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Lack of Succession Planning Negatively Impacts American Businesses
AchieveGlobal Study Finds Majority of Companies Lack C-Suite Succession Plans
Tampa, Fla. (November 14, 2008) - In a new study released by AchieveGlobal, a leading global workforce management firm, an alarming 51 percent of respondents reported that their organization has no established succession plan in place for C-Suite executives. The C-Suite includes Chief Executive Officers, Chief Financial Officers, Chief Operating Officers, etc. This is particularly troubling for American businesses as 16 percent of respondents indicated that they had an existing vacancy in their C-Suite and 37 percent indicated that they anticipated a vacancy within the next year.
“The challenge of today’s troubled economy and daily fluctuations in business environments are vital points for consideration as companies prepare for the unexpected,” said AchieveGlobal CEO Sharon Daniels. “Changes in C-Suite personnel have a significant impact on employee retention, leadership and business plans. Having a supporting cast of groomed and vetted candidates will not only improve the company’s pool of talent but will also ensure that an organization is change capable and ready for the unexpected.”
The benefits to succession planning are clear. The AchieveGlobal study found that 48 percent of respondents believed that continuity and ease of transition was the top benefit. The development of the C-Suite (16 percent) and an established talent pool (13 percent) were also cited as major benefits. Despite the benefits of succession planning, 31 percent of respondents reported that their company lacked a plan because the need did not seem urgent, 26 percent reported that the time investment was a roadblock and 24 percent were deterred by the complexity of the process.
While often ignored by some companies, the urgency of a transitioning C-suite can not be denied. In fact, CEO turnover spiked in the first quarter of 2008, reaching its highest rate in two years. According to a report by consulting firm Challenger, this year alone there have been 1,132 CEO departures, meaning 2008 is likely to break 2006’s record of 1, 478 turnovers.
“Whether realized or not, there is a real urgency for companies to develop comprehensive succession plans,” Daniels continued. “Conventional wisdom will tell you that long-term success requires a steady flow of skilled leaders at all levels, especially in the C-Suite. Interruptions at the executive level result in diminished customer and employee retention and missed business opportunities - problems that companies can not afford to face in today’s economic climate.”
C-Suite succession planning is often a task designated to the Board of Directors and the C-Suite itself. Corporations must expand this responsibility and make it a priority for others in the organization to fill the succession pipeline. The research provides insights into the succession planning process and investigates several primary activities necessary for effective planning, which include:
• Analyzing pipeline gaps
• Identifying talent pools
• Developing succession strategy
• Implementing succession strategy
• Monitoring and evaluating the process
• Continuous coaching
• Transitioning into new roles
Of these primary activities, respondents believed that their organizations were most effective in analyzing pipeline gaps, identifying talent pools and monitoring and evaluating executives. Organizations were reported to be less effective in developing C-Suite candidates, transitioning candidates into their new roles, and implementing succession strategies. In response to the lack of effectiveness in developing candidates, the report presents some key leadership skills necessary for senior leaders.
The study surveyed 144 respondents with the title of Vice President or higher. Respondents represented companies with 500 employees or more. A full study overview can be found at www.achieveglobal.com/report/c-suite.
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About AchieveGlobal
AchieveGlobal is the world leader in providing exceptional interpersonal business skills, giving companies the workforce they need for business results. In the 21st century, the level of human skills will determine organization success. Located in over 40 countries, we offer multi-language, learning based solutions - globally, regionally and locally. For more information, see www.achieveglobal.com.
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