I always wondered how companies could actually run without having a good succession plan. In other words, when a CEO leaves a company, who takes care? Of course, the temporary solution is to hire an “Interim CEO” for a short term — generally less than a year. Interim CEOs come on board to replace predecessors who leave unexpectedly for a new position or to pursue other business opportunities, or to take care of ailing family members.

Year 2008 saw an increase in the number of such CEOs in the U.S. According to Challenger, Gray & Christmas, the average tenure among Interim CEOs through July was about six months. So far, 71 Interim CEOs have been replaced by permanent successors, including six in July.

An increase in the number of outgoing CEOs being replaced by interim leaders suggests that more executives are leaving or are being asked to leave without notice, according to Challenger, Gray & Christmas. When a CEO leaves after a short notice period, the process of handing over also gets affected. In the current economic conditions, it is also noticed that many Interim CEOs are taking over during weak earnings and difficult restructuring. This makes their task even more difficult.

On top of that, by the time Interim CEOs could understand the company’s structure, workflow and his responsibilities, the company would have incurred millions of losses. Worse is the havoc among the lower-level employees; uncertainty, instability and anxiety about the direction of the company inflate their minds. Furthermore, chaos among employees plunges productivity, decreases turnover, deflates morale and damages the bottom line.

So are companies adequately equipped to manage such situations as well as an unprepared CEO?