Getting ready for succession

‘Boards of directors want a top-notch general counsel who will be their trusted business advisor,’ says Cary McMillan, chief executive officer of True Partners Consulting, a global tax and business advisory firm. ‘But that takes work on the company’s part, as attorneys are in the minority at most corporations.’ This is what makes it particularly difficult to fill the corporate secretary position . Companies are looking for specialized talent and experience – and in large doses. Furthermore, the long careers of some corporate secretaries result in substantial amounts of accumulated legal and company knowledge, which ultimately makes replacement (and succession) a greater challenge. ‘Those who do become corporate secretaries tend to do so in their mid to late thirties,’ notes John McGuire, a partner focusing on corporate law matters at Ohio-based law firm Calfee Halter & Griswold. ‘They often retire from the position along with their early retirement from main employment – say, late fifties or early sixties.’ ‘I believe that succession planning for senior positions in any organization plays a vital role in achieving consistent, long-term success,’ says Fred Krebs, president of the Association of Corporate Counsel. ‘Succession planning requires careful thought and deliberation about what the organization needs and how to fulfill those needs.’

McGuire, who specializes in succession planning, agrees with this sentiment, strongly believing that a comprehensive plan of action should be in place by the time a corporate secretary is ready to leave the firm. ‘Succession remains a critical issue at any firm,’ McGuire explains. ‘The folks remaining behind need to know what is expected of them. Things can change abruptly, and you need to be prepared.’ Adding to the problem is the uncertainty that many firms face when it comes to succession planning – as evidenced by the mushrooming collections of analyses on this issue. ‘The findings point to a looming management succession crisis among North American companies,’ says Sandi Edwards, senior vice president of AMA Corporate Learning Solutions, which offers advisory services and tailored learning programs to organizations.

Formal Succession Planning Decreases in U.S. Organizations ...

Alexandria, Va. – June 16, 2010 – The number of U.S. organizations with a formal succession plan in place decreased during the past five years from 29 percent in 2006 to 23 percent in 2011 according to a poll from the Society for Human Resource Management.

While less than a quarter of businesses have a formal plan in place, the numbers improve when informal plans are considered. More than one-third, or 38 percent, of HR professionals said their organization currently has an informal succession plan or process in place (up from 29 percent in 2006).

The number who said their organization has no intentions to develop a plan remained roughly unchanged from 16 percent in 2006 to 17 percent in 2011.

Sixteen percent said their organization’s staff size is too small to create a formal succession plan.

“The number one reason organizations are not developing formal succession planning is because more immediate projects are taking precedence—not surprising given that organizations are focusing their energies on dealing with an uncertain economic outlook,” said Evren Esen, manager, Survey Research Center at SHRM. “Still, succession planning has significant strategic implications for organizations and should not be put on the back burner, especially during times of economic volatility.”

While roughly four in 10 HR departments lead the organization’s succession plan initiatives, 21 percent of efforts are lead by the organization’s president or CEO. Thirteen percent of efforts are lead by executives such as the chief financial officer or the chief operating officer. Only four percent are lead my middle managers and three percent by the board of directors.

“This is an area that HR should lead in organizations,” said Esen. “Currently only 40 percent of HR departments lead succession planning efforts,” she noted. “Maybe planning would increase if HR ran the programs.”

For details, visit the survey section of SHRM Online at http://www.shrm.org/surveys . Follow SHRM Research on Twitter @SHRM_Research.

Media:

For more information or to schedule an interview with a human resource expert, contact Julie Malveaux of SHRM Media Relations at 703-535-6273 or Jennifer Hughes at 703-535-6072 and jennifer.hughes@shrm.org .

About the Society for Human Resource Management

The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China and India. Visit SHRM Online at www.shrm.

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