Every organization will, sooner or later, lose its CEO, its finance head or the one engineer who understands a critical system. The question is not whether this will happen but whether the organization will be ready when it does.
Succession planning is one of the most important career development tools organizations use to prepare. It identifies backups for senior and critical positions and trains the people at the next level down so they can step up when needed. Many organizations rely on it to find their next CEO and other top executives.
This article explains what succession planning is, the benefits of doing it formally, why many succession plans fail and how to make them work.
What is Succession Planning?
Succession planning is a systematic process of identifying and developing talent for future leadership and critical roles. It involves developing employees at lower levels so they can handle the responsibilities they will be given in the next few years.
Formal succession planning goes further than naming a few possible successors. It examines the organization’s long-range plans, strategies and HR forecasts, and builds a structured process around them. Done well, it has a positive effect on organizational culture and efficiency.
How Formal Succession Planning Works
A formal succession plan usually follows five steps, as shown in the diagram.
- Identify critical roles. Decide which positions would hurt the organization most if they fell vacant suddenly. These are not always the most senior roles.
- Define success profiles. Describe the skills, experience and behaviors each critical role needs, now and in the future.
- Assess the talent pool. Look at potential successors’ performance, potential and readiness. A common tool is the nine-box grid, which plots performance against potential.
- Develop successors. Give candidates stretch assignments, mentoring, training and exposure to senior decisions.
- Review and update. Revisit the plan at least once a year, and whenever the business strategy or key people change.
Turning the Nine-Box Grid into Development Actions
The nine-box grid (step 3) is only useful if each group it identifies gets a clear development plan (step 4). The table below shows one simple way to link three key groups of potential successors to next steps:
| Position on the grid | What it usually means | Suggested development |
|---|---|---|
| High potential, high performance | Ready now | A senior mentor, regular exposure to top leadership, and a major project or business area of their own to run |
| High potential, moderate performance | Ready later | Pinpoint the specific skill or knowledge gaps, coach them on those, and avoid promoting them before they are ready |
| Moderate potential, high performance | Valued specialist | Work to retain them and grow them as experts, technical leads or trainers, rather than pushing them into managing people |
Benefits of Formal Succession Planning
The benefits of a formal approach fall into four broad themes.
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A systematic, logical approach to leadership continuity
- Formal succession planning is a systematic way to prepare employees at lower levels for the responsibilities of the next level. It involves careful HR forecasting and talent reviews to identify people with the potential to be promoted.
- It provides a logical route for filling top positions from the level below. By understanding each person’s skills, competencies and potential, the organization can also deploy them to different jobs in a crisis.
- It answers the key questions about preparing someone for the next level. HR specialists can see why a particular person should be developed and trained for promotion.
- It creates a logical basis for choosing among qualified candidates: who should be selected, why, what skills they already have and what still needs to be developed.
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Less randomness, fewer crises
- It reduces randomness in management development and promotions. Formal steps, policies and procedures support the selection of the CEO and other senior executives.
- It is proactive. HR professionals can anticipate problems before they arise, avoiding the negative and dysfunctional situations that often follow a sudden, unplanned vacancy.
- It helps HR managers move beyond reactive management toward proactive management, making the organization a better place to work.
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Better integration of HR processes
- It encourages cross-functional development and ties together the different parts of HR planning: processes, procedures, formats, guidelines, analyses and discussions.
- It makes better use of HR information systems, planning software and HR tools to identify, develop and train people.
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A direct link between strategy and people
- It creates a clear connection between business objectives and strategic HR planning.
- It increases opportunities for internal promotion, which motivates employees and helps retain them.
Aspect Informal succession planning Formal succession planning How successors are chosen Personal preference of senior leaders Agreed criteria and evidence Coverage Usually only the CEO All critical roles Development Left to chance Planned assignments, mentoring and training Timing Reactive, after a vacancy Proactive, years in advance Fairness and transparency Low Higher, with clear processes Link to strategy Weak Built in
Succession Planning as Part of Talent Management
Succession planning is one part of a broader talent management system. Talent management covers attracting, developing, engaging and retaining people. Succession planning focuses that effort on the roles the organization cannot afford to leave empty.
The two support each other. Good talent management builds the pool of capable people from which successors are drawn. Good succession planning gives talent management a clear target: the skills and leaders the organization will need tomorrow.
Why Many Succession Plans Fail
Surveys over the years have repeatedly found that a large share of organizations have no formal succession plan at all, even though succession planning and manpower planning were once standard practice in large companies. So what went wrong?
Several factors have combined:
- Skepticism among executives. Leading executive coach Marshall Goldsmith has noted that many executives see succession planning as a waste of time.
- Lack of bench strength. At the same time, many CEOs complain that they do not have enough capable people ready to step up, which is exactly the problem succession planning is meant to solve.
- Demographics. Countries with aging workforces, such as the United States and much of Europe, face waves of retirements among experienced leaders. Countries with young populations, such as India, face a different challenge: plenty of people, but not enough with leadership experience.
- Plans that become paperwork. When succession planning is reduced to forms and charts, people see it as an end in itself rather than a path to future roles.
How to Make Succession Planning Work
Shift from succession planning to succession development
An old saying captures it well: “I hear and I forget. I see and I remember. I do and I understand.” Plans on paper rarely engage people. Real development experiences do.
Simply renaming the process “succession development” can help, because it signals that the focus is on growing people, not on filling in forms. When employees see that the aim is their development, they take ownership of it.
Focus on outcomes, not process
Emphasize results: how many critical roles have a ready successor, and how successors perform once promoted. What gets measured and rewarded shapes behavior. When outcomes are visible, employees and managers take the process more seriously.
Keep assessment simple
Organizations often make assessment needlessly complicated. Complex processes are hard for the average line manager to use and quickly fall into disuse. Keep succession assessment simple. More detailed tools can be used for broader people development.
Make it a leadership responsibility
Succession should be on the leadership team’s agenda every year, not only when a senior person resigns. The CEO and board must own the plan for top roles.
| Checklist item | Done? |
|---|---|
| Critical roles identified and agreed by leadership | |
| Success profile written for each critical role | |
| At least one “ready now” and one “ready later” successor named | |
| Development plan in place for each successor | |
| Plan reviewed in the last twelve months | |
| Progress measured by outcomes, not paperwork |
Conclusion
Formal succession planning gives organizations a systematic, proactive way to secure leadership continuity. It reduces the randomness and disruption of sudden vacancies, ties HR planning to business strategy and opens up internal promotion. Many plans fail because they become paperwork. The organizations that succeed treat succession as development: they focus on real experiences, measure outcomes and keep the process simple enough for every manager to use.
Frequently Asked Questions
What is succession planning?
Succession planning is the process of identifying and developing people to fill key leadership and critical roles in the future, so the organization is ready when those roles become vacant.
What are the main benefits of formal succession planning?
It provides a systematic, logical way to fill key roles, reduces disruption from sudden vacancies, integrates HR processes, links people planning to business strategy and increases internal promotion opportunities.
How is succession planning related to talent management?
Succession planning is part of talent management. Talent management builds the overall pool of capable people, while succession planning focuses on preparing successors for specific critical roles.
Why do succession plans fail?
They often fail because they become paperwork exercises, are too complicated for managers to use, lack leadership commitment or focus on process rather than real development.
How often should a succession plan be reviewed?
At least once a year, and whenever there is a major change in strategy, structure or key personnel.
