Human Resources |
Article by Donna Davis
From the January/February 2015 Net Assets
After months of search committee meetings, resume evaluations, interviews, candidate visits and reference checks, NBOA Academy has finally hired a new head of school. Although the committee, trustees, administrative team and even the new head may want to congratulate themselves on their success once the contract is signed and announcements are made, the job isn’t over.
Now it’s time for the transition—a period of adjustment and relationship-building for both the newly chosen chief executive and the school community. With costs hovering around $100,000 to $120,000 for a consultant firm-led search, according to sources for this article, the difference between a long, productive tenure and a quick turnaround toward another expensive search can be the extra time spent on helping the new head feel comfortable with the day-to-day operations of the school, along with its culture.
Establishing a timeline and sticking to it, as well as communicating progress to the school’s constituents, means the community as a whole feels involved, informed and ready to accept the new head.
L. Lincoln Eldredge Brigham Hill Consultancy
A successful head transition has as its foundation a thorough search process, starting with a search committee that represents the school. Members can include the board chair, department heads, business officer, advancement officer, parents and/or community members, depending on each school’s unique culture. Working with or without a search firm, the committee advertises the opening, identifies and evaluates candidates, and conducts interviews and campus visits for finalists before recommending a hire to the board of trustees. Establishing a timeline and sticking to it, as well as communicating progress to the school’s constituents, means the community as a whole feels involved, informed and ready to accept the new head, says L. Lincoln Eldredge, president of Brigham Hill Consultancy, a Texas-based executive search firm serving independent schools and other nonprofits.
The process of finding a new head of school needs time, but in recent years, schools have seen search timelines tighten and the number of hiring cycles per year increase. One reason—a head of school population that is aging out. According to the National Association of Independent Schools’ (NAIS) “The State of Independent School Leadership 2009” survey (the most recent), 38 percent of heads were in their 50s and 35 percent in their 60s, and more than a third of them reported they planned to retire or change jobs by 2014.
Stephen DiCicco, co-founder of Educational Directions Incorporated, has seen the number of head openings rise in the past five years. His Rhode Island-based firm, which provides executive search and consulting services to independent schools, publishes The Blue Sheet listing of head of school openings. Before the 2008 recession, the listings totaled about 110 per year. Then in 2008, “everything froze” as heads delayed their retirements while they waited for their retirement funds to rebound. Once the recession started to wind down, the number of openings rose to about 230 annually.
At the same time, the pool of candidates has shrunk. One result, DiCicco says, is more “rising stars” being hired as first-time heads. “Although the pool is extraordinarily good, it is not particularly large.”
Another result, says Eldredge, is a “heightened sense of urgency” among independent schools to hire the best candidate before another school does. Search cycles that once lasted from March to November now may start in January or earlier, with semi-finalist evaluations and hiring sometimes taking place in just a few weeks. “It’s like speed dating that leads to a Las Vegas marriage,” Eldredge says. “You wonder how long that Vegas marriage is going to last.” Building in time for reflection about finalists’ qualifications and fit, and allowing for back-and-forth discussions and questions, makes for sound decisions and better transitions, he notes.
Olney Friends School started its search for a new head in the fall of 2014. The search committee for the Barnesville, Ohio, Quaker school wanted to take advantage of the outgoing head’s one-year notice to do a thorough search and a thoughtful transition, says Shelley Rockwell, business manager. Rockwell, who is a member of the search team for the 50-student day and boarding high school, says the last head search four years ago was much shorter. Regarding the current yearlong process, “We found we really needed that length to improve the level of attention given to the transition from the departing head to the new head,” Rockwell says. This search will include more meetings between the head-elect and school leaders and more interaction with the head’s family. Olney, which is doing its search in-house, is relying on the search experience of several committee members and getting helpful advice from The NAIS Head Search Handbook.
Planning the transition of a new head of school? Here are some tips for business officers, from Jane Armstrong and Bill Lyons, managing partners of Independent Thinking, which conducts head of school and administrator searches for independent schools.
