Succession planning is a critical component of effective governance for any board, whether it’s for a corporate entity, charity, or for-purpose organisation. In New Zealand, where governance practices are guided by both legal frameworks and best practice principles, succession planning ensures that a board remains dynamic, diverse, and capable of steering the organisation into the future. This article outlines some practical considerations to keep in mind when developing a succession plan for your board.
1. Primary Responsibility of the Current Board
Succession planning is one of the board’s most important responsibilities, ensuring continuity and stability during leadership transitions.
(a) Evaluating Leadership Roles
Start by assessing the current leadership. Who is your Chair and how long have they been in the role? It may be time to consider appointing a deputy Chair who can learn the ropes now and ensure a smooth transition when the time comes for the current Chair to step down. Planning ahead mitigates risks associated with abrupt leadership changes and maintains strategic continuity.
(b) Emphasising Diversity of Thought
When considering successors, resist the temptation to simply replicate the existing board members. Instead, focus on bringing in new perspectives. Diversity of thought fosters innovative solutions and more resilience. Actively seek out individuals who bring different experiences, skills, and viewpoints to the table.
(c) Mapping Out a Succession Plan
A clear, structured succession plan is essential. Consider implementing a rotation schedule for trustees, this could be legally enshrined in your Trust Deed. For instance, a trustee might serve for a term of three years, renewable for another three years, with a maximum of three terms (3+3+3), after which they must stand down for at least a year. This ensures regular infusion of fresh ideas while maintaining experienced leadership.
(d) Encouraging Healthy Board Renewal
Term limits and rotation schedules naturally create opportunities for board renewal. These mechanisms facilitate necessary discussions about new leadership without making it personal. Focus these conversations on the organisation’s needs rather than individual preferences to prioritise the entity’s long-term success.
2. Utilising a Skills Matrix
A skills matrix is a valuable tool for evaluating the board’s current composition and identifying gaps in expertise or experience. This can be used to decide where there may be areas to bring people in on. By regularly updating the skills matrix, you can keep your board aligned with the evolving needs of the organisation. Here is ‘needs matrix’ example from SportNZ.
3. Long-Term Vision: “Where Will We Be in 50 Years?”
While succession planning often focuses on the near to medium term, it’s crucial to consider the long-term legacy of the current leadership. The question, “where will we be in 50 years?” encourages the board to think beyond immediate challenges, nurture potential leaders, anticipate future trend and position the board to respond to long-term challenges and opportunities.
4. Conclusion
Board succession planning is not just about filling seats—it’s about ensuring that the board remains effective, diverse, and forward-thinking. By taking a proactive approach, utilising tools like a skills matrix, and thinking long-term, your board can continue to provide strong governance that drives the organisation’s success for decades to come.
If you would like to listen to a short podcast on this topic, the Institute of Director’s have released an episode featuring a Chartered Fellow of the Institute of Directors here where Steven Moe (the host of the show) talks through governance and board considerations.
If you need assistance in developing a succession plan tailored to your board’s needs or have legal questions regarding governance, contact one of our experts at Parry Field Lawyers.
This article is intended for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please contact a qualified legal professional. Reproduction is permitted with prior approval and credit to the source.
