Instability at the top of arts organizations

Just this past week, the NY Philharmonic announced the sudden departure of its president and chief executive after just one year in the position.? While this is certainly newsworthy, it's not an isolated incident.? The penultimate President and CEO of the Boston Symphony lasted about a year in her position. The penultimate CEO of the American Ballet Theater and San Francisco Ballet each had short tenures before departing. The President and CEO of the Indianapolis Museum was abruptly fired after a15-month tenure.? Two CEOs ago, the board of Lincoln Center cut short the tenure of its President and CEO after a year.?? These are just a few examples of a trend that's becoming all too common.

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A short tenure of one year usually indicates the decision to fire the CEO was made even earlier; it takes a few months to gain consensus from the entire executive committee confidentially and then some time to work out the legal details of the severance. One year may really mean nine months.

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But what are the issues, why is this happening, and what can be done? It's important to focus on finding solutions, as this trend is not irreversible and can be addressed with the right strategies.

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First, short-tenured turnover is very damaging to the organization.? The cost of losing a top executive is often cited as 213% of the executive's annual salary.? For these arts leaders, whose compensation is well north of $500,000, this translates to at least $1 million in cost, including severance, legal fees, and additional executive recruitment costs. ?Short-tenured CEOs with unplanned terminations also interrupt the recruitment of other senior management positions and retard strategy implementation.? ?But there are more insidious costs:? Donors might react negatively to leadership changes, potentially affecting the company's fundraising campaign; partners, pending agreements with agents, artists, unions, and other stakeholders are put on hold; seasons and exhibitions take years to plan, these plans could be put on hold; and partners might develop concerns about continuity and stability, affecting business relationships.? The leader plays a crucial role in shaping and maintaining the organizational culture. A leadership change can lead to shifts in the corporate culture, which require time to stabilize.

Short tenures indicate that a hiring mistake was made.? For nonprofit arts organizations, selecting a CEO requires thoughtful, sometimes challenging, introspection and a capable, experienced search firm to advise.?? In an arts organization, every artistic decision has financial or business implications, and every business choice implies the creative process.? How can a group of volunteers, some with widely varied tastes and backgrounds, reach a consensus on the traits and experiences of the best candidate?? And then, once the search is completed, the board’s involvement ends, and the new CEO is left to onboard herself.??

One solution is long-term succession planning, where the board and sitting CEO create a plan for identifying (and sometimes training) the next CEO.

I have been surveying the nonprofit sector for over thirty years on their attitudes and actions regarding succession planning. In the early ’90s, I conducted a succession planning survey of American orchestra’s executive directors; the following year, I surveyed Association of Art Museum Director members; in the mid-nineties, a similar study for the Association of British Orchestras; and, over the last twenty years, together with my colleagues at DHR Global Nonprofit Practice, we have polled the science museum community and other well-established nonprofit professional organizations by sector.??? The message from these studies is consistent:? approximately 4 of 5 board leaders and CEOs consider succession planning “very important or important.” In contrast, less than 20% of those leaders polled engage their organizations in succession planning.? We believe, anecdotally, that the respondents’ assessment of their succession planning falls far short of a rigorous process, or less than one in five nonprofit organizations engages in succession planning for the CEO. A separate Board Source study from 2021 indicated that less than one in three nonprofit organizations have a written succession plan.

The predominant reason for the lack of succession planning is that “succession planning is not a criterion by which boards measure CEO’s performance.” If the board does not require a succession plan, the CEO may not be motivated to initiate a succession planning process. Without a mandated retirement age, nonprofit executives whose lives are defined by the position are often reluctant to consider their transition and retirement. However, as the leaders in the field age, they often 'decide' to retire too late or, because of illness, death, or simple burnout, are forced to leave without a successor in place. And then the board begins to scramble to find a successor.

?Succession planning facilitates healthy leadership transitions. Most well-run for-profit corporations dedicate divisions within human resources to oversee succession planning at all enterprise levels. CEOs’ performance measures include succession planning for the executive suite. Yet, we know that nonprofit organizations, even the largest, are not effectively planning for leadership succession.

The case o the New York Philharmonic is the exception that may prove the rule.? Its former president and chief executive, Deborah Borda, one of the great arts leaders of her generation, was motivated to create a succession plan.? We imagine that after evaluating her current staff and seeing no likely successor, she recruited the now-fired president and chief executive as general manager (he was the executive director of the National Symphony for five years) to train with her to take on more responsibilities during her last year and to be appointed by the board as her successor. Not all stakeholders (perhaps orchestra members) agreed with the strategy and choice, or maybe the new president and chief executive was not up to the job. ?We will likely never know.?

But what we do know is that beyond this jarring and surprising termination, the NY Philharmonic and most arts organizations in the US are facing multiple existential crises – from post-pandemic audience defections, shifting fundraising priorities away from the arts, the added necessity of addressing the social justice movement, and, today, a pending potential crisis around censorship and freedom of ideas depending on the election results.?Stable, sustained leadership –and planning for leadership change – is even more critical than ever.

For those interested, succession planning can work and, with a thoughtful process, can avoid the downsides of ruptured leadership. We at DHR Global, mainly through our Leadership Consulting Practice, can consult with arts boards and CEOs to begin installing a succession plan. The costs of a wrong hire or a sudden departure can be difficult to overcome in these fragile times. Succession planning becomes a required investment. ?And, if an executive search is needed, we at DHR commit to a two-year guarantee on our arts leader placements, demonstrating our confidence in identifying, recruiting, contracting, and onboarding a new CEO for the long term.

James Abruzzo, Vice Chairman

Partner, Leadership Consulting

DHR Global

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