Don’t be anxious about building a new partnership. If you are good at your job and your philosophy is to make the head’s job easier, your worries should decrease further. However, you will need to make some adjustments, such as learning the new head’s management and communication styles and how much information he or she wants.
Ask yourself, “What information can I offer that the new head needs and won’t get from anyone else?” Once you know there will be a leadership change, start to assemble a collection of financial and budgeting information that you would like to have if you were in the head’s shoes. Keep adding to it through the months of transition and organize the information by category. Let the head-elect know you are doing this and ask if there is anything specific that would be most helpful.
Discuss what the school’s budget says about its priorities. Where is money spent and why? Where isn’t it spent? What important choices has the school made in recent years? What have been the hot-button issues—and whose hot-button issues are they? “Board Treasurer Mary Smith goes crazy when we talk about funding faculty graduate work...”
Help your head of school get to know the board members—which financial issues they have wrestled over and where they are aligned. If you can help outline the financial landscape for your new head, you can help him or her navigate with suggestions framed around your institutional knowledge: “This might not be something you want to ask the board about yet,” or “You know, as new head you could ask the board about its thinking around this choice.”
Talk to the new head about faculty compensation. Is there a salary scale? Are there individuals for whom there are special circumstances? What is the history of tuition remission? What are the top issues for the faculty? What promises have been made or implied?
Show the new head of school that you are there to help him or her get up to speed. Heads will come to the job with a wide variety of experience in school budgeting, so adjust accordingly—whether that begins with budgeting 101 lessons or two financial whiz kids working together.
Like the search process, a successful transition also requires time—up to a year, search consultants say. During that time, the school should capitalize on the people who have come to know the new head best: members of the search committee, all or some of whom can morph into the transition committee, which meets at regular intervals with the head-elect. Whether formal or social, those meetings offer a haven for the incoming head to discuss expectations, ask questions, tackle upcoming challenges or simply get to know the school and its leadership.
DiCicco's firm mandates a board retreat for the incoming head. “We do that based on what we call ‘success theory.’ Most heads who get in trouble do so because either the expectations are not clear and therefore the evaluation is not clear, or (the expectations) are not made public.”
At the retreat, the head-elect and the board outline their expectations and goals for the first two years and agree on how they will evaluate their respective progress. In addition, they create plans for communicating those goals and expectations to the entire school community. Schools that don't take this last step risk alienating constituents, DiCicco says. For example, if the board directs the new head to solve the school's enrollment problem within the first two years, parents might say the head is not visible enough, not knowing that he or she has been concentrating on a vital, board-directed task.
Many schools also add a “welcoming” committee that provides the head and family with advice and information designed to help them adjust to their new community, from recommending a dry cleaner to suggesting connections that might help the head’s partner in a job search.
Outside support is also available. For schools that have retained a search firm, the consultant typically will stay in touch during the transition and be available to answer questions or help with sensitive issues for up to a year. Jane Armstrong, managing partner of Massachusetts-based executive search firm Independent Thinking, leverages the knowledge and relationships she and her colleagues gain during the search process to help the incoming chief executive. “New heads are looking for someone they can talk with as they are navigating and learning the politics of the place,” she says.
In recent years, it’s become more common for new heads of school to receive help from an executive coach or mentor as part of their contract. The NAIS survey found that the number of heads who had participated in formal mentoring programs rose from 9 percent in 2002 to 14.5 percent in 2009; most of the other heads surveyed reported having at least informal mentoring arrangements. Some of those coaches or mentors may be former heads.
Percy Abram, who has worked in independent schools for close to 20 years, began his second headship in July at The Bush School in Seattle. He works with an executive coach—also an educator—who helps provide perspective on some of the changes Abram has faced, including returning to working with high school students after six years as head of a K–8 school, overseeing a larger campus and managing a bigger budget.
