12 Shocking Statistics on CEO Succession Planning

2020 made it clear - CEO Succession Planning isn’t Optional

“We really need to have a name in the envelope as soon as possible.” So begins many of the discussions we’ve been having lately with board members who are frantic about CEO succession planning.
 
2020 brought an unprecedented wave of early retirements. This unanticipated contingency highlights the importance of succession planning. Succession planning is the essential practice of identifying and developing leaders within your organization for their advancement. Successful succession planning yields a stronger workforce and better long-term outcomes. Organizations must not bank exclusively on a few key leaders.

CEOs can account for a 30% variance in their organization’s profitability, and research suggests that top management has an even greater impact on organizational performance than the CEO. Succession planning should be among the most important considerations for any organization. Yet, the research and statistics collected below tell a different, and rather unnerving story. Most organizations are unprepared to replace the individuals in their highest leadership positions. 

Here are 12 shocking statistics on CEO Sucession​

1. CEO turnover in 2019 was the highest in nearly 20 years. Source
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2. The direct cost of replacing a failed executive is close to 10x his or her salary. Source
   
   
3. 74% of Boards are making emergency plans in case of a sudden CEO departure. Source
   
   
4. 86% of leaders believe leadership succession planning is of utmost importance, only 14% think their organization does it well. Source
   
   
5. Only 35% of organizations have a formalized succession planning process. Source
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6. The median tenure for CEOs at large-cap companies is only 5 years. Source
   
   
7. 74% of executives were not prepared for the challenges they faced in senior leadership roles. Source
   
   
8. Only 27% believe their organizations provide the necessary resources to support their move into a C-level role. Source
   
   
9. 46% of leaders underperform during their transition to a new role. Source
   
   
10. 50% of leaders reported that it took them six months to become effective in their new roles. Source
    
    
11. 20% of C-Suite Executives said it took more than nine months to become effective. Source
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12. Direct reports perform 15% worse under a struggling leader and are significantly more likely to become disengaged. Source
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​The turbulence we’ve experienced throughout the pandemic will continue to have ripple effects for years to come, underscoring the importance of resilient leadership. CEO succession planning empowers employees to become invested in your organization over the long term.​

"LM Hurley & Associates did an amazing job conducting our search for a VP to succeed the CEO of our CCRC. The board of our organization could not have asked for a better selection of candidates and the offer and acceptance process went seamlessly.  The entire board appreciated their detailed process, their dedication, and the expert candidate insights that Lauren Hurley and her team provided throughout the search from kick-off to on-boarding."
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Reference from a recent client: Board Member and Leader of VP Search Selection Committee 

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