One in Five Companies Unprepared for Leaders’ Sudden Loss

New York — Jan. 24

One in five organizations is unprepared to deal with the sudden loss of its key leaders, according to an online survey of 1,098 senior managers and executives by American Management Association Corporate Learning Solutions. Only 14 percent were said to be well prepared, while 61 percent are somewhat prepared.

The findings point to a looming management succession crisis among North American companies, said Sandi Edwards, senior vice president for AMA Corporate Learning Solutions, which offers advisory services and learning programs to organizations. “Just a small minority of organizations seem ready to manage a top-level succession in an emergency, which means most companies are taking a huge risk by failing to address their bench strength issues.”

According to Edwards, the survey data provide an unvarnished perspective of current management succession preparedness.

“Our findings aren’t based on an official response from corporate leadership, but instead come from middle- to senior-level respondents at more than 1,000 organizations across the U.S. and Canada,” she said. “In other words, the findings mirror what people really think. And the respondents weren’t hesitant to share their opinions. Barely 3 percent claim not to have an opinion.”

Similarly, survey respondents were critical of their organization’s leadership pipeline, Edwards explained. “Again, the respondents weren’t shy about their viewpoint. Scarcely half believe their company’s bench strength is even adequate, and merely 10 percent think it’s robust.”

Planning for a smooth management succession is more critical than in former years, according to the findings.

“A big majority, 71 percent, say it’s more important; 27 percent that it’s about the same as in the past; and less than 1 percent think it’s less important; yet organizations neglect to sufficiently plan for such unhappy contingencies,” she said.

For the past two years, Edwards said, senior management has been focused on cost cutting and survival. “But now it’s time for investment in sustainability and competitive advantage, which must be based on talent. Having the best people in pivotal leadership roles, prepared to step in at any time, is essential for future success.”