Survey: 72% of Public for-Profit Companies have Succession Plans

June 9, 2006 ( - Most HR professionals say their company has or is planning to develop a program aimed at training leaders within the company.

Eighty-four percent of HR professionals surveyed in the Society for Human Resource Management’s 2006 Succession Planning Survey said that their organization has a succession plan or intends to create one in the near future. Some 29% say they will develop a plan soon, and 72% of publicly owned for-profit companies have formal succession arrangements, according to the survey released Thursday.

“Succession planning no longer centers on merely replacing vacancies as they arise,” according to a news release on the survey. “Today, succession planning is a more sophisticated approach that ensures continuous development of employees to fill key roles.”

Formal succession plans, as defined by the survey, are defined as a recognized policy or process for developing and filling specific positions, whereas informal succession plans are not officially recognized. The SHRM report suggests that organization begin shifting from informal plans to formal plans.

In 2003, only 29% of 428 HR professionals polled said they had implemented succession planning or replacement charts. Nearly one-third said in the SHRM Older Workers SurveyReport that year that their organizations were not doing anything to prepare for the impending wave of retiring older workers and the skill sets they will take with them.

The survey results show the attitudes toward such formal plans have changed somewhat and are most common among organizations with 500 or more employees:

  • 36% percent of such organizations have formal succession plans;
  • 23% of medium-sized companies (100-499 employees) have such plans;
  • 19% of smaller firms have formal plans.

The survey found that some types of organizations are more prone than others to have formalized plans:

  • 72% of survey respondents in publicly owned for-profit firms have formal succession plans
  • 45% of privately owned for-profit organizations have formal plans.
  • 32% of nonprofit organizations
  • 31% of governmental entities have formal plans.

Survey respondents agree or strongly agree that a succession plan should have qualities such as:

  • Identifying employees who could potentially fill future vacancies in leadership positions.
  • Ensuring that critical positions within the organization have proper successors.
  • Considering the organization’s long-term objectives and goals.
  • Identifying prospective vacancies in leadership positions.
  • Considering workforce trends, such as an aging workforce, retention and turnover.