The financial services industry needs to focus on long-term company strategy to put succession planning back on the agenda.
Hay Group associate director Nicholas Conigrave has said that company boards do not spend enough time discussing their long-term strategic goals and so succession planning often falls by the way side.
"The strategic intent of the organisation is critical: if you don't know where you're going, how do you know what you need to get you there," Mr Conigrave said.
"So firstly you've got to have a very clearly articulated strategy, but the assumption that the board have a clearly articulated strategy to which they're all aligned is just that - it's an assumption."
Without a long-term strategic plan, businesses often struggle if they need to find a replacement unexpectedly.
But despite the financial services industry's facing increased regulation and the baby boomers' retirement, succession planning is not often factored into long-term strategic development.
"[Succession planning] takes time and it takes years," Mr Conigrave said. "Most organisations think you can just do it in three weeks before the chief executive is about to retire but in fact, as a bare minimum, you'd want to spend 18 months to two years."
With markets remaining unstable in the outlook for 2013, having a stable senior management team is more important than ever for the financial services industry.
According to Mr Conigrave, the industry needs to change the way in which it views succession planning, incorporating it into long-term goals.
"CEO succession is an ongoing process that doesn't start or stop - it's continuous, because continuity is a real risk," he said. "In these changing times, six months is an entirety if you don't have a leader."
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 21 Aug 2017Advisers key to ‘living the dream’: FPABy Staff Reporter
- 21 Aug 2017US IFA history repeats itself in AustraliaBy Killian Plastow
- 21 Aug 2017Licensees need greater scrutiny, PJC hearsBy Larissa Waterson
- 18 Aug 2017ASIC permanently bans former AMP adviserBy Staff Reporter
- 18 Aug 2017IRESS announces first half resultsBy Jessica Yun
- 18 Aug 2017Banks the key to closing advice gap, Tria saysBy Larissa Waterson
- view all