is a time for creating written job descriptions, organization charts, and evaluation procedures. Relinquishing control of the organization is one of the greatest challenges for a founder. Therefore, skilled staff leadership that shares the founder’s vision and commitment must be in place so that the founder will feel confident in delegating.

Even the most well-intentioned founders slip back into their old founder habits from time to time. When they stray off course, they need understanding and a supportive network of board partners and capable staff to carefully but firmly help them back on course. Founders who are able to navigate the founder stage are successful in both recognizing the need for and managing change.

With careful preparation and attention to the transition process, your organization can ensure safe passage for all.