Are Executives Really in Short Supply?

The sentence can be true and still leave the company exposed. A title can be filled. A recruiter can produce a slate. An experienced executive can arrive with sound judgment, relevant industry knowledge, and a record of carrying difficult work.

The harder question is how many suitable people exist for this company, in this market, at the moment the need becomes urgent. A plant in a specialized region, a business with an unusual regulatory environment, or a company whose relationships have gathered around one operator may face a thinner answer than the board imagines.

Replacement also contains two clocks. One ends when someone accepts the role. The other ends when that person understands enough of the company to make consequential decisions without the old route beside them.

Sauvagnat and Schivardi used exhaustive Italian social-security records covering private-sector workers from 2005 through 2015, matched with firm financial data. They studied premature executive deaths as plausibly exogenous shocks and defined executive labor-market thickness by industry and location.[Are Executives in Short Supply? Evidence from Death Events]

Across the sample, return on assets fell by about 0.8 percentage points in the year of death and the following three years. The average concealed a sharp split: firms in thin executive markets experienced an estimated decline of roughly 1.8 percentage points, while the authors found virtually no performance effect in thick markets. In thin markets, return on assets recovered to its prior level only four years after the event.[Are Executives in Short Supply? Evidence from Death Events]

The study concerns abrupt deaths in Italy, not planned U.S. retirements. Market thickness was local and industry-specific, and the design cannot supply a forecast for one company. Its value is the mechanism: suitable executive supply can affect how well a firm recovers, even when the vacancy itself is eventually filled.

The authors found that firms in thin markets hired replacement executives with lower education and experience levels, and those executives were more likely to leave in later years. Peer executive wages also rose after a death event in thin markets, consistent with added demand meeting scarce local supply.[Are Executives in Short Supply? Evidence from Death Events]

The number of executives recovered in both thick and thin markets at a broadly similar pace. The performance difference therefore did not appear to come simply from leaving the seat empty longer. Match quality and the available field of candidates mattered.

For a board, that distinction changes the preparation question. “Who could occupy the role?” belongs beside “How wide is the credible market?” and “What must the company continue carrying while a new person learns this particular terrain?”

A transition can struggle because the company cannot find enough suitable candidates. It can also struggle because a strong incoming executive lacks customer history, operating exceptions, informal authority, or the reason behind inherited commitments. The first problem sits mainly in the labor market. The second sits inside the company.

Executive search and assessment specialists address the external field, candidate comparison, and role fit. Internal continuity work identifies the consequential capability that should not wait for a new leader to reconstruct it through avoidable mistakes. One service cannot be treated as a substitute for the other.

The Dependency Assessment helps owners examine whether important decisions, relationships, history, or access remain concentrated before deciding what kind of response is proportionate.

Begin with decisions that cannot simply pause: a quality threshold, lender covenant interpretation, customer recovery, allocation during a supply constraint, or regulatory escalation. For each, identify who notices the issue, who holds the history, who can decide, and what external expertise is already available.

Then ask what the replacement market changes. Could an experienced industry executive understand the decision quickly? Does the work depend on a local network or facility-specific knowledge? Is there another internal person who can carry the situation temporarily? Where would a new hire need guided cases rather than a binder?

This produces a more useful continuity plan than a universal claim that the departing executive is irreplaceable. Some capability may be available in the market. Some can be spread internally. Some deserves deliberate reconstruction before access closes.

A national company may operate in a thick market for general executives and a thin one for a leader who understands a particular process, region, customer set, or regulated product. The scarce person may sit below the C-suite. A commercial officer may be replaceable while one technical operator remains unusually difficult to match.

That is why a company-wide view should follow consequential capability rather than title prestige. The question is where only one dependable route remains—and whether the outside market, the internal bench, or a documented and practiced alternative can provide a second one.

The Atlas examines concentrated decisions and relationships across several people or roles. The Map is the narrower starting point when one person clearly carries the dependency.

Calling someone replaceable can dismiss the real company-specific work gathered around them. Calling them irreplaceable can become an excuse to avoid building another route. The evidence points toward a conditional question: replaceable by whom, from which market, with what preparation, and over what period?

Not Every Retirement Is a Knowledge Crisis shows why average turnover effects are modest and why attention should follow concentrated consequence. This study adds another part of the answer: the available supply of suitable executives can change how well a company absorbs the loss.

A succession plan cannot make the market thick. It can keep the company from discovering, in the same week, that the market is thin and the internal route was never drawn.