Organizational Bench Strength and Succession Plans

By American Management Association

Planning for smooth management succession is more important than ever. But many management teams have little or no strategy, an inadequate leadership pipeline and haven’t demonstrated the commitment necessary to undertake sudden change.

Are North American companies headed for a succession crisis? When a member of senior management suddenly leaves a position, a company’s ability to answer this critical question determines its continued success. The succession process lays bare the quality of an organization’s planning for such events, as well as its internal leadership pipeline, aka bench strength. However, according to the results of a new survey conducted by American Management Association Enterprise, senior and midlevel leaders believe their organizations are not well prepared for the inevitable
departure of top talent.

In an increasingly competitive, global environment characterized by fast-changing business conditions and a mobile workforce, planning for management succession is more important than ever. During the past several years, the attention of companies has been, of necessity, elsewhere,
as they struggled to cope with the financial crisis and its fallout—survival was paramount. Consequently, most senior and middle management teams are without either a commitment or a strategy to deal with the sudden loss of critical players.

After three years of uncertainty, U.S. companies are reporting positive earnings trends. But now, the lack of succession planning threatens to impact the bottom line. With the employment picture expected to brighten gradually over the near-term, companies can expect top talent to test the waters for better opportunities and competitors to recruit the talent that they were unable to acquire in the recent past. Increased mobility for top talent will further challenge companies lacking adequate succession strategies and management bench strength.

The companies that continue to succeed despite the departure of strategic leaders are those that prepare in advance—they have key players in place and they have implemented well-defined, comprehensive development programs, formal management training programs, and succession
plans. Developing a comprehensive, long-term succession plan is a critical element for continuity and success. Such plans start with talent: finding, growing, and retaining leadership-in-waiting. Having the best people in pivotal leadership roles, prepared to step in at any time, is essential for
future success.

AMA Enterprise conducted an online survey in December 2010 to probe perceptions of corporate bench strength as well as management succession preparedness. The study population consisted of 1,098 senior and midlevel business, human resources, and management professionals located in the U.S. (96%) and in Canada (4%).

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