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One in Five Companies Unprepared for Leaders’ Sudden Loss

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1/19/2011

One in five organizations is utterly 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% were said to be well prepared, while 61% 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 tailored 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.”

In your opinion, how prepared is your organization to deal with a sudden loss of key members of the senior management team?

Well prepared

14%

Somewhat prepared

61%

Not at all prepared

22%

Don’t know

3%


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. In other words, the findings mirror what people really think. And the respondents weren’t hesitant to share their opinions. Barely 3% claim not to have an opinion.”

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

How would you describe the leadership pipeline at your organization?

Robust

10%

Adequate

47%

Inadequate

39%

Don’t know

3%


Planning for a smooth management succession is more critical than in former years, according to the findings. “A big majority, 71%, say it’s more important, 27% that it’s about the same as in the past, and less than 1% think it’s less important, yet organizations neglect to sufficiently plan for such unhappy contingencies.”

But Edwards is not surprised by the survey findings. “Getting top leadership to focus on management succession is a perennial challenge. After all, even great leaders may not want to consider a worst case scenario. Moreover, finding, growing and retaining leadership in waiting are not easy.”

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.”

AMA Corporate Learning Solutions conducted the online survey in December 2010 in order to probe perceptions of corporate bench strength as well as management succession preparedness. The study population consisted of primarily senior-level business, human resources and management professional contacts drawn from the AMA. Ninety-six percent of respondents are from U.S.-based organizations and the balance from Canada.

About American Management Association/Corporate Learning Solutions
With more than 85 years’ experience and headquartered in New York, American Management Association (www.amanet.org) is a leading provider of comprehensive leadership, management and talent development. AMA’s specialized division, Corporate Learning Solutions, partners with corporations and government agencies to provide results oriented training solutions that are aligned with business, culture and workforce strategies.