Understanding
Succession Planning

Why Is Succession Planning Important?

Succession planning keeps the heartbeat of an organization steady, even when leadership changes. Without it, operations can falter, knowledge evaporates, and teams lose momentum.

Benefits of Succession Planning

Ensures organizational continuity: By preparing for the seamless transition of leadership roles, succession planning prevents disruptions in operations.

Aligns with strategic business goals: It ensures that future leaders have the skills and competencies needed to lead the organization.

Preserves institutional knowledge: Succession plans ensure that senior employees’ valuable knowledge is transferred, preserving the organization’s intellectual assets.

Reduces reliance on recruiting to fill positions: Companies focused on retaining top employees and developing internal talent are equipped to thrive in a tight labor market. Depending solely on recruitment may fail to secure the talent necessary to meet an organization’s strategic goals.

Reduces turnover and improves productivity: Employees who cannot envision a clear career path often seek opportunities elsewhere. They are also more motivated to succeed.

Improves competitive advantage: Companies that invest in their people gain the capacity to innovate, integrate new technologies, and improve processes. All of these investments help position companies ahead of those that don’t invest in internal talent.

Optimizes employee development investments: Many organizations allocate budgets for training and development but fail to maximize these funds because they lack a spending plan. Succession plans direct training resources to developing future leaders responsible for executing the strategic plan.

Find out more about the benefits of accelerating the development of your leadership pipeline

How Does Succession Planning Improve Employee Engagement?

Employee engagement enhances an organization’s reputation as an employer of choice, which is crucial for attracting and retaining top talent. By creating detailed development plans, an organization can build and maintain a culture of engagement that boosts productivity and encourages employees to stay. Succession planning is a key component of these development plans, as it ensures a continuous pipeline of qualified candidates ready to step into leadership roles.

Low engagement levels can hinder an organization’s ability to effectively develop its best employees.  Succession planning can improve employee engagement by promoting from within, giving employees the opportunity to advance their careers, which serves as a powerful motivator.

Succession Planning Strengthens Employee Engagement In Several Ways

Provides clear career paths: Employees have higher job satisfaction and productivity when they see their future in the organization.

Fosters increased commitment: Employees feel more motivated when they see the organization is invested in their growth, especially during times of change.

Encourages recognition and development: Identifying high-potential employees and offering personalized development plans and mentorship increases morale and loyalty and fosters a positive work environment.

Creates a long-term perspective: A clear future within the organization promotes a long-term perspective that deepens employees’ connection to organizational goals.

When done well, succession planning creates a culture where employees feel motivated to give their best every day.

Why Should Succession Planning Be Linked to Organizational Strategy?

Integrating succession planning with strategic business plans ensures leadership development aligns with long-term business goals. Succession planning that isn’t rooted in the organization’s goals is like a ship without a compass. By aligning succession plans with strategic objectives, a business ensures that tomorrow’s leaders are ready to steer the organization toward its vision.

“Every succession effort is anchored around helping the business meet future challenges.”

Integrating Succession Planning with Organizational Strategy Offers These Benefits

• Supports long-term goals: Leaders are developed with the skills needed to drive the organization forward.
• Manages talent transitions seamlessly: Smooth transitions in leadership roles minimizes disruptions and maintains continuity in executing strategic initiatives.
• Aligns leadership styles: A cohesive leadership style reinforces company culture and, in turn, the company’s mission and values.
• Reduces risks: Preparing successors to step into leadership roles mitigates the risks of executing the strategic plan associated with leadership gaps.

See why organizational strategy is the foundation for effective succession planning

What Is a Succession Planning Process?

Succession planning follows a common process. A good process is structured and flexible, adapting to the organization’s unique context.

Step-by-Step Succession Planning Process

1. Define future needs: Start with the business strategy. What will leaders need to look like in 5 or 10 years?
2. Identify potential leaders: Don’t default to favorites. Effective succession planning involves considering multiple candidates for each role who may be a suitable replacement for a variety of positions. Cast a wide net, focusing on performance and potential. (A rule of thumb is to consider three people for each role.)
3. Assess capabilities: Use diverse inputs to understand potential leaders’ strengths and limitations. Assess candidates against a Success Profile or other established criteria.

After you define what success looks like and identify a diverse pool of successor talent, turn your attention to development, measurement, and decision.

4. Accelerate development: Provide targeted training, mentorship, and cross-functional exposure.  Development plans must be specific and actionable and should include a mix of leadership training and on-the-job learning via exposure to different parts of the business.
5. Evaluate progress: Monitor how candidates are progressing by measuring their skill acquisition and improvement over time. Adapt your development plans as needed based on the data.
6. Benchmark the external market: Understand how your candidates stack up against the market. Study how competitor talent is being developed. Maintain an external network to increase the optionality and diversity of your successor pool.
7. Make thoughtful decisions: Transition leaders with clarity and support into their new role.

Use these best practices to strengthen your succession planning strategy.

“The process is only as good as the managers’ ability to identify potential and develop talent. You need a mentality that enterprise talent is a corporate asset.”

Why Is the Advancement of Diverse Groups Important in Succession Planning?

Diversity isn’t just a moral imperative—it’s a business advantage. Promoting diversity ensures equal opportunities, creates an inclusive workplace, and leverages diverse perspectives to enhance organizational performance. Our research shows that diverse leadership teams are better at innovating, problem-solving, and understanding markets.

Reasons Why Succession Planning Should Focus on Diversity And Inclusion

Enhanced innovation and performance: Diverse perspectives enhance creativity and problem-solving, leading to better financial performance and overall success with a broader range of skills and viewpoints.

Broader market appeal: Diverse leadership improves customer relations and market understanding, tailoring services to diverse needs.

Strengthened culture and social responsibility: Promoting diversity creates an inclusive culture, enhancing engagement and satisfaction. It also demonstrates a commitment to equity.

Resilience and mitigating bias: Diverse teams navigate change and uncertainty more effectively with varied experiences. Including diverse groups in succession planning ensures a fair promotion process, considering the best candidates regardless of background.

By advancing diverse groups in succession planning, organizations build stronger, more adaptable teams and set themselves apart as inclusive and forward-thinking.

How Can Organizations Evaluate Succession Planning?

You can’t measure success with a gut feeling. You have to measure it using clearly defined, measurable objectives. Leaders should ensure the metrics align with strategic goals and evaluate the plan across various dimensions, including internal customer satisfaction, financial value, internal process improvements, and learning and growth.

Here are six metrics to measure to determine whether your succession plan is working:

1. Leadership readiness: Use assessments, performance reviews, and feedback from mentors to determine whether identified successors are ready to step into leadership roles.
2. Talent pipeline health: Evaluate the depth and breadth of your talent pipeline. Key metrics to look for include the number of high-potential employees, the diversity of the talent pool, and the proportion of key positions filled by internal candidates.
3. Business performance: Analyze the impact of succession planning on overall business performance. Study revenue growth, market share, and operational efficiency.
4. Time taken to fill key positions: The shorter the time, the more efficient your process of filling key roles.
5. Employee retention and morale:  Consider the impact of succession planning on employee retention and morale, particularly among high potential employees.
6. Retention rate of promoted employees: Track how long promoted employees stay with the organization post-promotion.

Measuring these metrics can help organizations adjust their succession strategy, ensuring they maintain a strong talent pipeline.