Fewer than half – just 45 percent – of executives from 34 countries around the world say their companies have a process for conducting CEO succession planning, according to a recent survey by InterSearch Worldwide, a leading global executive search organization operating in more than 45 countries.
"Forward-thinking, responsible companies have robust processes for CEO succession planning, so it may astonish some readers that fewer than half of the companies represented in our survey actually do," said InterSearch Chairman Frank Schelstraete. "Our advice to the 55 percent that do not: never let an emergency situation catch your company by surprise. Executives can resign or even pass away unexpectedly. Establishing a CEO succession plan should be a fundamental obligation of public and private companies – of any size, in any region – and their boards."
Data by company size
In terms of company size, the larger the company the more likely it was to have a CEO succession plan. Among the largest companies in the survey (those with annual revenue of more than US$500 million or approximately 400 million Euro), 73 percent have a CEO succession plan.
The data were more evenly split among medium-sized companies (those with annual revenue between US$50-500 million or approximately 40-400 million Euro) with 49 percent having such a plan.
And among small companies (those with annual revenue under US$50 million or approximately 40 million Euro) only 17 percent had a CEO succession plan.
Data by geographic region
By geographic region, 38 percent of companies had a CEO succession plan in place in EMEA, which includes a wide range of countries from this diverse region.
In the Americas, where respondents came primarily from the United States, Canada, and a few South American companies, 74 percent of companies had such a plan.
And in Asia, 53 percent indicated their companies had a CEO succession plan. This region's respondents came primarily from Australia, Japan and South Korea.
Nearly three-quarters (73 percent) of all respondents say their companies review and/or update their CEO succession plan at least every three years, with a majority (56 percent) doing so once every year. Twenty-seven percent do so only as needed.
Most companies generally think their CEO succession planning is satisfactory or better. Seventy-nine percent of all respondents rate their plans as good (43 percent), very good (33 percent) or excellent (3 percent). Nineteen percent rated their plans as fair (16 percent) or poor (3 percent).
Comments from survey respondents describing the effectiveness of their company's CEO succession plan in identifying qualified internal and external candidates included:
"My estimation is that we have a good process in place. Internal candidates are monitored and assessed regularly [and] we have a programme to attract external talents." ~Large private firm, Switzerland
"The updated and regularly reviewed database provides good number of qualified persons. External candidates are not properly followed." ~Large private firm, United States
"Both the succession plan as well as standardized nomination and handover processes are established. As always, there are situations where the defined process is violated." ~Large private firm, Austria
"The process [has been] clear and consistent over the years. The succession plan usually considers internal candidates who have been growing in the organization [in] high responsibility roles." ~Large private firm, Italy
Of the respondents, 70 percent came from private companies while 30 percent came from publicly traded companies. Of those, just 38 percent of private companies said they had a CEO succession plan, compared to 61 percent of public companies that did.
InterSearch conducted the online survey of executives around the world during the two months from 1 December 2012 through 31 January 2013.
InterSearch Worldwide is a global organization of executive search firms consistently ranked amongst the largest retained executive search practices in the world. InterSearch is currently operating in more than 45 countries, staffed by local professionals selected for their experience and reputation in their own markets and their ability to operate internationally. For additional information, please visit www.intersearch.org