70% of Executives Fail in First 18 Months
A Corporate Executive Board study reveals the alarming rate of executive failure, highlighting the need for effective succession planning, which poses significant challenges for companies, including identifying the right candidate profile and evaluating candidates effectively
Succession planning poses significant challenges for companies, with a staggering 50 to 70 percent of executives failing within the first 18 months of a promotion, according to a Corporate Executive Board study. This high failure rate underscores the importance of getting succession planning right.
The first challenge in succession planning is a lack of clarity about the profile the new leader needs. To overcome this, companies must deeply understand their current business strategy and where it is heading, allowing them to define clear requirements and selection criteria from the outset. However, organisations often default to looking for leaders who resemble the person retiring, or who fit the demands of today's success rather than tomorrow's.
Building a correct process for identifying and evaluating candidates is the second challenge in succession planning. This requires multidimensional input, including structured interviews, 360-degree evaluations, psychometric tests, and other sources. A complex, simulated future situation assessment can also be a useful tool for evaluating candidates.
Effective succession planning requires a thorough understanding of the company's future needs, rather than simply replicating past successes. By understanding the business strategy and where it is heading, companies can identify the right candidate profile and evaluate candidates effectively.
## Why it matters The high failure rate of executives highlights the critical importance of effective succession planning. Companies that fail to plan for succession risk appointing leaders who are not equipped to drive the business forward, leading to potential losses and damage to the organisation's reputation. By addressing the challenges of succession planning, companies can reduce the risk of executive failure and ensure a smoother transition to new leadership.
## What happens next As companies continue to grapple with the challenges of succession planning, it is essential to develop a robust and effective process for identifying and evaluating candidates. By doing so, companies can increase the chances of appointing a successful leader and reduce the risk of executive failure. This requires a deep understanding of the company's business strategy, a clear definition of the required leadership profile, and a thorough evaluation of candidates using multidimensional input.
