Half of Canadian businesses in a recent survey do not have a succession plan, a growing problem in aging boardrooms, says the Canadian Institute of Chartered Business Valuators.
"Business owners and leaders are pulling up stakes in a boomer-led management exodus over the next decade," the report said. "As many as 50% of Canada's businesses may not be ready to cope with this massive change and associated loss of experience."
As well, as many as 70% of business owners will be set to retire before 2020, the report said.
The CICBV surveyed more than 200 Canadian executives and business leaders over a period of several months.
"We found a lot of entrepreneurs had succession and exit plans: Whether those would work or not was another thing," the report said.
Recently, Tim Hortons Inc., had to pay out $6.1-million in severance and consulting salary to ex-chief executive Don Schroeder, after the two parties tussled over a succession plan.
Mr. Schroeder abruptly left the coffee and doughnut maker at the end of May, only weeks after presiding over the company's annual general meeting.
Part of the problem for many aging executives is that the 2008 financial crisis and resulting recession came just as they were winding down their careers, ready to shuffle off to pasture with their legacies secure.
"That puts plans on hold. They are being forced to rebuild in a business climate they may not understand, against competitors they may never see coming," the CICBV said.
A chief executive in consumer services lamented that four of their most senior staff in one department were all over 60.
"It's about knowledge transfer. I'm afraid to death of losing the legacy of the organization through this," the chief executive said.
And one chief executive of an energy company complained that many private and family businesses have gotten "spooked" and may sell before they are ready.
"They thought their cash cow would go forever — now it's a drag on them as they try to carry on in a difficult world and even the good ones are saying: 'I can't take much more of this. I'd rather sell.'"
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