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30+ Succession Planning Statistics

As the current workforce is rapidly aging, companies have to rethink and reevaluate their succession strategies. The cost of a bad hire at any level of the company is an issue. A bad hire for a CEO or other leadership position can have a major detrimental impact on a company.  

How COVID-19 has
changed succession strategies

  • Only 7% of respondents said COVID-19 has not had any impact on their organization’s succession planning (I4CP, 2020) 
  • 70% reported that leadership development programs have been rescheduled or delayed (I4CP, 2020) 
  • 40% of talent reviews that are a part of the organization’s succession planning are now being conducted virtually, and 33% said that they have delayed or rescheduled such meetings (I4CP, 2020) 
  • 46% of board members reported not having an effective plan process for CEO succession (HBR, 2020) 
  • Industries which are most in need of planning a succession program are media, leisure products, and metals and mining (HBR, 2020) 

Reasons for
failed succession

  • On average, boards spend only two hours on CEO succession planning (Stanford, 2014) 
  • Only half of companies provide support or on-board training to newly appointed CEOs (Stanford, 2010) 
  • Over half of leaders (51%) have weak confidence in maintaining clear and consistent succession programs (Deloitte, 2014) 
  • The majority of firms have not asked potential internal candidates if offered a CEO position whether or not they would accept it (Stanford, 2010) 
  • 77% of CEOs did not participate in their company’s performance evaluation of the top executives (Stanford, 2014) 
  • Only 55% of directors claim to know the skills, capabilities, and shortcomings of their senior executives well (Stanford, 2014) 
  • 39% of respondents said they do not have any viable internal candidate for CEO (Stanford, 2010) 

Succession planning has positive effects

  • Almost all employers (94%) said that having a succession plan positively impacts their employees’ engagement levels (Talexes, 2017) 
  • More than half of employees claim they would be “significantly more engaged” at work if their company has a succession plan (Hireology
  • Over 90% of younger workers (aged 18-to-34) report that working at a company with a clear succession plan would improve their levels of engagement (Talexes, 2017) 
  • Companies in top-performing quartiles had planned successions 79% of the time, and also 79% hired for CEO positions internally (Strategy-business, 2015) 

Succession Planning
Tools Vendors

High turnover rate

  • 75% of CEOs whose companies’ stock rose during their first year were still in the same job two years later; however, 83% of CEOs whose companies’ stock fell during their first year were not at the same position (HBR, 2007) 
  • CEO turnover in the world’s 2,500 largest companies is at 17.5%, which means that every year corporations must appoint a new executive (Strategy & PwC, 2018) 
  • The rate of forced turnovers is at 20% (Strategy & PwC, 2018) 
  • Annual turnover among senior managers rises dramatically when a new CEO is appointed, especially if it is an outside hire (HBR, 2016) 

Succession strategies

  • 86% of leaders believe succession planning is an “urgent” and “important” priority, yet only 13% believe they do it well (Deloitte, 2014) 
  • 69% of respondents say that a CEO successor should be “ready now” to take over, 54% said they are grooming an executive for the position (Stanford, 2014) 
  • 79% of employers surveyed note that they have succession plans in place for mid-level management positions (Talexes, 2017) 
  • 81% of employers reported using some form of software for their succession planning process (Hireology
  • Only half of companies (50%) have written down the skills required for the next CEO (Stanford, 2010) 

Cost of a bad Company Leadership hire

  • 40% of new CEOs fail to meet performance expectations in the first 18 months (HBR, 2016) 
  • Large companies that underwent forced succession would have generated $112 billion more in market value had they planned the succession better (Strategy-business, 2015) 
  • Companies that have to fire their CEO lose an average of $1.4 billion in shareholder value, compared with companies with a succession plan (Strategy-business, 2015) 
  • Companies in the lowest performance quartile have poor succession practices, and force out CEOs twice as much as companies in higher quartiles (Strategy-business, 2015) 
  • Second-generation leaders of family-owned businesses have a 60% failure rate, and the succession from second-to-third generation has a 90% failure rate (EDSI Solutions, 2020

Different software and services can help companies with their succession planning needs. Companies can see the top Succession Planning Solutions on the Shortlister platform.