Working with the coach and Eldredge, whose firm consulted on the search, Abram took advantage of an entry plan they designed. As head-elect, he also made periodic visits to the 600-student day school. He attended a number of board meetings, got reports from the board and committee chairs and met with members of the administrative team. Those encounters, he says, helped him develop “relationships, both personal and professional.”
The Bolles School in Jacksonville, Fla., is bringing on David Farace as new head of school on July 1. A strong onboarding plan designed to give the head-elect a “rapid view” of the 1,670-student preK–12th grade day and boarding school is a key element in the transition process, says Nancy Greene, associate head of school finance and operations. This process includes details of the school’s history, mission, finances, governance structure and bylaws. The new head will also have a professional executive coach, and a board committee will provide the head and his family with information about the school and the community. The school’s chief human resources officer also will play a critical role in the head’s transition and development.
In addition at The Bolles School, Farace will meet the board and finance committees as well as community members in a series of on-campus visits. The idea, Greene says, is to give him opportunities to introduce himself to the community and learn the “cultural pitfalls” and “unspoken rules” he might encounter in a new environment. Those steps will mean the new head will not join the school as an unknown entity, and he and his family will have built some initial relationships as well. “Since he can’t be in front of 300 people every time he’s here, those people will get to know him and spread the word to others that he’s a great guy, not just a name.”
Eldredge cautions schools not to forget the outgoing head, involving him or her in the transition process as appropriate. Schools also need to recognize that the outgoing head—whether interim or permanent—is in charge until the new chief executive takes over, Greene adds.
In considering contract terms for a new head of school, don’t overlook the tax implications of the various fringe benefits that complete his or her compensation package. From school-owned housing to tuition remission to spousal travel to executive coaching, most non-cash benefits may be considered part of the head’s gross income under certain circumstances—and thus may be subject to taxation, to be borne either by the school or the head personally.
“Taxation of fringe benefits is the same whether you work for a K–12 school or IBM,” says Steve Hoffman, a tax expert specializing in colleges and nonprofits and author of Taxation for Universities and Colleges: Six Steps to a Successful Tax Compliance Program. As a general rule, all items of value given to the head (or any employee, for that matter) must be reported on the head’s W-2 unless they are documented to show that they meet one of five broad provisions under Section 132 of the Internal Revenue Code:
The head uses the benefit to serve a business purpose in his or her capacity as a school employee. A prime example is housing, which “needs to be for the convenience of the employer” and not the employee, Hoffman says. “This is easily justified by making a condition of employment that the head of school lives in the house and is on call 24 hours a day for the safety, welfare, health and maintenance of the students and the school.” This also applies to spousal travel, which generally requires a valid business purpose for him or her to go along.
The benefit involves free or reduced-cost services that do not cause the school to incur substantial additional costs. This might include use of the school’s athletic facilities or occasional use of a school-owned vehicle or property.
The benefit is a discount of up to 20 percent on services or goods sold by the school, such as play tickets or spirit wear.
The benefit is de minimis—e.g., occasional events tickets or taxi fare where the value is too small to justify the administrative burden of accounting for it.
Additional exclusions include qualified transportation expenses (parking or transit remittals), moving expenses and retirement planning services.
The value of free or discounted tuition is tax-free to highly compensated employees such as the head of school if it is available on substantially the same terms to all employees, or a reasonable classification of employees, and does not discriminate in favor of the highly compensated employees. If the tuition remission benefits discriminate in favor of highly compensated employees, then they are taxable only to them. But with this and other fringe benefits, the school “can always gross it up and pay the taxes,” Hoffman notes.
Hoffman also provides some cautionary notes:
Be prepared to justify the head of school’s compensation level. “The IRS can challenge how much somebody is paid unless you can substantiate the amount” as comparable to similar schools, for instance. “You need to have a ‘rebuttable presumption.’”
Be very specific about acceptable use of school credit cards. “Procurement card abuse runs rampant,” he says, citing a university president forced to resign after revelations that he had improperly used hundreds of thousands of dollars from school accounts to pay for personal travel and other items.
