While many employers are working feverishly to stem the tide of employee turnover associated with the Great Resignation, they may be losing sight of one priority that could also leave important gaps in the workforce.
According to a new study by History Factory, a significant number of organizations aren’t adequately strategizing for executive succession planning. The organization, which helps organizations tie their organizational history to business strategy, surveyed 160 C-suite executives, finding that 57% don’t have documented plans in place for executive departures, although nearly 90% agree that such strategies are more important than ever in today’s environment.
In 2019, Challenger, Gray & Christmas reported the highest level of CEO turnover in two decades–rates that paused during the pandemic but began rebounding quickly at the end of 2020. The History Factory report predicts that the events of the last year will hasten many executive departures, given the rapid digital transformation and workplace changes the pandemic brought.
What it means to HR leaders
A recent study in the Harvard Business Review cited the critical role CHROs can play in executive succession planning–and the effects on the organization when they don’t. For instance, S&P 1500 companies lose nearly $1 trillion in market capitalization each year from poorly managed C-suite departures, according to the report. That stems from both under-performing outside hires brought in to fill the vacancy and the loss of institutional memory.
Sixty percent of respondents to the History Factory survey say that history and heritage can play a critical role in executive onboarding, allowing new hires to capture that institutional memory. Jason Dressel, president of History Factory, points to Steve Jobs’ work at Apple, ensuring the company’s history was well-documented–an act that earned the transition to Tim Cook the highest rating by History Factory respondents.
Dressel says many executives today are “clear-eyed” about how current conditions should be making strong executive succession planning, with an eye toward passing along institutional knowledge, a priority.
“But for too many companies,” he says, “that understanding isn’t translating to concrete plans and is not an organizational priority. This should be a clear signal to chief human resource officers: CEOs need their help in preparing for an eventual leadership change.”
Learn about the latest technology helping employers boost executive succession planning during HR Tech, Sept. 28-Oct. 1 in Las Vegas. Click here to register.