Succession Planning:
Definition, Process, Comparison & Uses

Succession planning is a strategic process organizations use to identify and develop employees to fill critical leadership and business-critical positions when they become vacant due to retirement, promotion, turnover, or unexpected departures. This proactive approach ensures business continuity by preparing internal talent to assume key roles rather than scrambling to fill positions at the last minute.

Organizations use succession planning to build a steady stream of talent capable of guiding the company through change and growth while preserving valuable internal knowledge and experience. The process involves identifying key roles, understanding the skills and experience needed for those roles, and developing employees who are ready to step into those positions when the time comes.

Related terms: talent management, workforce planning, leadership pipeline, career development

Succession planning delivers 5 key organizational benefits that protect business stability and growth:

• Facilitates smooth leadership transitions and prevents organizational chaos during planned or unexpected changes
• Develops future leaders by identifying high-potential employees early and preparing them for greater responsibilities
• Boosts employee engagement and retention by demonstrating investment in career growth and advancement opportunities
• Promotes business stability and maintains stakeholder confidence during leadership changes
• Improves knowledge retention by transferring institutional knowledge from experienced leaders to successors through mentoring and cross-training

Research from LinkedIn's 2020 Global Talent Trends report shows employees at companies that hire and promote more internal candidates stay 41 percent longer than workers at companies with lower internal hiring rates. Organizations that report the greatest gains from succession planning feature high ownership by the CEO and high degrees of engagement among the larger leadership team.

Effective succession planning follows 6 core steps to identify and develop future leaders:

1. Identify critical positions and business-critical roles that require successors, focusing on leadership roles and positions with significant decision-making power or specialized skills
2. Assess future organizational needs by evaluating upcoming retirements, potential promotions, industry trends, and growth projections to forecast which roles may need successors
3. Define competencies and skills required for each critical position by creating detailed profiles that include core responsibilities, key performance indicators, technical competencies, and soft skills
4. Identify and evaluate potential successors through performance reviews, 360-degree feedback, leadership assessments, and competency evaluations to determine readiness and potential
5. Develop talent through targeted training, mentorship programs, on-the-job training, leadership workshops, cross-functional assignments, and stretch projects that prepare nominees for future roles
6. Review and adjust the succession plan regularly based on changes in business goals, industry trends, individual performance, and organizational needs

According to a 2006 Canadian Federation of Independent Business survey, only 10 percent of business owners have a formal, written succession plan, while 38 percent have an informal, unwritten plan, and 52 percent have no succession plan at all. Organizations that implement structured succession planning processes minimize disruptions and maintain operational stability during leadership transitions.

Succession planning operates as a critical component within broader talent management programs. Talent management covers a wide range of activities designed to attract, recruit, identify, develop, engage, retain, and deploy talented individuals, with a focus on both external and internal talent. Succession planning specifically addresses the internal element by preparing existing employees to fill key positions.

As of 2017, corporations consider succession planning part of a holistic strategy called talent management, which encompasses activities and processes throughout the employee life cycle including recruiting and hiring, onboarding, training, professional development, performance management, workforce planning, leadership development, career development, cross-functional work assignments, succession planning, and the employee exit process.

Organizations use succession planning to ensure that employees are recruited and developed to fill each key role within the company. Through the succession planning process, organizations recruit superior employees, develop their knowledge, skills, and abilities, and prepare them for advancement or promotion into increasingly challenging roles.

Organizations typically apply succession planning to 2 main categories of positions:

• Individual senior positions including the most senior jobs in the organization, such as executives, directors, and key managers who hold significant decision-making authority
• Business-critical roles at all levels that possess specialized skills, institutional knowledge, or responsibilities essential for business continuity, including technical experts and scientists crucial to organizational success

Succession planning traditionally covers the most senior jobs in the organization, identifying individuals with the potential to step into these posts as short-term or longer-term successors. Many large organizations operate local models in divisions, sites, or countries where similar processes are applied to a wider population beyond the executive level.

Organizations who adopt an inclusive whole workforce approach to managing and developing talent identify business-critical roles at all levels within their organization. The first step is to identify business-critical roles for which potential successors are needed, focusing on positions that would cause the most disruption if left unfilled due to their complexity or lengthy replacement time.

Succession planning has transformed significantly from its traditional model. Historically, large companies ran highly structured, confidential, and top-down succession schemes aimed at finding internal successors for key posts and planning their career paths accordingly. These traditional programs focused exclusively on managerial roles and involved hand-picking executives to be company successors in a rigid, confidential process.

Modern succession planning looks quite different, featuring 4 major shifts:

• Broader vision that includes non-managerial roles and business-critical positions at all levels
• Greater openness and transparency with employees understanding the succession process and assessment methods
• Increased diversity and inclusion through objective assessment processes that identify talent from underrepresented populations
• Closer integration with talent management practices including performance management, career development, and workforce planning

With growing uncertainty, increasing speed of change, and flatter organizational structures, traditional succession planning declined. However, in a climate of enduring skills shortages and research suggesting a lack of confidence in the leadership potential within the existing workforce, interest in succession planning has revived with these more flexible, transparent, and inclusive approaches.

People professionals and HR leaders play a pivotal facilitating and supporting role in succession planning while ensuring line managers and the leadership team own the process. HR leaders train people to fill various positions in the company, supporting smooth functioning during departures, transfers, or promotions.

