Succession planning process: The complete guide for leaders

What is a succession planning process?

The succession planning process is a strategic approach to identifying and developing potential leaders within an organization. It ensures key roles are filled smoothly when vacancies arise, helping maintain business continuity and fostering long-term organizational growth and stability.

Despite its importance, many businesses overlook the need for a solid plan, leaving them vulnerable to leadership gaps and operational disruption.

• In the 2023 Gartner Board of Directors Talent Survey, it was discovered that only 51% of surveyed CEOs have a written plan in place for CEO succession planning.¹ 
• In the UK, Azet’s latest research determined that just 9% of UK businesses have a fully integrated succession plan, and 6% haven’t thought about it.² 
• A DDI survey found that 32% of businesses need to start succession planning for C-suite executives.³

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Why is a succession planning process important?

• Succession planning boosts employee motivation and retention. When current employees see opportunities for advancement into senior positions, they’re more likely to stay with your company, improving morale and retention.
• Succession planning also maintains organizational continuity. Critical vacancies disrupt productivity, but with a succession plan, you can seamlessly fill roles with internal talent, minimizing operational delays.
• Neglecting succession planning comes with significant risks, including loss of institutional knowledge, disruptions in business operations, decreased revenue, and challenges in attracting top talent. By being proactive, you safeguard your company’s future and ensure sustained growth and stability.

Key components of effective succession planning 

To create an effective succession plan, it's crucial to identify the essential elements, including leadership development, talent assessment, and clear role identification. These components ensure a smooth transition and prepare your organization for long-term success and continuity.

Effective succession planning includes several key components:

• Identifying critical roles and potential successors: Start by pinpointing essential positions and the key employees who could step into these roles.
• Assessing skills and competencies: Evaluate potential candidates to ensure they have the necessary skills, identify any skill gaps and leadership potential.
• Creating development plans: Provide tailored leadership development opportunities to help successors build the competencies required for their future roles.
• Anticipating future talent needs: Continuously assess upcoming leadership gaps to ensure you’re prepared for long-term changes.
• Aligning with organizational goals: Succession planning should support your company’s strategic objectives, ensuring leadership transitions strengthen overall business growth.

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The 7-step succession planning process 

Developing strong future leaders requires a strategic approach. Start early to ensure a smooth transition for key roles. Follow these seven essential steps to create your organization's long-term, effective succession plan.

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1. Secure leadership buy-in 

Before making succession decisions, it’s crucial to get approval from the leadership team and business owners. Gain their support by presenting examples of successful succession planning and highlighting the benefits of preparing future senior leaders to ensure business continuity.

💬 Learn how to convince your leadership team by asking our AI coach, Marlee

2. Identify key positions and skills 

With support in place, identify which current and future roles need a strong succession plan. Determine the key positions and the specific skills required for these roles. This clarity will help you to target and develop high-potential candidates effectively.

3. Assess your team 

Evaluate employees to identify those whose career goals align with business needs. Shortlist team members with strong leadership qualities.

🎯 Use Marlee's XFactor benchmarking to objectively analyze and rank your team, ensuring a fair and thorough assessment.

4. Create individual development plans

Design customized leadership development programs to nurture your team along the leadership pipeline. Incorporate mentorship, job shadowing, career planning, and targeted training to build their skills and prepare them for future roles effectively.

5. Implement training and mentoring programs

Begin training and mentoring your top team members immediately. Effective succession planning ensures that these individuals are prepared to step into key roles, such as the CEO position, with confidence and competence when the time comes.

💪🏼 Marlee's talent development creates tailored programs aligning with each team member's motivations and goals.

6. Regular review and adjustments

Continuously evaluate your succession planning strategy to ensure its effectiveness. Regularly review progress, assess the performance of your team, and adjust development plans as needed to address any gaps and align with evolving organizational goals.

7. Integrate succession planning within the human resources strategy 

Collaborate with HR to incorporate succession planning into your overall strategy. Utilize predictive people analytics to identify and track your ideal team members, ensuring your succession planning is data-driven and aligned with broader HR and organizational objectives.

