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Leadership and Management

Leadership Selection during Strategic Restructuring

One of the key questions that surfaces during Strategic Restructuring is that of leadership. Particularly in mergers when two or more entities become a singular organization, a key concern of current leadership and many stakeholders is the selection of the chief executive for this new organization.

Our experience has been that this is a most sensitive issue that can impact the success of merger negotiations. The process is as important as the outcome. The negotiation committee must come to agreement on the process of selecting leadership.

The potential solutions to the selection of the new Executive Director of a newly merged organization include:

• Open Placement with public search (regional, or national)
• Current Executive Directors make a recommendation
• Selection Committee interviews current Executive Directors and makes choice
• Co-Executive Directors
• Interim Executive Director

These five scenarios, and the pros and cons of each, are described below:

Open Placement

Open placement is the process of crafting a search process that is open to anyone who wishes to apply. The new board creates a job description and recruits from multiple sources. The incumbent executive directors are invited to apply. They are considered along with other appropriate candidates, however they may be guaranteed to be finalists in the process. The finalists are then considered carefully, and the most qualified and appropriate candidate is hired. The existing executive directors might get other positions in the organization or be given severance after their positions are closed.

Pros: Hopefully, the broad search process enables the organization to get the best possible candidate for the position. This option considers the talents and abilities of existing and potential candidates and makes an informed and objective decision.

Cons: Outsiders always look better on paper and in interviews. You know the strengths and weaknesses of both incumbents. There is also the potential to lose existing staff and/or board members due to uncertainty, at a time when you need a strong, competent, and knowledgeable team.

Selection Committee interviews current EDs and makes choice

In lieu of open placement, a selection committee from the new board (and possibly including outside stakeholders as well) can interview both existing Executive Directors and make a decision to offer the position to one of them.

Pros: This is a short process that focuses on the strengths and skills of two existing candidates. It can be done quickly and assures continuity of leadership.

Cons: It can be challenging to the selection committee to put aside existing biases and perceptions. Some committee members may have made their decision before the interview. Also, if neither of the two EDs are really strong candidates, the choice can be for the lesser of two evils.

Current Executive Directors make a recommendation

A general rule of management is that the more input individuals have into a process or a decision, the more investment you will get from those individuals in the implementation of that decision. If the two existing EDs have the necessary capacity and openness, they can have a discussion about the challenges and opportunities that the merger presents to both of them. There could be new roles in the combined organization that might be more appropriate for existing staff. And one (or both) of the EDs may not be interested in becoming the leader of a larger post-merger organization.

While the final decision cannot be left to the EDs, however, they might make a recommendation to the new board about who should be the new ED and who might take a second-in-command role, such as Chief Operations Officer, Associate Director, or Program Director.

Pros: This requires a great amount of self-awareness and a small amount of self-interest to work. It puts the organization and the success of the merger first. This is preferable because it gives power to the EDs and hopefully retains talent in the most appropriate roles.

Cons: It can be difficult to make this work due to the obvious sensitivities involved. It also has to be clear that the recommendation is not a fait accompli. It is only a recommendation that is to be acted on by the board.

Co-Executive Directors

Some organizations may opt for a situation where leadership is shared evenly in a Co-Executive Director arrangement. The two existing EDs agree to lead the new organization together. The areas of responsibility are divided and shared according to the skills and abilities of both. They hopefully lead in a collaborative manner.

Pros: The organization loses no history or skills from the two incumbents. A difficult decision does not have to be made as to who will lead the new organization.

Cons: There are many, many cons to this option, and we strongly advise against it. Usually, the decision to go this route is made because the organization or board does not want to make a tough choice — but the selection of a new ED has a significant impact on the potential success of the merger, and the decision is too important to be side-stepped. Having co-executive directors is an impediment to integration, often creating confusion, power struggles, and divided loyalty. Accountability, responsibility, and authority have to be vested in one individual to unify the staff, as well as to communicate the vision of the new organization to the public and funders.

Interim Executive Director

In order to assist the transition during merger, and to make sure they are not making a premature decision in choosing a new leader, some organizations opt to hire an interim ED.

Pros: An interim ED may be a solution if neither of the two existing EDs want or are appropriate for the new position, and there is inadequate time to conduct a full open search. Moreover, the type of leadership needed in the new organization may not be fully known until some progress has been made on merger implementation and integration. Some executives specialize in temporary assignments, and are great as bridges during a period of organizational change, but may not be the appropriate long-term leader.

Cons: An interim leader is just that, and he/she does not have the authority and charter to lead the organization in the long term. Hence, the interim ED may not be seen as a significant leader by staff at a time when leadership is critical. Also, the process of finding and orienting competent leadership is time and energy intensive for the board and staff, and the selection and placement of an interim ED adds another step to that process.