Who's next? Getting ready for a transition at the top.

Three out of every four participants in The NonProfit Times 2007 Salary Survey indicated their organization does not have an executive succession plan, and fewer than 4 in 10 are in the process of creating a plan.

Although this year's figures have improved slightly from last year's 82 percent negative response to the question, the results are not surprising to Deborah Hechinger, president and CEO of BoardSource in Washington, D.C. Finding organizations without a succession plan is not uncommon, she said. Short of a crisis, succession planning can easily tumble to the bottom of the priority list for organizations.

"It's important for nonprofit boards to think about the fact that they govern their institutions through the chief executive. And so ensuring that there is a good chief executive in place, that the chief executive is supervised, appropriately compensated, are all keys to success," Hechinger said.

"Even when you know CEOs are successful, there's going to come a time for all organizations when there's going to be a change in the organization at the CEO level and so it's important for nonprofit boards to prepare for that by designing a succession plan of some kind," Hechinger said.

There are two types of succession plans: a short-term emergency plan to deal with unexpected situations, and a longer term succession policy, which states the process a board will follow in the event of a formal, planned change in leadership.

"It's always critical for nonprofit boards to be thinking about the leadership component of their organization because that's the way things get done," Hechinger said, but it's going to be particularly important during the next five to 10 years because demographics indicate a change in leadership in the sector. "The Baby Boom generation is aging, and as they age some of them will be thinking about retirement. As more of them retire, there'll be more leadership opportunities in the nonprofit sector," she said.

The nonprofit sector itself also is growing rapidly, having increased by almost a third during the past 10 years, Hechinger said. With aging demographics and the projected shift in resources from individuals of the World War II generation giving money to charities as they pass on, "there will be even more opportunity for greater numbers of charitable organizations."

Some boards might shy away from succession planning for fear that the chief executive might now think about leaving when that hadn't already been considered. Also, if not handled appropriately, a discussion about succession planning can head into the wrong direction.

"There's a fine line between discussing succession planning as part of your strategic planning for the organization on the one hand, and a confusing set of messages to the chief executive on the other about whether or not his or her performance is appropriate, and they are not the same thing," Hechinger said. "It's very important for boards to understand the difference between having a conversation about succession planning and a conversation about performance evaluation of the chief executive."

Hechinger suggested that a conversation between the board chair and chief executive can set the stage for a larger conversation with the board regarding succession planning that's positive and has to do with planning the organization's future. Such communication can ensure that people understand the difference between succession planning and performance evaluation.

"Succession planning is setting the stage for how it is you're going to handle the situation when and if occurs," Hechinger said. "Implementing that plan is when you move to thinking about who could fit in that position or who to retain." Net