🚀 At Marlee, we've spent more than 20 years researching the traits of high-performing teams. Set up a team in Marlee, and use our HR features to supercharge your team.

How to overcome common succession planning challenges 

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Getting succession planning right can be challenging initially. Be aware of these common barriers:

• Resistance to change: Leaders and employees may resist new processes. Address concerns through clear communication and demonstrate the benefits of succession planning. Learn how to convince others by adapting your communications.
• Lack of resources and commitment: Insufficient resources or commitment can delay development. Ensure adequate support and investment in training and development for your team.
• Bias in selection: Company culture can introduce bias in candidate evaluation. Implement objective criteria and diverse review panels to ensure fair assessments. Rank your team objectively based on proven success factors.
• Speculation and morale issues: Uncertainty about succession decisions can impact morale and lead to turnover. Communicate transparently and manage expectations to maintain employee engagement and retention. A strong organizational culture is important.

Best practices for succession planning

Elevate your succession planning with these best practices:

Build a culture of growth

Encourage continuous learning with coaching, education, and training. Employees who engage in development opportunities will be better prepared for leadership roles.

💪🏼 Begin your free online coaching program with Marlee. Trusted by teams from more than 90,000 organizations, our coaching supports more than 1,000 goals.

Form cross-functional teams

Promote cross-functional projects to help your team gain diverse skills and insights across departments. This horizontal training prepares future leaders by broadening their understanding of the organization’s operations.

🤝 Learn how to run a successful team dynamics workshop.

Balance internal development and external hiring

A succession planning framework should prioritize your existing team for promotions to improve team motivation and retention. Research from the University of Texas on internal vs. external candidates indicates that internal hires often work harder to achieve promotions and maintain their commitment post-promotion. Use external hiring to fill gaps when necessary.

Measuring the impact of your succession plan 

Evaluate the effectiveness of your succession plan with these strategies:

• Key Performance Indicators (KPIs) and Objectives and Key Results (OKRs): Track metrics such as the number of high-potential employees, retention rates, job satisfaction, and time to fill positions to gauge success.
• Team reviews: Monitor employee progress through regular performance reviews to ensure they develop as expected.
• One-on-one meetings: Conduct meetings and mentorship sessions to assess your teams' readiness for future leadership roles.
• Calculate ROI: Evaluate return on investment by comparing turnover rates, time-to-fill senior roles, and employee engagement with the costs of training and development.

Trends to consider for your succession planning process

• AI and data-driven decision making: AI tools help analyze employee data to identify high-potential individuals and forecast future leadership needs. For instance, IBM leverages AI to make strategic talent development and succession decisions, facilitating smooth leadership transitions.
• Focus on soft skills: Future leadership will increasingly require strong soft skills, including communication, empathy, teamwork, adaptability, and problem-solving. Effective succession planning should evaluate these skills to ensure leaders can build relationships and drive team success. Assess your teams' soft skills with Marlee's analysis.
• Remote work: McKinsey research highlights that remote work enhances work-life balance and reduces burnout. Incorporating remote work options into succession planning helps attract and retain a diverse, inclusive workforce.
• Diversity, equity, and inclusion (DEI): Diverse teams excel in problem-solving, innovation, and decision-making, with less bias. Integrating DEI initiatives into succession planning enables organizations to leverage these benefits and create more effective leadership pipelines.

Tools and templates for succession planning 

• Succession planning template: Use a succession planning template to create a structured framework for identifying, developing, and preparing team members to fill senior management roles.
• Team review meeting agenda: Structure your meetings to pinpoint critical roles, evaluate team performance, and identify talent gaps. A team assessment template ensures a structured approach.
• Team competency matrix: Use a team competency matrix template to proactively assess the skills within your team, helping you identify who possesses the required competencies and where gaps may exist.
• Individual development plan template: Help team members align their career goals with organizational objectives by using development plan templates to track their progress and ensure their goals match the company’s strategic needs.

Final thoughts

A strong succession plan ensures critical positions are always filled by preparing and transitioning high-potential employees with leadership skills and specialized knowledge. By proactively nurturing your talent pipeline, you'll secure long-term success and stability.