Eighty percent of senior executives said that their company would not be able to replace them quickly if they left, according to a survey of 1,270 business leaders from around the world by IIC Partners.
Despite the fact that almost six in 10 respondents said their company had a succession plan in place, only one in five said their organization would be able to replace them immediately if they were to leave.
“The findings of this survey point to a gap in succession planning at many companies,” said Paul Dinte, chairman of IIC Partners. “It is one thing to have a written succession plan, but quite another to be prepared for the departure of a C-level executive.” Two-thirds of the survey respondents were C-suite executives.
When asked if there was a succession plan in place for their position, the senior-level executives responded this way:
- 31 percent said their company had a succession plan and could replace them within 12 months
- 26 percent said their company had no succession plan and they did not speculate on how long it would take to replace them
- 20 percent said their company had a succession plan and could replace them immediately
- 16 percent said their company did not have a succession plan and it would take 1-3 years to replace them
- 4 percent said their company had no succession plan and it would take more than three years to replace them
Companies that reported being least ready to replace a senior executive were not-for-profits (40 percent said it would take up to a year to replace them) and family-owned businesses (37 percent).
“No matter the location or the industry, there remains a gap in succession planning by many organizations,” Dinte said. “This oversight will likely be worsened with the continued exodus of Baby Boomers from the workplace, as well as the different relationship with work that many younger employees have.
“Gen-X employees tend to change jobs more frequently. As this generation moves into C-suite positions, corporate expectations for length of service may have to be adjusted.”
Companies from the following industries reported suffering the most when a senior executive departed unexpectedly:
- Not-for-profits (68 percent said it caused some or considerable difficulty)
- Pharmaceuticals (67 percent)
- Professional Services (67 percent)
When asked what the most negative impact of an unforeseen executive departure was, the senior-level executives responded this way:
- 38 percent said an unforeseen departure would have a negative impact on the current culture
- 18 percent said it would lead to the loss or delay of a new product or service
- 16 percent said it would lead to the departure of another executive
- 14 percent said it would lead to loss of revenue
- 13 percent said it would lead to negative publicity
Respondents at smaller organizations reported being the least affected by unforeseen departures, with 56 percent saying that they had no significant business impact. Family-owned businesses reported suffering the most, with 94 percent saying that there was a negative impact on their organisation.
“Not surprisingly, family-owned businesses experienced the most pain from an unexpected executive departure, most likely because of the intertwined personal relationships involved,” Dinte noted.