In every executive’s professional life, there comes a time when an abrupt – and sometimes unexpected – career decision must be made for personal gain and career development. This practice will only become more common as the highly mobile future generations begin to succeed into senior executive roles.
The Global Succession Planning Study 2014, conducted by IIC Partners in late 2013, surveyed 1,270 senior executives across the globe and found that nearly 60 percent of corporations experienced an unforeseen departure of a senior-level executive within the past three years. Eighty percent of survey respondents said it would take at least 12 months to find a suitable replacement, and a surprising 35 percent said their company had no succession plan or strategy for the senior executive team at all.
What impact does a swift C-suite exit have on a company?
Without a viable succession plan set in place for the senior executive team, companies can almost guarantee a self-inflicted distress that will ripple through every level of the organization.
Survey respondents ranked the top five implications that an unforeseen senior executive departure would have on their company. If there is no succession plan in place at the organization, employees can expect:
- A negative impact on culture
- Loss/Delay of new product or service
- Departure of other executives
- Loss of revenue
- Negative publicity
Across all regions, respondents reported that planned mergers and acquisitions were least affected by unforeseen departures. However, participants in EMEA ranked loss of revenue as the second-highest implication of an unforeseen executive departure.
Succession planning: An implicit productivity insurance policy
Given that the above are all negative effects felt after an unexpected executive departure, a succession plan is crucial to the continued profitability of an organization. Succession planning – much like a senior executive team – prepares for the future of an organization and preemptively proposes the “next move.”
A succession plan presents the opportunity to revisit and redefine an organization from the top down. It furnishes an implicit “productivity and morale insurance policy” for the rest of the organization and assures all employees that there is a contingency strategy, while initiating the engagement process with an executive search firm.
As future generations gradually enter the C-suite, executive mobility will only increase and, inversely, average lengths of service by senior executives at organizations will recede. A succession plan will serve as an essential tool in an attempt to preserve employee outlook, and assist organizations in surviving multiple CEOs within the same decade. With a looming talent crisis, what is your organization’s next step?