Ensuring Leadership Continuity with Succession Planning

A Q&A with Tim Wiseman

Succession planning is essential for maintaining shareholder value and ensuring long-term company success. Yet, half of companies today can’t name a successor if a key leader departs unexpectedly, with only 51% of surveyed board directors having a written plan for the current CEO’s succession, according to the 2023 Gartner Board of Directors Talent Survey.

Succession planning is a critical strategy for businesses to support continuity and uphold leadership quality. It goes beyond preparing for inevitable leadership transitions; it aims to protect the company’s future by ensuring a consistent supply of capable leaders. Succession planning involves pinpointing key roles within your organization and creating action plans for individuals to fill those positions. By considering both current and future goals, this approach ensures you have the right people in the right roles now and in the future.

We asked Tim Wiseman, Managing Partner, Leadership Consulting, to share some insights on succession planning and why it’s so critical to organizations’ success.

Meet Tim Wiseman

Tim is a talent management expert with 20 years of experience in designing and deploying organizational-wide talent solutions across multiple sectors, including technology, finance, and retail. He specializes in assessment, succession planning, performance management, and leadership development.

Tim’s deep expertise in succession planning is integral to his work in talent management. With a focus on aligning leadership development with business objectives, Tim helps organizations ensure a seamless transition of leadership, maintaining continuity and fostering growth. His global experience and extensive background in various industries position him uniquely to address the complexities and challenges of succession planning, ensuring that businesses are well-prepared for the future.

How does succession planning support success in future leadership transitions?

Succession planning is a vital aspect of organizational development, ensuring that companies are prepared for future leadership transitions, whether planned or unplanned. This process can be broadly categorized into two types: comprehensive succession planning and specific succession events.

Comprehensive succession planning involves creating a developmental roadmap for all employees at every level within an organization. This approach ensures that there is a clear path for progression from one role to the next. For instance, an assistant manager in a retail store should be developed to become the store manager, who, in turn, is groomed for the role of regional director. This process should be integrated with performance planning, as it aligns the development of employees with the organization’s overall goals and performance metrics.

In a well-implemented comprehensive succession plan, every employee has a defined developmental path. This approach fosters a culture of growth and advancement, motivating employees by providing them with clear career trajectories and acting as a retention strategy. It also helps organizations maintain a steady pipeline of capable leaders who are prepared to step into critical roles as they become available.

What are succession events and how can organizations prepare for them?

Specific succession events require a detailed and focused intervention. These events are typically handled at the highest levels of an organization, involving the CEO, board members, and sometimes other key leadership positions one to two levels down from the C-suite. In this context, succession planning involves identifying the key responsibilities of a role, building a comprehensive profile for the position, and assessing potential internal candidates who can fill the role when needed.

Such planning is driven by various factors, including the need to recruit or hire for a particular position, or to backfill a role due to unexpected vacancies. Organizations must periodically review and update their succession plans, ideally every 12 to 18 months, to ensure that they have candidates who are ready to step into leadership roles immediately, within one to two years, and within three to five years. For example, in the case of a Chief Technology Officer (CTO), there should be a designated individual ready to take over the role at any moment, followed by others who will be prepared in the near and distant future. This stratification is often classified as Ready Now (RN) and Ready with Development (RD).

What roles should organizations prioritize in succession planning?

Succession planning should not be limited to C-suite positions alone. Organizations must also identify and plan for critical roles that are essential to their operations. For example, in a pharmaceutical company, roles such as the head of R&D or a senior lab director are vital to the company’s success, even if they are not part of the executive team. Similarly, in a retail company, a key position might be the head of digital marketing or a supply chain manager. These critical roles require the same level of attention and effort in succession planning as the higher executive positions. Every type of business should have three to four critical roles identified regardless of sector or industry.

What are the risks involved in succession planning?

Failures in succession planning often lead to the appointment of individuals who are not well-suited for critical roles, resulting in significant negative impacts on the organization. History is littered with examples of poorly executed CEO succession transitions. The causes are legion, including poor development/preparation, poor cultural fit, reaching outside for candidates that don’t fit the industry, and bias within the selection process. The results can be unnecessary churn with key roles, poor execution of new strategies, and constant reshuffling of business priorities. This can lead to indecision and rework with the leadership team, leading to business setbacks and, in extreme cases, their collapse. 

What are the benefits of effective succession planning, and why is it so critical?

The benefits of effective succession planning are manifold. It ensures business continuity, particularly for fast-paced companies with complex supply chains. It also enhances employee retention, as individuals identified for future roles often experience increased confidence and a sense of value, which fosters loyalty and a strong talent pipeline.

Following the 2008 financial collapse, regulatory frameworks have pressured boards of directors to hold businesses accountable for having robust succession plans, elevating its importance, while not legally mandated. While large companies may sustain themselves temporarily without a succession plan, smaller companies face a high risk of collapse if they experience significant leadership gaps.

Yes, succession planning takes effort, time, resources, and investment. However, a poor transition can cost the organization significantly more time and money and, even more critically, loss of traction against competitors. Engaging external, neutral experts can provide valuable insights and ensure that the process is done correctly, leveraging industry-specific knowledge and comprehensive assessment tools. Organizations like DHR offer the necessary expertise and deep industry knowledge to facilitate successful succession planning, ensuring that companies are well-prepared for future leadership transitions.

Wrapping it Up: The Critical Role of Succession Planning

Succession planning is an essential strategic process that ensures organizations are prepared for future leadership transitions. Whether through comprehensive succession planning or specific succession events for critical roles, having a clear and proactive approach helps maintain continuity and stability. By developing a robust pipeline of leaders at all levels, companies can align their talent capabilities with business goals, fostering a culture of growth and advancement. Effective succession planning not only mitigates the risks associated with leadership gaps but also enhances employee retention and organizational resilience. Investing in this critical process, even with the associated time, resources, and costs, is paramount for long-term success.