Practical considerations for board succession planning

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.

A primary responsibility of the current board

Succession planning is one of the board’s most important responsibilities, ensuring continuity and stability during leadership transitions:

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.

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. We have created a board skills matrix which you can access here.

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 example, 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 a regular infusion of fresh ideas while maintaining experienced leadership.

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.

Using 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. By regularly updating the skills matrix, you can keep your board aligned with the evolving needs of the organisation. Here is a ‘needs matrix’ example from SportNZ.

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 trends and position the board to respond to long-term challenges and opportunities.

Board succession planning is not just about filling seats – it’s about ensuring the board remains effective, diverse and forward-thinking. By taking a proactive approach, using 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 Directors has released an episode featuring a Chartered Fellow here where Steven Moe (the host of the show) talks through governance and board considerations.

This article was first published at Parry Field Lawyers. Reproduced with permission.