While employers across the country are gearing up to attract talent in the coming year, one position that won’t require any recruiting is that of Chief Financial Officer (CFO). A new survey, released by Robert Half Management Resources, finds that almost half of all respondents say their company doesn’t have a succession plan in place for CFO positions because they don’t anticipate that they’ll have to use it.
According to the survey, 52% of CFOs said they have identified a successor for their position, which is a good strategy in a tight labor market. With CFOs planning their future departures, it’s one less position that recruiters and hiring managers will have to fill. But what about the other 48%?
Of the respondents without a succession plan, 64% said it was because they were not planning to leave the company in the near future. Again, this is great news for employers. However, respondents who have yet to identify a successor say it’s because there is a lack of qualified candidates within their current organization (17%).
The survey also found that other reasons were to blame for the lack of succession, specifically, respondents claiming they were too busy and had to focus on other priorities (14%). While some (4%) simply say it’s not a priority because they will no longer be at the company.
It may not be a priority for departing CFOs, however, it is a huge priority for the company he or she is leaving behind. Robert Half Management Resources says that when companies do not have a succession plan in place, it can lead to these five potential pitfalls:
- Business disruption—Productivity and operational efficiency are at risk without a contingency plan. An orderly succession ensures that a leadership departure remains a manageable event rather than an organizational crisis.
- Legacy loss—A company that doesn’t engage in executive mentoring and knowledge-sharing can struggle with retention and potentially lose institutional expertise.
- Strategy standstill—High-level executive absences and departures can put strategic decision making on hold and impact long-term projects and initiatives.
- Succession ambiguity—The lack of a defined advancement protocol can hinder internal promotions and undermine organizational confidence, impacting everyone from the CFO aspiring to a CEO role to executives and staff throughout a company.
- Protracted leadership void—Companies faced with an unplanned departure frequently appoint an interim leader to fill the gap while a search is conducted, but it’s prudent for executives to anticipate such circumstances to ensure a smooth transition and graceful exit from the role.
With unemployment at an all-time low, having a succession plan in place for all employees—not just CFOs—is a great strategy. As one expert says, “While succession planning was once reserved for the C-Suite, in a time of almost full employment, companies need workers in the pipeline or [they] risk grow[ing].”
For more information on succession planning, click here.