Across the C-suite, we are reading of a succession planning crisis. Whether it be CEOs, CMOs, CFOs, the baby boomer generation is retiring and there are simply not enough seasoned, qualified candidates to backfill the number of openings they have created. Gen-X, which followed the boomers is a much smaller generation (61 million compared to 81 million boomers), and millennials, who have not yet hit 40, are too young in their careers to step into these roles.
Per the AESC, “Organizations need to develop succession plans 15 years out, which also requires talent mapping, understanding not only the talent you need to be competitive in the market today but also tomorrow, and how will that talent differ, what skills will be required, and what must you do to attract or develop that talent.” Succession planning is a proactive approach to identify and prepare high-ceiling employees at your company for future leadership roles. The process should be ongoing in order to maintain consistency as current leaders retire or leave the company.
Making matters worse, on average roughly 15% of CEOs turn over every year. This percentage has increased in the past decade as more CEOs are held accountable for poor performance. The effects of replacing a CEO are felt in profitability, public perception, productivity, and internal culture. The Rock Center for Corporate Governance at Stanford University reported that just 54% of boards had any succession planning process in place, and that 39% of companies have no viable candidates internally.
To add context around the number of baby boomers leaving the workforce, 10,000 boomers will retire every day for the next 12 years. This reminds me of the Chinese proverb, “The best time to plant a tree was 20 years ago. The second best time is now.” If you haven’t already addressed your succession planning, now is the time.
The first step you should take is to make succession planning a priority at the board level. Once you have alignment, the next step is to look at your current workforce and identify people who show potential. The caveat here is to be open minded. One of the challenges today’s C-suite faces is a lack of diversity. Look beyond your comfort zone for people who think, manage, and execute differently. The goal is to develop talent regardless of what it looks like.
Once you’ve identified who shows potential, work with a third party, like Sheer Velocity, to administer leadership assessments and create development plans for the employees. This will provide you with objective insights and visibility into who embraces the increase in responsibility. You should also consider mixing up their responsibilities. A C-suite candidate should be able to adapt to changing environments and succeed in new areas.
Establishing a talent pipeline, internally and externally, takes time. And you won’t always know when a C-suite position is opening up. A retained executive search partner is an asset that can provide you with a competitive advantage when a position unexpectedly opens up. Rather than making a quick, and often less than optimal decision, an executive recruiter is going to be up to date with the availability of top candidates to fill the role.
To learn more about our approach to succession planning, send us a note. We’re happy to walk you through our process and show you how we tailor each search to your specific needs.