Why Succession Planning Matters Now More Than Ever

When we hear the term “succession planning,” many of us picture boardrooms and executive retirements, but it goes far beyond that. Succession planning is about preparing for the future at every level of your organization. It’s the process of identifying and developing talent so that when someone moves on (whether unexpectedly or as part of a planned transition) your team is ready.

For leaders, it’s one of the most strategic tools you can use to build stability, retain top performers, and protect your organization from disruption. And yet, many organizations are underprepared.

In this article, we’ll explore what the research says about succession planning. Specifically, the risks of ignoring it, the benefits of doing it well, and the common missteps to avoid. We’ll also look at best practices and give you a simple roadmap to help you move forward with confidence.

Why Succession Planning Matters

According to the Canadian Federation of Independent Business, only about 1 in 10 small business owners in Canada have a formal succession plan, even though more than 70% expect to exit their business within the next 10 years. In the public sector, many leaders are also preparing for retirement, which means a lot of important roles could soon be left unfilled if organizations don’t start planning ahead.

So, what’s the risk? Without a solid plan, leadership changes can cause real problems. If someone leaves suddenly due to retirement, illness, or another reason, it can lead to confusion, delays, and missed opportunities. In fact, research shared by Harvard Business Review found that companies without proper succession plans lost an average of $1.8 billion in value during unplanned CEO transitions. That’s a big price to pay for being unprepared.

Here in Canada, the Treasury Board has created a helpful guide for federal organizations. It stresses the importance of connecting leadership planning with business goals to make sure teams stay strong and focused through any transition.

The Benefits of Planning Ahead

While there are real risks to not planning ahead, the good news is that strong succession planning brings major rewards. Research shows that organizations with solid succession plans are more likely to perform well during leadership changes. They have smoother transitions, higher employee confidence, and less disruption to operations. Another study published in Harvard Business Review found that companies that promoted internal candidates for CEO roles performed better over time than those who hired externally, even though external hires were often paid more.

Why is this the case? Internal candidates already understand the company’s culture, values, and systems. They don’t need as much time to adjust, which means they can start making an impact right away. When employees see clear pathways to leadership, they’re more likely to stay and grow within the organization, which in turn reduces turnover and increases engagement.

What Gets in the Way of a Strong Succession Plan

Even with the best of intentions, succession planning can go off track. Understanding what can go wrong is just as important as knowing what to do right. One common issue is waiting too long to start. Many organizations don’t think about succession until a key leader announces their departure. At that point, it becomes a rush to fill the role, often without enough time to properly prepare a replacement. This can lead to poor hires or internal tension if the process feels rushed or unclear.

Another challenge is relying too much on one person. When leadership is built around a single personality or style, it’s hard for others to step in. If that person leaves without a clear plan in place, the organization can struggle to maintain its direction. This is why succession planning should focus on roles, not just individuals, and include plans for knowledge transfer and team support.

Talent hoarding is another problem. Some managers hold on to high-performing employees rather than encouraging their growth across the organization. This limits opportunities for those employees and weakens the overall leadership pipeline.

The takeaway? Succession planning can fall short when it’s treated as a last-minute task or kept too private. To be effective, it needs to be ongoing, transparent, and supported at all levels of the organization.

Simple Practices That Make Succession Planning Work

Succession planning doesn’t have to be complicated, but it does need to be intentional. The most successful organizations take a proactive approach and follow a few best practices. 

1. Start early and plan ahead

Don’t wait for someone to leave before thinking about who could step in. Start by identifying the most important roles in your organization and ask: “If this person left tomorrow, who could take over?” Early planning gives you time to develop the right people, not just find a quick fix.

2. Look within your organization

Research shows internal candidates often perform better than external hires. They already understand your values, systems, and team dynamics. Keep an eye out for employees who show potential - even if they’re not in leadership yet. Mentorship, stretch projects, and training programs can help them grow.

3. Make it part of your culture

Succession planning works best when it’s not a one-time event. It should be part of your regular HR and leadership conversations. Encourage managers to support development, share talent across teams, and talk openly about career paths.

4. Keep it transparent

If your process is too secretive, it can cause confusion or even resentment. While not every role needs a public plan, communicating openly about leadership development shows your commitment to fairness and growth.

Whether you're part of a large organization or a growing business, these steps can help create a stronger, more prepared workforce. Succession planning is about building a team that can grow with you, not just replacing people when they leave.

Roadmap to Building a More Effective Succession Strategy

Step 1: Communicate and engage

Step 2: Identify key roles

Step 3: Assess your talent

Step

4: Create development plans

S

tep 5: Test and Evaluate

Step 6: Review and update regularly

Now that you know the risks, rewards, and best practices, how do you actually build a strong succession plan? It doesn’t have to be overwhelming. Here’s a simple step-by-step roadmap you can follow:

Step 1: Communicate and engage

Let employees know that career development is important to your organization. While not every detail needs to be shared, being open about leadership planning can improve trust and motivation.

Step 2: Identify key roles

Start by listing the roles that are critical to your organization’s success. Not just the top leadership positions. Think about roles that would be hard to fill quickly or require specialized knowledge.

Step 3: Assess your talent

Take a close look at your current team. Who shows potential? Who’s ready now, and who could be ready with some development? Use performance reviews, feedback, and manager insights to guide you.

Step 4: Create development plans

For each high-potential employee, build a plan to help them grow. This might include training, mentoring, job shadowing, or stretch assignments. The goal is to prepare them for the next step, not just the job they have now.

Step 5: Test and Evaluate

Give potential successors opportunities to demonstrate their capabilities in real-world scenarios. This not only builds their confidence but also allows the organization to assess readiness in a practical context. Examples include assigning them to interim or acting roles when a vacancy arises or for vacation coverage, or involving them in managing unexpected challenges or crises. These experiences offer valuable insights into how individuals perform under pressure, collaborate with others, and make decisions—key indicators of their potential to succeed in more senior roles.

Step 6: Review and update regularly

Your business will change - and so will your people. Revisit your succession plan at least once a year to make sure it still fits your goals and your team’s needs.

By following this roadmap, you can move from reactive to proactive planning. Instead of scrambling when someone leaves, you’ll have a bench of capable, confident leaders ready to step up.

Summary

Succession planning helps shape the future of your organization by preparing the right people for the right roles. When done well, it strengthens leadership, improves morale, and ensures you’re never caught off guard. Start small, stay consistent, and remember: you don’t have to do it all at once. Building a smart succession plan is a process, and every step you take is a step toward greater stability, resilience, and growth.

Ready to build your next generation of leaders?

If you're ready to put a plan in place but not sure where to begin, our team is here to help.We help organizations develop strong internal talent pipelines through customized career and leadership development programs. Whether you're just getting started with succession planning or want to take your strategy to the next level, we’re here to support your goals.

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