CHICAGO — Succession plans may play a crucial role in the future of senior living, as more than 70 percent of nonprofit CEOs will likely retire within the next 10 years according to a recent survey by Ziegler.
The Chicago-based investment bank polled nearly 145 senior living CFOs and financial professionals. The CFO Hotline poll was also conducted in 2013 and 2015, offering historical comparisons.
Respondents were asked to estimate how long their organization's CEO has until retirement. One-third of the respondents indicated that their CEO will likely retire in less than five years, while another 40 percent estimated that their CEOs will retire in the next five to 10 years.
This is an acceleration from previous years — 68 percent of respondents suggested their CEO would retire within 10 years in 2015, up from 62 percent in 2013.
Despite this wave of incoming retirements, only 35 percent of respondents said they had a formal written succession plan in place for the eventual departure of the CEO. This is actually down from 2013, when 39 percent of respondents had a succession plan.
The survey did set off alarm bells for several respondents, who were allowed to add anonymous comments to their responses.
“Our organization may have a succession plan for the CEO, but it has not been communicated to anyone,” one respondent told Ziegler. “I think that it is important for our boards to plan, and our board/CEO have been reluctant to do so.”
Several respondents said that a succession plan was either unwritten, or its creation was currently in progress. Some noted that if a strong candidate was not available internally, the CEO’s eventual departure could be extremely hard to fill.
“[The] limited supply of individuals with the skillset to run different types of organizations in different geographical locations remains a challenge,” said one respondent. “The high cost of living in my market makes it also difficult to recruit from other states.”
Another respondent echoed that sentiment, noting that the industry is “not seeing an abundance of emerging leaders.” Another respondent put it rather bluntly: “Our organization is completely unprepared for succession planning at any level.”
To view the rest of the survey results, click here.