Even though the departure of a key member of the executive team is among the biggest disruptions a company can face, chief financial officers (CFOs) often fail to put in place a succession plan that can help to ensure a smooth transition when they leave the organization, the findings of a survey conducted by Robert Half Management Resources indicated.
The results of the survey of more than 1,100 CFOs at U.S. companies with 20 or more employees were released on December 20, 2018. The survey found that only 52% of all respondents reported that they have identified a successor for their position, and that just 37% of the CFOs polled who are at a small business (20-49 employees) said they have an heir apparent.
Of the respondents who indicated that they do not have a succession plan, 64% said they lack such a plan because they are not planning to leave the company in the near future. The other reasons given by these respondents for not having a succession plan included a lack of qualified candidates within their current organization (17%), being focused on other priorities (14%), and a lack of concern about the company’s future after they have left (4%).
Researchers pointed out that although companies faced with an unplanned departure frequently appoint an interim leader to fill the gap while a search is performed, it is prudent for executives to anticipate such a situation to ensure an orderly succession, and to prevent a protracted leadership void. They also warned that a company that does not engage in executive mentoring and knowledge-sharing can struggle with retention and run the risk of institutional expertise, and that high-level executive absences and departures can cause strategic decision-making to be put on hold. Finally, they cautioned that the lack of a defined advancement protocol can get in the way of internal promotions and undermine organizational confidence, which can negatively affect the professional development not just of executives, but of managers and staff.
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