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News Release

February 21, 2007

Companies Unprepared for Baby-Boomer Exits, Says U of G Prof

This research was featured in the Globe and Mail.

The departure of baby-boomer executives from the workforce is imminent, but most Canadian organizations aren’t preparing to fill their big shoes, a University of Guelph professor has found in a new study.

Peter Hausdorf, a psychology professor and associate researcher with U of G’s Centre for Leadership Studies, and PhD candidate Rebecca Slan Jerusalim surveyed more than 700 managers from about 150 Canadian organizations and found that succession management strategies were lacking. Their study will be published in an upcoming issue of the Journal of Management Development.

“In 2004, only 18 per cent of companies had implemented an executive replacement process,” said Hausdorf, who completed the study in conjunction with MICA Centre for Leadership. “To me, that’s basic; I thought it would be a given for organizations. If someone gets hit by a bus, you need to know who will step in the next day.”

“Identifying and developing specific managers to fill key leadership positions is the first of three components of succession management critical for organizations,” said Hausdorf. “The second is identifying and developing a pool of talented managers who could be future leaders and the third is ensuring employees have developmental opportunities to meet their career goals.”

Not only did the study find that most Canadian companies aren’t ready to respond to unexpected changes in their leaders, but it also found that only 31 per cent were identifying future leaders and offering them career development programs.

“The whole practice of identifying managers with high potential is relatively new,” said Hausdorf. This study is the first in North America to examine how people are identified within organizations as future leaders and what’s being done to foster their talents.

“When companies have to select leaders under crisis situations, that’s when they’re most at risk,” he said. “If they have to find someone very quickly and haven’t prepared anyone within their organization, they’re probably going to make a bad decision.”

On the other hand, if an organization has an effective succession management plan in place, it will help build the knowledge and competencies of managers already in the organization and produce better leaders, he said.

The process of identifying future leaders and developing their careers allows people to see that there are fair processes and outcomes in place, said Hausdorf.

“Justice is an important concept because it has an impact on people’s performance − whether they stay and how much effort they put in. Since succession management strategies are meant to keep your best people, you want to make sure they’re fair so you don’t end up losing people.”

The study specifically found that having a transparent high-potential identification process − with employee input, open communication and evaluation of the process − led to employees believing the process was more fair than when these characteristics were lacking.

Organizations are at risk because they’re reliant on the skills people have, but the best employees have many choices and can move around, said Hausdorf. “That’s why leadership succession programs are so critical. If you’re talented and the organization you’re working for isn’t fostering that talent, then you might go to a competitor that does offer incentives and opportunities.”