If the leader of your company unexpectedly resigned, became incapacitated or even passed away, is there a plan in place for what would happen next?
A written succession plan is vital to the continuity of any business, yet one in four North American companies – and more than half of businesses worldwide – don’t have one.
Executives from 34 countries around the world responded to executive search firm InterSearch Worldwide’s succession planning survey in December 2012/January 2013. Only 45 percent said they have a process for CEO succession planning.
Large companies are much more likely to have succession plans. Among companies with $500 million or more in revenues, 73 percent of businesses worldwide have a plan.
Of midsized firms worldwide (between $50 million-$500 million in revenues), only half have a plan in place.
And even fewer smaller companies – 17 percent worldwide – had a plan, a particularly disturbing statistic. With closely held and family businesses, in particular, the lack of a written succession plan can threaten the continuity of the business. The absence of a succession plan, coupled with poor estate planning, can result in excess estate taxes, family feuds and general chaos upon the departure of a significant owner.
Of those that have succession plans, three-fourths of executives say they review and update the plan at least every three years, and half review it annually.
Asked to rate their succession plans, only 3 percent of the executives responding said their succession plan was excellent, but 76 percent said it was “good” or “very good.” Three percent said their plan was “poor,” and 16 percent said “fair.”
If your business does not have a current, updated succession plan, now is the time to get one in place.