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Why Non-Profit Boards Should Practice Disclosure in Executive Searches

It’s 60 days since your volunteer Board of Directors made one of the most important strategic decisions they will ever make: hiring a new CEO. Through interviews, psychometrics, and references, this was the right leader for the job. But today, the new CEO is tendering her resignation after just 2 months.

Why? Financial and labour issues weren’t revealed when the candidate interviewed for the position, to the extent that the future of the non-profit organization was in question. She could not make a fully-informed decision to accept the position, which, frankly, was not as advertised.

There are other problems that departing executives have cited as reasons for an early departure. These include undisclosed merger negotiations that might ultimately impact the position or employment of a candidate. Organizational issues that may soon become public with significant brand and funding implications are another factor that may have unforeseen implications for an incoming CEO.

In some cases, undisclosed information may impact a candidate’s career to the extent that there are legal implications for an employer. An employment lawyer is the best source of advice on these risks.

While it’s understandable that non-profit organizations want to present their best face when searching for and attracting new talent, there needs to be transparency when it comes to realities and issues that may challenge a new CEO, particularly at the start of his or her term. In fact, the nature of those challenges and issues may well determine the type of leader that the organization needs, and the type of candidate who might be attracted by these challenges. Think of turnaround CEOs who relish the challenge of setting an organization back on a sound financial footing and course of mission. Sharing and discussing these issues openly with him or her may well be the best basis to assess the candidate.

Looking at transparency from another perspective, employers expect full disclosure from candidates who apply for positions with them. Why then, shouldn’t the candidates, particularly CEO candidates, expect the same level of transparency from their prospective new employers? If confidentiality is an issue, the candidates of interest can be asked to sign non-disclosure agreements (NDAs) to be fully informed before interviewing proceeds.

To be sure, there are things that are best not discussed with candidates about an organization. For example, a departed CEO may have had a bad relationship with one or more on staff, which may relate more to personality differences. Disclosing these difficulties might prejudice a new CEO at the start, rather than letting him or her form their own opinions and build new relationships. The same would apply to key external stakeholders to an extent, but if a conflict or problem exists with a stakeholder, it’s reasonable to test a candidate on how they might reset the relationship. Again, it takes transparency.

Be mindful that some information or issues may already be disclosed about an organization which are just a Google away for candidates. If something is out there on news or social media, particularly false or misleading information about your organization, it’s important to be out in front of it. Openly raise the issue with candidates and offer your narrative backed by facts. Then engage candidates in how they might approach the problem. That way, you’re not only being transparent with candidates, you’re able to defuse an issue that might have turned a good candidate off.

Disclosure and transparency say far more positive things about your organization to candidates than any risks it might pose. In reality, they are effective recruiting tools that employers should use for every executive search. 

Bill Hozy, BBA (Hons), is Director, Talent Management at crawfordconnect and has decades of experience in human resources in non-profit and for-profit, and in executive search. You may reach him at bill@crawfordconnect.com.