The Steve Jobs Effect: 20% of Companies Are Not Ready for Leadership Loss

The big question on the mind of everyone who follows Apple is this: What will they do if Steve Jobs doesn’t come back?

It’s a great question, because as The New York Times notes, “For many people, Apple would not be Apple without Steven P. Jobs.”

But it’s a problem that many companies and organizations seem to have these days, with a just released survey indicating that, “one in five organizations is utterly unprepared to deal with the sudden loss of its key leaders.”

So much for smart succession planning. Call it “The Steve Jobs Effect.”

Only 14% “well prepared” for key leadership loss

According to an online survey of nearly 1100 senior managers and executives by American Management Association Corporate Learning Solutions, only 14 percent of companies said they were well prepared to deal with such a key leadership loss, while another 61 percent said they are “somewhat prepared.”

While the future of Jobs and Apple may be on everyone’s mind this week, the findings of this survey point to a larger (and perhaps more troubling) looming management succession crisis among North American companies said Sandi Edwards, Senior Vice President for AMA Corporate Learning Solutions, which offers advisory services and tailored learning programs to organizations.

“Just a small minority of organizations seem ready to manage a top-level succession in an emergency,” she said, “which means most companies are taking a huge risk by failing to address their bench strength issues.”

AMA asked the question, “In your opinion, how prepared is your organization to deal with a sudden loss of key members of the senior management team?” Here’s the response:

  • Well prepared — 14 percent;
  • Somewhat prepared — 61 percent;
  • Not at all prepared — 22 percent;
  • Don’t know — 3 percent.

According to Edwards, the survey data provides an “unvarnished perspective” of management succession preparedness.

“Our findings aren’t based on an official response from corporate leadership, but instead come from middle to senior-level respondents at more than 1,000 organizations across the U.S. and Canada,” she said in a press release accompanying the survey. “In other words, the findings mirror what people really think. And the respondents weren’t hesitant to share their opinions. Barely 3 percent claim not to have an opinion.”

Similarly, survey respondents were critical of their organization’s leadership pipeline, observed Edwards. “Again, the respondents weren’t shy about their viewpoint. Scarcely half believe their company’s bench strength is even adequate, and merely 10 percent think it’s robust.”

Just 10% say leadership pipeline is “robust”

This is one of the areas where Apple gets high marks despite whatever happens to Steve Jobs, because Apple is widely acknowledged to have a deep leadership bench around him.

Article Continues Below

“The company could not thrive if Steve didn’t have an extremely talented team around him,” David B. Yoffie, a professor at Harvard Business School who has studied the technology industry for decades, told The New York Times. “But you can’t replace Steve on some levels.”

But Apple’s deep bench and leadership pipeline is rare compared to organization’s who responded to the AMA survey. When asked the question, “How would you describe the leadership pipeline at your organization?” only 10 percent said is was “robust.” Another 47 percent said it was “adequate,” while 39 percent indicated that it was “inadequate.” Again, 3 percent said they just didn’t know.

What is interesting about the survey findings is that companies understand completely how important succession planning is even if they aren’t really doing it. Some 71 percent agreed that “planning for a smooth management succession is more critical than in former years,” the survey found, while 27 percent said that it’s about the same as in the past, and less than 1 percent think it’s less important.

This isn’t surprising, but AMA’s Edwards notes that, “Getting top leadership to focus on management succession is a perennial challenge. After all, even great leaders may not want to consider a worst case scenario. Moreover, finding, growing and retaining leadership in waiting are not easy.”

A simple lesson: prepare for the “what if” factor

For the past two years, Edwards said, senior management has been focused on cost cutting and survival. “But now it’s time for investment in sustainability and competitive advantage, which must be based on talent. Having the best people in pivotal leadership roles, prepared to step in at any time, is essential for future success.”

AMA Corporate Learning Solutions conducted the online survey in December 2010 in order to probe perceptions of corporate bench strength as well as management succession preparedness. The study population consisted of primarily senior-level business, human resources and management professional contacts drawn from the AMA. Ninety-six percent of respondents are from U.S.-based organizations and the balance from Canada.

The lesson here in the AMA survey is simple: your company may not have to replace a Steve Jobs, but you undoubtedly have some key performers and leaders you would be hard pressed to do without. The more you can do to prepare for the “what if” factor should they suddenly be gone, the better off your organization will be to survive — and thrive — in the uncertain future to come.

John Hollon is Editor-at-Large at ERE Media and was the founding Editor of TLNT.com. A longtime newspaper, magazine, and business journal editor, John has deep roots in the talent management space. He's the former Editor of Workforce Management magazine and workforce.com, served as Editor of RecruitingDaily, and was Vice President for Content at HR technology firm Checkster. An award-winning journalist, John has written extensively about HR, talent management, leadership, and smart business practices, including for the popular Fistful of Talent blog. Contact him at johnhollon@ere.net, connect with him on LinkedIn, or follow him on Twitter @johnhollon.

Topics