November 5, 2010

HR Fact Friday: Companies Unprepared for Succession at the Top

Filed under: Succession Planning — Tags: , , — Paul @ 6:00 am

More than half of survey respondents from U.S. and Canadian companies could not immediately name a successor to their organization’s CEO, according to research conducted by executive search firm Heidrick & Struggles and Stanford University.

The research conducted last spring, surveyed 140 CEOs and directors at large and mid-cap public companies in the U.S. and Canada, with 10% of respondents coming from large private companies.

Other findings:

  • While 69% of respondents said that a CEO successor neeeds to be “ready now” to step into the shoes of a the departing CEO, only 54% are grooming an executive for this position.
  • 39% of respondents cited having “zero” viable internal candidates. This points to a lack of talent management and succession planning.
  • On average, boards spend only two hours a year on CEO succession planning.
  • Only 50% have a written document detailing the skills required for the next CEO.
  • 71% of internal candidates know they are in the formal talent development pool, but there is regular communication – typically yearly or biyearly – for only 50% of these internal candidates.
  • While 48% of respondents said they have an extremely strong or very strong understanding of the capabilities of internal candidates, only 19% have extremely well-established or very well-established external benchmarks to measure those candidates’ skills.
  • Furthermore, once the new CEO is installed, only 50% of companies provide onboarding or transition support for him or her.

Source: HR Magazine, October 2010, Theresa Minton-Eversole, pg 22

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January 9, 2009

HR Fact Friday: CEO Salaries in for Rough Year

Filed under: Salaries & Pay — Tags: , , , — Paul @ 11:57 am

There may be one common sense result from the current economic downturn and resulting unemployment and fiscal belt tightening.  After rising unchecked for years, CEO pay may be headed for a fall.

Compensation experts say the severe economic downturn, a shift in the political winds and shareholder outrage could finally combine to pressure companies to limit raises or, in some cases, even cut executive salaries.

That has occurred a few times already. Last month, Motorola Inc., facing drastic cost cuts, announced that its co-CEOs, Gregory Brown and Sanjay Jha, had agreed to take 25% reductions in 2009 salary. Caterpillar Inc. recently said its executives, including CEO Jim Owens, could see their total compensation decline by as much as 50% next year because of cuts in incentive pay. Both companies cut rank-and-file compensation as well.

Reducing executive pay has a minor impact on profits, but it helps companies avoid the perception that CEOs don’t suffer along with employees and shareholders.

It’s anybody’s guess who might join executives at Motorola and Caterpillar in having their wallets lightened. Candidates could include UAL Corp. CEO Glenn Tilton and Boeing Co. chief James McNerney.

Both companies face job cuts, and both men rank among the highest-paid CEOs in Chicago. United Airlines pilots, who are facing the loss of 950 jobs, have called for the ouster of Tilton and say he should at least take a pay cut.

A UAL spokeswoman said the company’s executive pay “is market-based and on par with other comparably sized companies.”

This year, compensation experts expect changes in federal law to impose so-called “say on pay” measures universally. The legislation likely will be introduced in the House early this year, two years after Congress last voted it down. The sponsor of the failed 2007 bill: then-Sen. Barack Obama.

Source:  John Pletz of Crain’s Chicago Business, a sister publication of Workforce Management.

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