Succession Planning: How to Strategically Map Out Your Company’s Future

Apr 25, 2024 | HR Trends, Talent Management & Recognition

Good succession planning ensures a company’s long-term success and stability. By identifying people with the right leadership style and potential for specific positions, succession planning will help your organization seamlessly navigate future role changes.

The Society for Human Resource Management (SHRM) compares it to a high-stakes game. “Succession planning is a bit like chess in that business leaders and their HR teams must assess the board with an eye on the next move—and the next five moves thereafter,” they write. “If one piece falls, they must develop a winning strategy using the pieces that remain.”

Yet just 21% of companies have implemented a succession plan—and 24% only have a vague, informal plan. Given its importance, why do companies put off succession planning? Thirty-one percent cite a lack of time and resources, 18% say they’re too small for one, and 15% say they’re family-run, reports SHRM. Many companies wait until a crisis happens—someone retires suddenly, or multiple people leave—and then scramble to fill these roles. This leads to hasty decision-making that can negatively affect the company’s future.

In this article, we’ll delve into the key elements and benefits of effective succession planning. From identifying potential successors to overcoming common challenges, we’ll address how to design a winning succession plan.

Table of Contents

1. Understanding Succession Planning

2. The Need for Succession Planning

3. Identifying Potential Successors

4. Developing Future Leaders

5. Succession Planning for Different Roles

6. Challenges in Succession Planning

Understanding Succession Planning

The purpose of succession planning is to identify and develop future leaders, as well as to fill crucial roles throughout the organization. Implementing this plan allows you to maintain organizational continuity. Let’s discuss the idea of succession planning vs. replacement planning to be clear on what it entails. Then, we’ll delve into what an organization-wide succession plan looks like.

Succession Planning vs. Replacement Planning

Is “succession planning” another term for “replacement planning”? Not at all. A replacement plan identifies people who can serve as “backups” for specific roles in a pinch. For example, if an employee goes on a temporary leave, a replacement can fill in. You can cross-train employees to fill particular roles if the need arises. Meanwhile, a succession plan is a map of long-term role changes you expect to make in the future.

Levels of Succession Planning

Often we think of succession planning as creating a leadership pipeline—and that’s a big part of it. However, succession planning can involve every level in the organizational hierarchy. Through a multi-level succession plan, you can prepare for changing needs in your industry. As you craft this plan, reevaluate skill needs for each role—and the specific roles required—and how to meet these changing needs. 

For instance, say Manager A is preparing to eventually step into a director-level position as her boss becomes part of the C-suite. In turn, Employee B can gain managerial skills that would allow her to fill Manager A’s current role. And an entry-level employee could prepare to take Employee B’s place. 

Importantly, a succession plan doesn’t guarantee future employment in a given role. The plan can be strategically adjusted at any point. Be careful not to make promises so you don’t run into legal or ethical issues.

The Need for Succession Planning

An HR manager and two employees discussing the optimal succession plan
Credit: Kampus Production/ Pexels

Succession planning helps you maintain strong leadership during times of unexpected change. Further, it allows you to retain institutional knowledge through these transitions. By encouraging employees to stay with your company, you retain and enhance this knowledge rather than losing it to competitors. 

Research shows that succession planning strongly supports employee retention. Knowing they have a future with your company and experiencing developmental opportunities increases their loyalty and motivates them to excel. And making internal promotions via a succession plan dramatically boosts employee morale. 

Researchers have also examined the effects of different types of CEO succession on organizational performance. Only when companies needed a major transformation or cultural shift did hiring an external CEO benefit them, they found. If a company is performing poorly, an outside perspective may help. But for those performing well, promoting from within brings far greater benefits, explain Claudio Fernández-Aráoz, Gregory Nagel, and Carrie Green in Harvard Business Review.

Further, an outsider has an 84% higher chance of turnover in their first three years, while commanding a higher salary, they add.

For these reasons, inadequate succession planning brings heavy risks. Without succession planning, companies will be choosing between ill-prepared employees and external hires who might not be as effective. A company could have been spending years grooming a high performer for a specific position, rather than rushing to do so at the last minute.

Identifying Potential Successors

A manager is interviewing his employees to identify a potential successor
Credit: Kampus Production/ Pexels

Take these steps to find candidates for higher-level roles. 

  • Envision what you want to accomplish with your succession plan. This vision will shape your choices. Consider which strengths to prioritize. 
  • Be inclusive, looking beyond senior employees and those who match the profile of current leaders. Consider high-performers who still need additional skills and experience.
  • Ask employees about their ambitions and set plans that align with their career goals.
  • Utilize leadership assessments, like Gallop’s CliftonStrengths, a DISC evaluation, or a Myers-Briggs Type Indicator. These tests can build self-awareness and help illuminate employees’ potential. 
  • Use a 9×9 box grid. This tool will help you categorize employees according to performance and potential. By determining where they fall on the grid, you’ll know who might be leadership material. You’ll also see who might be candidates for stretch assignments and mid-level roles.

