Over the past three-and-a-half years, three CEOs have left tech companies in the U.S. every week. This is more than any other 26 for profit sectors that executive search firm Challenger Gray & Christmas tracks. Because tech companies are in constant flux, you would think they should be the model for how to prepare for leadership transitions.They are far from it.The most important moment in any organization's life cycle is the change of command. Mishandled transitions from CEOs to other leaders can lead to a decrease in market value, momentum, focus, key personnel, and even loss of customers and partners. This could even be the turning point for an organization that is on its way to irrelevance.According to our survey of leaders in corporate Americas, 84% believe that succession planning is more crucial than ever with so much at stake. Seventy-two percent of the respondents to our survey agreed that tech companies are subjected to greater scrutiny than multinationals when they transition.84% of tech executives agree that succession planning has never been more important in today's rapidly-changing business environment.We found that tech executives are just as unprepared as peers from other industries for C-suite changes. Three-fifths of respondents stated that their companies don't have a plan for handling a leadership transition. However, that same ratio also indicates that they believe that having a plan is crucial to smooth transitions.These findings might not be so troubling if the respondents were founders of millennial startups, who are years away from quitting their company. However, we polled 160 executives from companies that have been around for at least 15 years. 35 of these are tech companies. This is the largest industry cohort.The smallest companies employ at most 1,500 people and generate $500 million annually. While the largest companies employ over 500,000 people and generate revenue in excess of $100 billion, they have more than 500,000 employees. They are able to plan for crisis management and risk management, as well as what to do if their leaders become victims to the "milk truck".One important reason tech execs need to be more careful about succession planning is institutional memory. According to McKinsey & Co., tech firms are generally younger than companies of a comparable size. This partly explains why S&P 500 companies' median age dropped to 33 years in 2018 versus 85 years in 2000.Although these companies have achieved a lot in their short time, they haven't captured their history like their more long-lived counterparts in other industries. In fact, less than half of these tech companies have recorded the stories of their leaders for posterity. This puts them in a disadvantage when they are required to hire new members to their C-suites.This history should be recorded before the chaos of a leadership transition. It will be crucial for the future leaders and incoming generations to understand the key aspects of the organization's track record, lessons learned, culture, and identity. It also explains how the organization evolved, what has brought people together and what might cause resistance. It's about looking forward, not back.Our poll found that 85% of executives agree with this sentiment. A company's history can serve as a guide for new executives, with 85% saying it can help them learn from past mistakes and prepare for future challenges. One respondent stated that history is the mother of innovation in any company. Another respondent writes that history includes both the road map to successes and failures.This documented history is not a biography of the departing CEO. Too often, outgoing CEOs spend their final years in office building their own trophy cases. Even though they admitted their ineptness regarding transition planning, most execs stated that they had already taken steps to strengthen their personal legacy. Two-thirds of them said that they have completed formal legacy planning, some with the blessing of their boards.Ironic that three-quarters of the five said that the legacy of a founder or CEO often outweighs the skills and experience of the successor. According to two-thirds, tech executives believe that the longer a leader is in office the more difficult it is for a successor.This is possible for tech leaders, and they have succeeded. Respondents No. Apple's transition from Steve Jobs to Tim Cook (38%), was followed by Microsoft's page-turn from Steve Ballmer and Satya Nadella (28%). The votes for General Electric, General Motors, and Goldman Sachs were all less than 13%.Apple's apparent dominance in this survey may contradict the advice to minimize the aggrandizement caused by an exiting CEO, and to highlight the compilation of and transfer of the organization's history to the next chief executives. Jobs managed his legacy meticulously until the end, and that was a fact. Jobs was still the star of the show, but he made sure to share Apples institutional knowledge with Cook throughout their 13-year tenure on Apples executive floors.Everyone in today's C-suite, including founders of startups, will soon leave. They should start preparing for the day as soon as possible to ensure that they leave a legacy.
