Succession Planning Key to Corporate Effectiveness
Recent CEO resignations are putting the spotlight on leadership succession planning, according to Egon Zehnder International, a global executive search firm. Yet, findings of an Egon Zehnder International survey of senior executives reveal none of the top U.S. executives taking the survey believe their companies are best in class or highly successful at meeting the challenge of succession planning. Equally important, nearly one-half (47%) believe their companies are average at succession planning and the remaining 53% felt their companies had failed to build an effective succession plan.
“The global financial crisis has resulted in high CEO turnover. This fact, combined with the recent SEC announcement that would allow shareholders to challenge the Board to disclose more information about plans for CEO succession, makes developing a succession plan even more critical,” said George L. Davis, Jr., a member of Egon Zehnder International’s Executive Management Committee and co-managing partner of the Global Board Practice.
The survey is based on responses to online interviews with 1,092 top managers in nine countries representing all industries. The U.S. is not alone in its belief that management is ill prepared for a transition in leadership. Eighty percent of French top managers indicate that they are not successful at leadership succession planning and 71% of respondents in the U.K. indicate that they are only moderately successful at succession planning.
In stark contrast, 70% of top managers in Germany believe they are successful at planning for leadership succession (40% very successful and 30% moderately successful). In India, 57% (28% very successful and 29% moderately successful) of top executives believe that they are effective at succession planning. In Australia, this number is 44%.
“At a time when CEO succession continues to dominate the headlines, it is clear that planning for leadership change is critical to the success of a corporation,” said Justus O’Brien, head of the U.S. CEO Succession Practice, Egon Zehnder International. “Our findings shed light on how corporate America needs to be better prepared for both planned and unplanned changes in top leadership.”
Egon Zehnder International is one of the largest privately held executive search firms in the world with nearly 400 consultants operating from 63 wholly owned offices in 37 countries. The firm specializes in senior-level executive search, board consulting and director search, management appraisals and talent management.