One of the major sticking points that prevents two charities from merging is “the CEO question” – the tension that arises between two sitting chief executives over who should lead the new merged organisation. Richard Litchfield and Vicky Browning explain why this does not need to be a barrier.

For people who work all hours to run charities, the job is both their passion and their livelihood. But leadership tussles fuelled by personal ambition and egos are the death knell of more and better mergers. They prevent organisations embracing the spirit of the new Charity Governance Code, which reminds us all that charities’ focus should be to serve their founding purposes and beneficiaries as effectively as possible, even if this means that a leader might have to fall on their sword in the interests of establishing a stronger organisation.

It’s hard to gauge how often leadership disputes have thwarted organisations from undertaking mergers. However, we know that when charity mergers do occur it is frequently when one chief executive is seeking to retire or move on. For example, last year Eastside Primetimers helped innovative ex-offenders’ charity Vision Housing merge into the Forward Trust, at a point when Vision’s energetic founder, Annys Darkwa, had decided she wished to move on to the next chapter of her career. When St Mungo’s and Broadway joined forces to establish one of the largest homeless charities, this was driven by Charles Fraser’s plans to step away after 33 years at the helm and seek his replacement in Broadway’s Howard Sinclair.

Addressing the CEO question

So, what can be done to address the “CEO question”?

First, tackle the elephant in the room early on. This should ideally happen shortly after a case for merger has been established. Rather than let discussions to rumble on with avoidable tension, the two chief executives and chairs should discuss this at the earliest opportunity.

Acknowledge the issue of self-interest explicitly. It’s perfectly natural and reasonable for the chief executives – and indeed other staff and trustees – to have concerns about loss of employment or status. So ask key leaders to share their self-interest concerns and fears about the merger, and then, with the help of their colleagues, to specify what steps the organisations or the merger negotiators might take to address these concerns.

Ask members of the board, staff, and management teams to answer the following questions:

  • In what ways are your personal interests threatened by this partnership?
  • What would help you to feel less threatened and more secure in moving forward?

Being open about identifying and addressing these concerns will go a long way to preventing potential sabotage of the process further down the line.

As soon as organisations have decided to an in-principle merger they should immediately establish a process for choosing leadership. This will alleviate tensions and help to give confidence to the two staffing teams. Commonly a joint steering group of trustees will oversee the merger process and should take responsibility for selecting the future leadership. They should consider the recruitment process, whether it’s internal only or external, the timing and what severance terms and notice periods can be offered to the unsuccessful candidate. If the CEO is appointed prior to merger being formally agreed, then this should be on a designate basis, with them retaining their current CEO role. Remember: a merger is not done until it’s done.

In certain cases where needs must, organisations have shared a chief executive as a prelude to full structural merger down the line – Warren Smyth had his hands full taking a dual CEO job at Suffolk leisure trusts Abbeycroft and Anglia for two years prior to their 2015 integration.

‘Golden handshakes’

Finally, let’s think of some innovative ways to embrace and support outgoing leaders. In the private sector, “golden handshake” severance deals are used to enable CEO exits. Although controversial, some funders are supportive of enhanced exit payments allowing chief executives personal breathing space as they juggle seeing through a merger and seeking a new job, removing a disincentive to mergers that can have real social and strategic value. Support from networks such as Acevo can help the outgoing CEO in many ways, from advice on refreshing their CV to accessing coaching, sharing their experiences with peers and providing opportunities to explore other avenues.

What’s clear is that outgoing CEOs have invaluable experience which makes them better leaders and can help others facing the same challenges in the future. How we support them and help them to share those lessons is critical for strengthening the environment for charity mergers.

Richard Litchfield is chief executive of social purpose consultancy Eastside Primetimers and Vicky Browning is chief executive of ACEVO. This blog originally appeared in Civil Society on May 14th 2018.

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