HR professionals contribute to succession planning by performing 5 critical functions:

1. Compiling information on potential candidates by designing and managing appropriate assessment processes
2. Developing and maintaining relevant databases and information systems that track succession candidates and their development
3. Providing career advice and expertise in assessing individual development needs while maintaining confidential information
4. Creating detailed profiles of critical positions that define performance expectations, core responsibilities, key performance indicators, technical competencies, and soft skills
5. Integrating succession planning with business strategy by maintaining close relationships with leaders responsible for shaping the organization's future

Those responsible for succession planning need to be highly knowledgeable about how the business is likely to evolve. People professionals must understand future strategy and the likely capabilities needed in business-critical positions, avoiding talent tunnel vision where the focus is purely on current skills needs.

Organizations face 6 common obstacles when implementing succession planning programs:

• Internal resistance to change from leaders who may be resistant to sharing knowledge or managers who see succession programs as a burden on their time
• Organizational silos that make it difficult to identify promising candidates and share knowledge across business units
• Inequitable opportunities where succession decisions have been made in an ad-hoc way by a few leaders without a holistic view, particularly overlooking underrepresented populations such as BIPOC and women
• Lack of buy-in from key stakeholders who may not understand the plan or have concerns about resources and implementation
• Limited resources and time with the resources needed to effectively carry out a succession plan appearing scarce
• Uncertainty about the future where business evolution outruns attempts to plan ahead

Research indicates many succession planning initiatives fall short of their intent, with bench strength remaining a stubborn problem in many companies. Program planners should anticipate these obstacles and clearly lay out the business case for succession planning's importance and need. Starting small with one major function can create a success story that helps allay concerns.

Mentoring programs serve as highly effective tools within succession planning by identifying employees with high potential and pairing them with experienced partners who can help them grow and thrive. Mentoring focuses on building personal relationships that strengthen the organization one person at a time to achieve long-term goals.

Using a mentoring template within succession planning delivers 3 key advantages:

• Breaks down business unit silos to increase workplace productivity and build better rapport with colleagues across the organization
• Sets up knowledge transfer by pairing high-potential employees with leaders in the organization to build greater institutional understanding for newer generations of employees
• Provides a personalized way to help an organization discover and develop potential leaders through one-on-one relationships

Mentoring offers a structured approach to succession planning that creates development opportunities tailored to individual growth while strengthening organizational culture and knowledge retention.

Organizations should conduct succession planning now if they don't already have a plan in place, as leadership transitions can happen unexpectedly due to retirements, promotions, or unexpected departures. Succession planning is not a one-time event but an ongoing process that organizations revisit and refresh regularly.

Organizations should review and update succession plans during 5 critical periods:

1. Company restructurings that change organizational structure or reporting relationships
2. Significant leadership changes that affect the executive team or senior management
3. Periods of organizational growth that create new positions or expand existing departments
4. Changes to the strategic plan that alter the organization's direction or priorities
5. Performance reviews and career development conversations that reveal employee aspirations and readiness for advancement

Additionally, major personnel changes such as upcoming retirements are times when organizations want to return to their succession plan and confirm it's up to date and ready to facilitate a smooth transition. As organizations change, they change their succession plans too to ensure alignment with current business needs and future direction.

Organizations can achieve optimal succession planning results by following 8 established best practices:

1. Evaluate current data to understand succession needs and issues by identifying data points such as how much of the workforce is currently eligible to retire and which positions take the longest to hire for
2. Conduct thorough research to identify potential candidates by objectively establishing the qualities and experience that define the ideal candidate and looking beyond obvious next-in-line employees
3. Establish clear expectations by making the succession planning process transparent for both candidates and leaders so everyone understands their respective roles and obligations
4. Involve employees and stakeholders in the process to gain multiple perspectives and ensure crucial buy-in from both groups
5. Align the plan with the company's strategic goals by starting with the high-level mission and strategy of the organization and working down to day-to-day logistics
6. Develop a diverse pool of potential successors by ensuring succession programs include groups of employees that have been historically underrepresented and drawing from diverse backgrounds and functions
7. Review and adjust the plan regularly as business objectives and environments change along with the goals and circumstances of potential succession candidates
8. Seek outside expertise and support from external resources and experts to help create a succession plan that serves the organization now and into the future

Clear objectives are critical to establishing effective succession planning. Research indicates that companies that report the greatest gains from succession planning feature high ownership by the CEO and high degrees of engagement among the larger leadership team.

Succession planning is often compared to 3 related workforce planning concepts:

Succession Planning vs. Replacement Planning

Succession planning involves building a series of feeder groups up and down the entire leadership pipeline or progression, while replacement planning is focused narrowly on identifying specific back-up candidates for given senior management positions. Succession planning takes a longer-term, strategic approach to developing internal people with managing or leadership potential to fill key hierarchical positions, whereas replacement planning addresses immediate vacancy coverage.

Succession Planning vs. Talent Management

Succession planning operates as a critical component within broader talent management programs. Talent management encompasses all activities throughout the employee life cycle including recruiting, onboarding, training, professional development, performance management, and career development. Succession planning specifically addresses the internal element of talent management by preparing existing employees to fill key positions when they become vacant.

Succession Planning vs. Workforce Planning

Succession planning sits inside the wider process of workforce planning. Workforce planning is a strategic process to ensure the right number of people with the right skills are employed in the right place at the right time to deliver on organizational objectives. Succession planning focuses specifically on identifying and developing talent to fill leadership and business-critical positions in the future as one component of comprehensive workforce planning.