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Two-Thirds of Companies Are Not Prepared for Sudden Loss of Leadership

Lack of succession planning is more acute in small-to-medium sized organizations.

Seattle, WA, August 13, 2008 --( The benefits of an effective succession plan are seemingly plain to see, but most companies are apparently wearing blinders, according to a recent study by the Institute for Corporate Productivity (i4cp). The study showed that more than two-thirds of polled organizations are not immediately prepared to fill a suddenly vacated leadership position, and just a third have identified an internal interim successor should their CEO suddenly depart.

Of all respondents, less than half (45%) reported they have a formal succession plan in place, and only 46% conduct regular talent reviews to gauge the readiness of employees who may be counted on to fill leadership roles in short order.

“It’s somewhat surprising to me that more attention isn’t being paid to succession planning issues,” says i4cp executive-in-residence Jim Thomas. “Having the right people prepared to fill key positions is an essential business strategy in this time of fierce competition for talent. The defining moments in a company’s ability to stay competitive may rest in the focus it places on filling key positions with assimilated and capable replacements.”

Large companies, however, are paying closer attention to succession planning issues. When broken down by company size, 66% of organizations with more than 10,000 employees said they are prepared or very prepared to immediately fill a leadership role, while 75% have identified an interim CEO successor. Also, among companies with more than 10,000 workers, 86% reported having a succession plan in place and 69% conduct regular talent reviews.

“I have held executive-level HR positions with several large companies, and the importance placed on succession planning was extremely high,” Thomas says. “It just makes sense. The future successful management of the company depends on the strategic initiative it places on having an integrated succession plan – specifically one that is consistently reviewed and used to fill key positions within the company.”

Of the organizations that have succession plans, 45% have a specific group (HR or other department) overseeing the plan (that number jumps to 74% in companies with more than 10,000 employees), while 39% include the plan in their career planning process. More than 38% review and/or refresh their plans a minimum of every two years, and 38% discuss strategic issues. Asked to describe their planning programs, 27% have an entry-level management trainee program (43% for companies with more than 10,000 workers), 26% have a formal plan for future hiring needs (50% in companies of more than 10,000), and 24% formally measure trainee job performance (41% in companies with upwards of 10,000 employees).

Almost a third of companies that have succession planning programs have had them in place for two or more years, while 23% have a system integrated with other business processes and 20% have a stand-alone succession planning program. For companies with more than 10,000 employees, 55% have programs that have been in place more than two years.

The organizational levels most likely to be addressed in companies of all sizes are at the executive and director levels – both at 45% – followed by CEO and vice president levels at 40%. In large companies, 81% of respondents address the executive level, while 76% include the vice president level and 71% address the director level.

The Taking the Pulse: Succession Planning survey was conducted by i4cp, in conjunction with, in July 2008. There were a total of 275 respondents. The full results of the survey are available exclusively for all i4cp corporate members.

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Institute for Corporate Productivity (i4cp)
Bill Perry

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