The majority of businesses across Europe (51%) do not have a succession plan in place for leadership teams, according to a new report from Robert Half.

The firm’s report also showed that 80% of businesses that admit they do not have this strategy in place recognise they need one.

The data also shows that 64% of private equity investors are considering making leadership changes in their portfolio businesses to navigate the current economic climate.

Philip Hendrickx, managing director at Robert Half’s executive search practice, said, “When businesses replace executive leaders, the implementation of well thought-through recruitment and handover processes is paramount. While a large proportion acknowledge the importance of succession planning, many organisations are yet to put a plan in place. Such insight suggests that although considered a sensitive, even a taboo, issue, succession continues to be neglected.”

Hendrickx added, “Discovering strategic-fit top talent is key, with the boards typically having two choices to make: appoint someone from within the business or look for a C-suite leader with proven experience externally. With most private equity firms investing in non-listed, and in many cases family-owned, SMEs, one can argue the skills of the well-versed leaders private equity investors are looking for would be more readily available from outside the organisation. External leaders come with a raft of new ideas, immediate experience of the market, and time spent navigating the challenging macroeconomic conditions elsewhere, giving them the confidence to make bold and business-critical decisions fast.”

“When the succession plan favours the appointment of internal candidates, such leaders have the competitive edge in already understanding how the business operates, having experience at a senior level and knowing the individual stepping down. Previous hierarchical relationships might cause challenges, but if the new leader has been developed to take on the role, they will have the advantage of building trust beforehand,” Hendrickx said.