Daniel Rothschild knew for years that the Mercatus Center at George Mason University was where he wanted to work — so badly, in fact, that he applied to every open job they had, even if he wasn’t qualified. He spent six years in a variety of roles and then became executive director. After 10 years on the job, the organization was the strongest it had ever been.

Then, he quit. 

Why? 

In an email to the organization announcing his decision, Rothschild said, “We’re in a position of strength, which is exactly when you want to undertake a transition if you are fortunate enough to be able to do so.”

Boldly, Rothschild believes that quitting can be one of the best things leaders can do. In fact, he argues that by staying too long, some leaders can actually do damage to their organizations rather than help them. In these cases, a leader’s ego can cloud their ability to gauge what’s best for all. 

It can be too easy to lean on past wins without feeling the need to take new chances and explore new avenues. This is particularly true in the nonprofit sector, where organizations don’t have the benefit of natural temperature-gauging by the competitive economic market that for-profits have. 

On the other hand, leadership turnover means that an organization’s drive, ideas, and perspectives stay fresh and energized. A consistent flow of new ideas can be transformative — especially for an organization looking for innovative ways to tackle society’s biggest challenges. 

Rothschild’s perspective is valuable for leaders of organizations of all kinds. We sat down with him to discuss his advice to leaders on how to know when it may be time to step down — and how to do so in a way that helps their organization without throwing it into flux. 

Why stepping down from a high role can be exciting

Leaders of nonprofits and for-profits alike should take the time to reflect and seriously consider when they’re doing more harm than good by staying, said Rothschild. “Too many people stay past the right time for them to leave. One of the big problems is that people have a very difficult time thinking about what's in the best interest of the institution, and they get their own needs and desires conflated with those of the institution.”

In Rothschild’s case, he realized that he had been at the Mercatus Center long enough and that he was risking complacency. Having brought the organization to a high point of strength, he feared it would be all too easy to settle for victory without feeling the need to keep pushing for further innovation and improvement. 

“We need to bring in the new ideas that come along with bringing in new people to leadership roles, and we need to remind ourselves that leaders exist to serve institutions — not the other way around,” he said. 

Realizing you may need to step down from your role isn’t easy. That level of self-awareness and humility can be difficult to access, in no small part because many organizational leaders have been in their roles for several years and change can be difficult to navigate. Ideally, leaders can use their positions to build frameworks that encourage resiliency, flexibility, and new ideas. If that culture is in place, then organizational turnover doesn’t have to be daunting, and both incoming and outgoing leaders can feel supported and encouraged.

After Rothschild announced his plans to depart, one donor wrote to him and said she was very surprised. “I thought about it for a second, and I realized ‘surprised’ is exactly what I wanted to hear,” he said. “Surprised — not relieved.”

“The most important thing is just creating a norm,” he continued. “The expectation that it should not be unusual for people to step down from CEO jobs when it is the right time to do so, regardless of knowing what it is that they're going to do next.”

With the right mindset, stepping down from a high-ranking role is exciting. A leap into the unknown can be the first step toward unprecedented personal and professional growth, providing new opportunities for leaders to consider whether they’re using their talents to their fullest potential and in a fulfilling way. According to Rothschild, life is more than a series of progressive steps of seniority or the constant hunt for a bigger, more prestigious role. 

“One of the things that people saw after COVID was that there are more opportunities out there than they initially anticipated and that the world is bigger than many of us were thinking in early 2020,” he said. “Sometimes the right thing to do is to go from leading an organization to doing something different. You don’t need to go from being the CEO of a Fortune 1000 company to a Fortune 500 company. Sometimes it's good to just go back and practice your profession.”

Ask yourself the right questions

So how can a leader know when it is the right time to step down? No one organization is the same, nor is any one leader. However, Rothschild outlined some key questions to ask that can help lead you in the right direction. 

As beneficial as leadership transition can be, turnover occurring too frequently can also derail an organization. Rothschild noted that he did not make his decision lightly or quickly. Instead, he spent months considering some critical pros and cons: 

• Length of tenure: Finding the right length of time in a role will inevitably look different for everyone. Rather than pursue frequent turnover for the sake of turnover, Rothschild advised considering “continuity.” This means ensuring you’ve been in your role long enough to establish institutional memory and long-term relationships. At the same time, you shouldn’t stay so long that you risk veering into stasis or complacency. 
• Status of the organization: Is the organization in a good position for a leadership change? Most leaders would say no, but Rothschild suggested this question is less about the organization as a whole and more about the status of the leaders. He said leaders know that “you will never have done all the things you want to do. You will always have problems. The question is whether you have the right leadership team to continue to drive forward on those changes and on those challenges.” Many organizations are thrown into flux because a leadership transition is forced on them rather than presented in a collaborative, voluntary, and orderly way. 
• Personal comfort: It’s important that you’re comfortable with the move you’re making. “I spent a long time thinking about this and second-guessing myself, asking, ‘Was it the right thing for the organization?’” said Rothschild. Only after he had enough personal conviction to answer yes to that question was he able to talk to his board openly, honestly, and productively. 

Consider when it isn’t the right time, too

As important as it is to know the right time, it’s also important to know the wrong time. 

Rothschild explained that “the wrong time” is when a leader still feels the same passion for the job as when they first started. However, he warned against confusing passion for tunnel vision: “A bad indication is when you convince yourself, ‘I’m the only one who is capable of doing this.’ That is never the case. Every leader convinces him or herself that they are the only people capable of doing that job, but none of us are irreplaceable, and we have to remind ourselves of that.”

As much as leaders should possess dignity and humility, said Rothschild, it is also crucial for them to be able to recognize it in others on their teams. By identifying the capabilities and talents of those around them, a leader can work with their team to drive the organization’s mission forward — with more impact than they could have by acting alone. 

Once a decision to step down has been made, a leader's work is just beginning. One of the most important tasks will be ensuring your departure from the organization empowers your team, rather than causing chaos. Honestly acknowledging the challenges that will be left in their wake and consistent, open communication with teammates are both crucial. These challenges will have to be tackled eventually, and putting off leadership transitions could make them more painful than they need to be. Effective leadership transitions can often be difficult in the short term but beneficial in the long term. 

“Talking to your executive team early on, talking to your board early on, talking to key stakeholders outside of the organization early on and bringing them in and making them part of the journey with you, I think that's absolutely critical,” Rothschild said.

Be willing to be uncomfortable

Despite knowing that he’s making the right decision, Rothschild’s departure from Mercatus is bittersweet. He has been so invested in the organization that leaving is simultaneously the best choice and the most difficult one. 

“I care about the organization,” he said. “I care about our mission, and I care about the people who are here. I have to remind myself daily that this is the right decision for the long-term health of the organization.”

He’ll stay with Mercatus in an advisory role for a few months to help oversee the transition of leadership roles before taking a sabbatical. 

“I have some reading I want to catch up on,” he said. “And I want to take the time to figure out, what's the thing that I want to spend the next 10 years doing? I’m confident that opportunity will come along.”

As uncertain as the future may be right now, Rothschild knows that stepping down is ultimately one of the biggest and most positive impacts a leader can make for their organization. He has learned that being influential means much more than holding a top role. 

“The reality is we’re in a fortunate position,” he said. “People who get to lead organizations that have a mission or are in an industry or doing something that they believe in — that is an incredible gift. We need to recognize that we can share that gift with other people and that there are many ways to contribute talents and skills and passions.”

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The Mercatus Center is supported by Stand Together Trust, which provides funding and strategic capabilities to innovators, scholars, and social entrepreneurs to develop new and better ways to tackle America’s biggest problems.