For a deferred compensation plan, clarify the “substantial risk of forfeiture” if, for instance, the head leaves the school before the funds are fully vested over the X-year period.
Membership in a country club or other club must be in the name of the school, and the head’s usage of it must be thoroughly documented as being for business purposes.
Even the head of school must submit receipts to be reimbursed for expenses or to justify expenses in the school’s name.
Regardless of specific contract terms, Hoffman advises having them reviewed by a tax expert as well as an attorney specializing in HR issues. “The legal review is just that, not a tax review,” he says. “I have seen contracts after legal has reviewed them and found things that should not have been there.”
The business officer, regardless of whether he or she is on the search committee, is likely an important part of the search process from well before the transition begins. For instance, working with the board and finance committee, the business officer includes funding for a head search in the school’s long-range financial outlook, or creates a reserve for the effort.
In addition, it’s often the business officer’s job to gather data for the board regarding the new head’s proposed contract—items such as national, regional and local salary and benefit comparisons. Helpful NBOA member resources include the NBOA Financial Position Survey, which can help assess the school’s comparative financial health, or Practical Guidance for Independent School Business Operations, which allows the head and business officer to conduct a self-assessment of the school's compliance with all aspects of its business operations. (Both are free member downloads from NBOA.org.) Business officers can also consult the NAIS Data and Analysis for School Leadership (dasl.nais.org), INDEX (Independent School Data Exchange, indexgroups.org), regional independent school association data and IRS 990 forms.
Further, the business officer might inform the board about any tax consequences that might result from the contract, such as provisions for housing or tuition remission amounts compared to other staff members’ discounts (see sidebar, page 18). And, the business officer compiles information for the incoming head’s “onboarding” package, including the operating budget, periodic reports and long-term financial and facilities plans. Finally, the business officer sometimes takes on the task of checking finalists’ background, education and reference information.
"Most importantly, the business officer should focus on building a strong partnership with the head of school from day one,” says NBOA President and CEO Jeffrey Shields, who leads the association’s business officer/head of school partnership training program. Make clear to the head of school how you can be part of his or her success and ask about information or resources you could provide that would be most helpful. Establishing trust and open communication from the very beginning is critical to the success of this partnership and the overall success of the school going forward with new leadership.
During the transition, the head-elect and the business officer ideally spend one-on-one time discussing current and long-term financial strategies and challenges for the school. In The Bush School’s case, Abram’s transition meetings included Robin Bentley, assistant head for finance and operations. Abram “arrived with a list of questions—what’s working, likes and dislikes, the most difficult decision I’ve had to make,” Bentley says. “I started a list of what I thought he needed to know. Some things he wanted to know ahead of time, and some I waited to talk to him about after he got here.”
Abram and Bentley, who has worked at Bush for 15 years, have discussed issues such as the school’s debt management plan, the Seattle independent school marketplace, and where the school ranks in salary and tuition in that marketplace. Abram, who calls himself a “big picture person,” adds, “I have one of the most astute operations people in Robin. I feel comfortable letting her dig in the weeds.”
Likewise, the business officer can learn from the new head, including his or her expectations of the business office and how much financial detail to present. First-time heads may have come from a more program- and curriculum-oriented background and need time to become comfortable with creating and analyzing budgets and long-range financial planning. When Independent Thinking asked head of school candidates which subjects they wanted to know more about, they replied development, boards and finance. “Take cues from the new head on how much background they need or want,” Armstrong says. If a “budgeting 101” session is appropriate, provide that. Above all, however, “set up an environment that allows the head to feel comfortable saying ‘I don’t get this at all.’”
For Greene, the most important factor in a successful transition is not just the business officer building a partnership with the head, but creating an atmosphere that allows everyone in the community to participate in that success. “We are all there to help the head realize the school’s goals,” she says. “It takes the entire community to ensure the new head’s success.”
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