Companies still failing to make succession plans

A recent global survey by Korn/Ferry International has found that 60.8 percent of respondents’ companies did not have a capable CEO-in-waiting should the current CEO unexpectedly depart. While responses were fairly consistent from region to region, North American recruiters were slightly more optimistic about organisations’ succession planning efforts than other regions.

“Finding a successor for the CEO role is one of the most important activities an organisation and its board have to undertake,” said Joe Griesedieck, vice chairman and managing director of the CEO practice at Korn/Ferry. “Corporate scandals and bad-apple CEOs - though clearly the anomaly – have monopolised the media and put ever more scrutiny on today’s corporate leaders. In this environment of transparent leadership and increased regulation, companies are recognising that succession planning is a never-ending process that begins long in advance of a CEO’s decision to move on, voluntarily or otherwise.”  

Lack of preparation is the most common succession planning mistake that organisations make, according to half (50 percent) of respondents, while other succession planning missteps identified were: no formal evaluation process (27.4 percent); subjectivity in selecting internal candidates (17.4 percent); no buy-in from the board of directors (3.5 percent); and position specifications that were too rigid (2 percent).

The survey also looked at who should drive an organisation’s succession planning. The most common response was a succession planning committee of the board of directors (42.8 percent). The next most common response was the board of directors (41.3 percent), followed by the incumbent CEO (11.4 percent). By region, Latin America and Asia/Pacific appear to be the biggest proponents of succession planning committees, with the majority of recruiters in those regions (63.2 percent and 53.3 percent, respectively) saying that committees should drive an organisation’s succession planning.

www.kornferry.com

•Date: 27th May 2005 • Region: N.America/World • Type: Article •Topic: BC general
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