Most Major Corporations Unprepared
for Potential Succession Needs, According to Global Survey
of Recruiters
- Recruiters Say Fewer Than 40
Percent of Organizations Have a Capable CEO-in-Waiting -
Los Angeles, May 3, 2005 –
Lack of preparation is the most common succession planning
mistake that organizations make, according to half (50 percent)
of recruiters who completed the seventh edition of the quarterly
Executive Recruiter Index, released today by Korn/Ferry International
(NYSE:KFY), the premier provider of executive search, outsourced
recruiting and leadership development solutions.
Other succession planning missteps
identified by recruiters 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 are too rigid (2
percent).
When asked what percentage of organizations
today have a capable CEO-in-waiting should the current CEO
unexpectedly depart, the majority of recruiters (60.8 percent)
answered “40 percent or less.” While responses were
fairly consistent from region to region, North American recruiters
were slightly more optimistic about organizations’ succession
planning efforts than other regions. When asked what percentage
of organizations have a capable CEO-in-waiting, fewer than
half (48.9 percent) answered “40 percent or less.”
“Finding a successor for the CEO
role is one of the most important activities an organization
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 monopolized the media
and put ever more scrutiny on today’s corporate leaders.
In this environment of transparent leadership and increased
regulation, companies are recognizing that succession planning
is a never-ending process that begins long in advance of a
CEO’s decision to move on, voluntarily or otherwise.”
The survey also looked at who should
drive an organization’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 organization’s succession
planning.
Findings from the Korn/Ferry International
Executive Recruiter Index:
Findings from the Korn/Ferry
International Executive Recruiter Index:
1. What percentage of organizations
today have a capable CEO-in-waiting should the current CEO
unexpectedly depart?
- More than 80 percent - 1.5%
- 61-80 percent - 7.0%
- 41-60 percent - 30.8%
- 21-40 percent - 39.8%
- Fewer than 20 percent - 21.0%
2. What is the most common
succession planning mistake that organizations make?
- Lack of preparation - 50.0%
- Subjectivity in selecting internal
candidates - 17.4%
- No formal evaluation process -
27.4%
- No buy-in from the board of directors
- 3.5%
- Position specifications are too
rigid - 2.0%
3. Who should drive an
organization's succession planning?
- The incumbent CEO - 11.4%
- Board of directors - 41.3%
- A succession planning committee -
42.8%
- Other - 4.5%
Methodology
The Executive Recruiter Index is based on a quarterly survey
of 201 Korn/Ferry International consultants, who serve the
world’s largest corporations and not-for-profit organizations.
This survey was conducted online within the Americas, Europe,
Asia/Pacific and Middle East & Africa between April 6
and April 22, 2005.
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