Succession Works Better When Founder Has Continuing Role, Study Finds

Succession Works Better When Founder Has Continuing Role, Study Finds

Making a "clean break" from a long-serving founder isn't necessarily the best way to ensure a successful transition to new leadership, a study by the Bridgespan Group finds.

Published in the Stanford Social Innovation Review, the report, Making Founder Successions Work, found that contrary to conventional wisdom, transitions that extend the role of a founder tend to yield the best results. Based on a survey of five hundred and thirty-eight nonprofit leaders and board members at more than two hundred organizations and interviews with forty-nine individuals at thirty-one organizations, the study found that more nonprofit boards worked out a continuing role for founders (45 percent) than pursued an amicable clean break (31 percent) or an involuntary break (24 percent). At the 45 percent of nonprofits where the founders stayed on, roughly half (23 percent) continued to play a "significant" role as either a board member (13 percent) or in a full- (7 percent) or part-time (3 percent) position, while most of the rest (22 percent) continued to serve in a "light" role such as a paid advisory or consulting position (12 percent), an unpaid advisory role (8 percent), or an interim position (2 percent).

At nonprofits where the founder stayed on, most respondents reported that the founders made positive contributions — for example, in fundraising (87 percent), as a spokesperson or ambassador (80 percent), with respect to policy and advocacy (79 percent), or mentoring the incoming executive director (71 percent) — while 75 percent thought the benefits of a continuing role for the founder justified the complexity of the succession. In contrast, nearly half the organizations where the founder did not stay on reported that the transition would have gone better had the founder continued to play a role.

According to the study, transitions that paired a founder in a continuing role with a successor who came from within the organization proved to be the most successful among the models examined. Organizations where the founder stayed on to help an internal successor were more likely to self-report successful transitions (73 percent, compared with 65 percent among all other transition models), retain the new leader for at least three years (88 percent vs. 69 percent), and see revenue growth above control group levels (47 percent vs. 39 percent). The study also found that nonprofits with long-term leaders who were not founders were more likely to have a successful transition when that executive stayed on.

The report's recommendations for managing an ongoing role for a founder include limiting the new role to specific areas of interest and capability; engaging a coach to help navigate operational and emotional aspects of the transition; anticipating conflict and agreeing to a process to mitigate it; transitioning board, staff, and funder loyalty to new leadership in logical order; and creating initial separation to allow the successor to settle in.

"Bridgespan's research indicates that an extended founder role, when done right, can be the best path to maintain funder, board, and staff loyalty while allowing the new leader to benefit from the founder's capabilities and knowledge," said Jari Tuomala, a Bridgespan partner and co-author of the study. "Everyone wins, including the organizations and most importantly, their beneficiaries."