Research Data

In relation to CEO succession planning, a national study of over 1000 family-owned businesses was carried out in the USA in 2002. The study revealed that whilst the small business sector was experiencing robust growth and more than 50% of responding organisations reported plans to increase staff by up to 5% in the next twelve months, 55% of organisations with CEOs aged 61+ who were expected to retire within five years had not chosen a successor. 39% of the businesses reported they would change leadership within the next five years. Almost 80% reported the current CEO was related to the controlling family by blood or adoption, and another 14% connected by marriage, and some 90% reported that the family would continue to control the firm in five years. Of those who had identified a successor to the CEO, 85% said the successor would be a family member. Less than 10% reported that a women was CEO, 34% said a woman could be the next CEO. Those with strategic plans in place (37%) are most likely to have selected a successor. Succession difficulties were also likely to result from a lack of knowledge of the senior generation’s share transfer intentions as only 62% of significant shareholders reported being aware of what was to happen to shareholdings.

A further survey on leadership succession, commissioned by RHI Management Resources, North America's largest consulting services firm, received responses from 150 executives with the USA's 1000 largest companies. Asked `How valuable is it for a manager to identify and groom a successor to his or her position?` the responses were (1) Very valuable 80%; (2) Somewhat valuable 20%; (3) Not at all valuable 0%. In a follow up question `Are you currently grooming your successor at work?` the responses were (1) Yes 72%; (2) No 27%; (3) No answer 1%.

Research by Byham of 150 Fortune 500 companies indicated that “The average company expects a 33% turnover at the executive ranks in the next five years, and fully one-third said that they were not confident that they will be able to find suitable replacements. In another survey conducted by American-based RHR International Co. results showed that half of respondents felt their companies were not undertaking effective succession planning and were unprepared to replace key executives.

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