Fortune 1,000 Firms Ignore Middle Managers in Succession Planning

Companies Unprepared: As their employees near retirement, large U.S. companies are woefully “unprepared for the looming brain drain” that will result, according to a report by Ernst & Young. Based on responses of human resources executives at Fortune 1,000 companies, it found that most companies apparently are giving lip service to employee development. In particular, organizations are at a crossroads in the area of succession planning. One in four companies say their middle-management ranks will be most affected as waves of retirement-bound employees exit the workforce. Even so, three-quarters of those with formal succession strategies in place focus exclusively on replacements for top senior executives, rather than identifying would-be middle managers.

Not surprisingly, the lack of deliberate succession planning results in higher costs: 52 percent of those surveyed say costs of recruitment have increased, while 43 percent have seen an increase in their training and development needs. The report warns that many companies will be exposed to “economic and productivity challenges” within five years unless they implement strategic succession plans.