The Value of Succession Planning

Harvard Business Review just came out with a new piece on The High Cost of Poor Succession Planning. The research to support their findings reveals that the market value wiped out by mismanaged CEO and C-suite transitions in the S&P 1500 alone is close a $1 trillion a year. Yes, you read that correctly. That’s T for trillion. Better succession planning could by, contrast, help the large-cap US equity market add a full point to the 4% to 5% annual gains Wall Street projects for it.

So what’s their conclusion? They state that companies and their directors must plan leadership challenges before they’re needed. They have to identify and develop rising stars and give them access to the board. Yes, you can still look at both internal and external candidates. And yes, it’s still ok to partner with executive search firms, albeit cautiously. It does make you wonder why these stellar executive search firms shouldn’t be tasked with reviewing the leading internal candidates as well? Now that’s a heady topic for another blog!

By Naseem Malik, Managing Partner