In fact, we’ve seen two CEOs depart from large, high-profile organizations in just the past nine days.
On Jan. 28, the Oak Brook, Ill.-based McDonald’s Corp. announced that CEO Don Thompson would retire at the end of February. That news came just two days after Mattel Inc.’s Bryan Stockton resigned from that company’s top post.
Both of those organizations looked within their own walls to replace erstwhile chief executives. Chief Brand Officer Steve Easterbrook will take the reins at McDonald’s, while longtime Mattel board member Christopher Sinclair was named the El Segundo, Calif.-based toymaker’s chairman and interim CEO.
Korn Ferry’s new Succession Matters report suggests that most executives favor such an approach to executive succession; one that relies more on “building” (developing from within) than “buying” (hiring from the outside) when sourcing leadership talent.
More specifically, the poll of 1,009 C-level respondents found most executives reckoning the right mix of “build” versus “buy” should be 2:1. Nevertheless, close to half of the survey’s respondents—from companies ranging in size from 500 to more than 50,000 employees—said their organizations depended more on outside hires to fill leadership positions.
And, looking more broadly at succession management, it seems many executives have issues with their companies’ efforts that go beyond where they’re looking for C-level talent.
Overall, just 36 percent of executives said they were “satisfied” or “very satisfied” with their company’s succession-management programs. Less than one-third (23 percent) reported having a solid pipeline of “ready now” candidates for leadership roles.
Part of the problem is that many succession-management programs “don’t go deep enough into an organization” in search of executive-caliber talent, says Jim Peters, lead for global succession management at Korn Ferry.
For example, the study finds 78 percent of executives saying their organization’s succession-management programs only include the title of “vice president” and above.
“I often say to CEOs: ‘There are several potential CEOs within your organization; you and many others at different levels in the leadership pipeline, with one being an individual contributor in Mumbai,’” says Peters. “[I ask these CEOs] ‘Do you know who she is? And if you know who she is, what would you do to ensure that she would have the skills and capabilities to lead the enterprise 15 or 20 years from now?’”
Building a “world-class” succession-management program requires integrating talent processes that make the whole “much greater than the sum of its parts,” adds RJ Heckman, president of Korn Ferry’s leadership and talent consulting business.
“Companies that do not have a ready supply of leaders leave talent processes separate and unintegrated,” says Heckman. “Recruiting is not related to performance, is not related to learning, is not related to succession … and lo and behold, you don’t have a ready slate of candidates when the proverbial emergency hits and you need candidates [for] senior positions.”Twitter It!