Now, let’s consider how to support each candidate’s growth.

Developing Future Leaders

Use multiple methods of promoting leadership development. A combination of the following strategies will create a dynamic learning experience.


Pair each new or emerging leader with an experienced mentor. Make sure it’s a good fit and that each mentee is getting adequate support. The mentor can share lessons learned from her career, offer insights, and answer questions. For instance, the mentor can help the new leader define and enhance his leadership approach.

Leadership Training

Offer various training opportunities for current and emerging leaders, like the following:

  • Online modules. These sessions can provide bite-size refreshers and knowledge upgrades in a convenient format. 
  •  Job shadowing. Watching leaders in action provides a great way to learn about performing a high-level role.
  • Workshops and leadership conferences. These events can be both motivational and educational.

If you have a mid-size or large organization, you might contract a trainer to lead in-house programs for future leaders. For smaller companies, outside training courses may be more practical.

Rotational Assignments

Research has shown that 70% of leadership development should involve learning by doing. Rotational assignments offer a great way of gaining hands-on experience. In these shorter-term assignments, people can work in a different department or function, expanding their breadth of knowledge. This prepares them to lead a broader range of people.

Give aspiring leaders the chance to spearhead high-level projects, give presentations, and mentor others, too. Coach them on how to effectively lead a team and support each person’s growth.

Attending High-Level Arrangements

Give future leaders a seat at the table during top-level meetings. You could also have a future executive attend board meetings to grow more familiar with company processes, say Fernández-Aráoz, Nagel, and Green. This will also allow them to build rapport with other leaders and stakeholders.

Feedback and Evaluations

Ongoing feedback and performance evaluations will shape the process of growth. Conduct quarterly performance reviews supported by strong analytics, as well as 360 reviews. The aspiring leader’s boss should discuss progress in depth during weekly one-on-ones, sharing observations and guidance. Use instant feedback tools to provide quick tips and encouragement as well.

Succession Planning for Different Roles

Succession planning can vary for different roles and levels within an organization. Let’s discuss how to prepare candidates for other important roles.

Managerial Roles

To prepare people for management roles, and help them grow confident in leading team meetings, as well as collaborations. Give them the chance to manage projects and teach others new skills as well. First-time managers need plenty of guidance on how to direct and coach others, so share advice and feedback multiple times per week.

Highly Specialized Roles

Planning to fill highly specialized positions, or high-impact roles, brings distinct challenges. These may be individual contributor roles that require a high level of expertise. In succession planning, pay particular attention to these positions.

The training process looks different for such roles than for leaders. Here, people may need to grow their depth of knowledge in one specific area. If someone is preparing to become a data analyst, connect them with an appropriate certification course, for example. The current data analyst can mentor them in these skills, explain elements of the job, and have them assist with certain tasks.

Most of the same principles that apply to leadership training apply at every level. Provide a diverse range of learning opportunities, and offer plenty of mentoring and feedback.

Challenges in Succession Planning

Let’s examine a few key challenges organizations may face in succession planning, and how to overcome them.

Lack of Time or Resources

Succession planning can feel time-consuming. However, it saves substantial time and money in the long-run, while strengthening employee performance. Considering the effects on retention alone, it will likely pay dividends within the year. Block out a few planning sessions on your calendar, making a small weekly investment that will benefit your whole company.

Biases in Selection

Biases may arise from resistance to change and a desire to maintain the status quo. So, assemble an internal committee composed of people of different backgrounds, ethnicities, genders, and ages to assess candidates.


You may also feel uncertain about which person would best fit a particular role. After all, it’s probably their first position at that level. However, using these tactics will help you make an informed decision:

  • Giving “test” assignments. Essentially, these are stretch assignments that match some of the duties of that next-level role. Working under the guidance of the leader who currently fills the role, high-performers can build and demonstrate job-specific skills.
  • Evaluating emotional intelligence (EI). Some people may have the expertise for the role but not the human skills. While they can work to cultivate those abilities, the person with stronger EI is probably more prepared for a leadership role.
  • Gauging confidence. Which of these candidates could conduct themselves with self-assurance in that role, making tough calls when needed? Give them each the chance to lead team projects to grow these abilities. 
  • Assessing perspective. Does one of the candidates bring a much-needed fresh perspective or background to the role?

By challenging people to demonstrate their leadership skill set, you’ll make the right choice for that role. And ultimately, each of them might be right for a particular type of position.

Proper succession planning will safeguard the future of your organization. By designing and implementing a clear plan, you’ll create a well-prepared leadership pipeline while boosting job satisfaction at all levels. In doing so, you’ll ensure that high-potential employees throughout the organization will thrive at your company for years to come.

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