Every company plans for growth. Far fewer plan for the moment a key leader leaves. In a SHRM survey reported in April 2024, 56% of organizations had no succession plan at all, 24% had an informal one, and only 21% had a formal plan.
Meanwhile, the people most likely to become your next leaders are looking around. DDI's Global Leadership Forecast 2025 found that 21% of high-potential individual contributors intend to leave, up from 13% in 2020.
This guide covers what succession planning is, how to build a plan that works, and how to keep it working.
What is succession planning?
Succession planning is the process of making sure every role the business depends on has someone ready, or getting ready, to step in. It has two time horizons:
- Emergency succession: who covers a role tomorrow if a leader leaves suddenly.
- Long-term succession: who will be ready to take the role in one, two, or five years, and what they need to get there.
A good plan handles both.
Why is succession planning more than replacing the CEO?
The CEO chair gets the attention, but the gaps are usually lower. Most companies have a name in mind for the top job. Far fewer know who is ready for the regional leader, the plant manager, or the head of finance. Succession is a pipeline, not a seat: if the layers below the top are thin, the top job has no one to draw from either.
What are the four steps to build a succession plan?
- Map the pipeline. Identify the roles that matter most at every level. A role is critical if losing the person would stall revenue or customers, if the role is hard to hire for, or if one person holds knowledge no one else has.
- Assess the bench. For each critical role, see who is ready now, who is ready later, and where the gaps are. Use evidence from real work, and add leadership assessments where you need a sharper view.
- Develop the next leaders. Give each candidate a development plan tied to the role they are being prepared for: stretch assignments, exposure to key decisions, and coaching on the specific skills the role demands.
- Transition with continuity. Plan each handoff so the business never skips a beat: overlap periods, documented relationships, and clear decision rights.
How do you rate succession readiness?
Most companies use three simple categories for each candidate:
- Ready now: could step in within weeks with normal support.
- Ready in one to two years: has the foundation and needs specific experiences.
- Ready in three or more years: high potential, but early.
Aim for at least two candidates per critical role, with at least one ready now or close to it. One name per seat is not a plan; it is a hope.
Who should own succession planning?
The CEO owns it, with HR running the process and the board or owners reviewing it at least once a year. Each senior leader should own the plan for their own team, because developing successors is part of a leader's job, not an extra.
How do you know your succession plan is working?
Track a few simple measures each quarter:
- Coverage: the share of critical roles with at least one ready-now successor.
- Depth: the share of critical roles with two or more named candidates.
- Internal fill rate: how often open leadership roles are filled from inside.
- Retention of named successors: whether the people you are developing are staying.
If coverage and depth are rising and your named successors are staying, the plan is working.
What are the most common succession planning mistakes?
- Planning only for the top job. Gaps lower in the pipeline become tomorrow's gaps at the top.
- Confusing performance with readiness. A strong performer in today's role is not automatically ready for a bigger one.
- Keeping it secret. People who do not know they are being developed often leave for a company that tells them.
- Building it once. A plan that is not reviewed every quarter is out of date within a year.
- Cloning the incumbent. Prepare successors for what the role will need next, not for what it needed five years ago.
How does The Executive-Panel help with succession planning?
The Executive-Panel builds succession planning across the entire leadership pipeline, from emerging managers to the executive team. The work follows the same four steps: map the pipeline, assess the bench, develop the next leaders with coaching tied to real roles and real work, and plan each handoff so the business never skips a beat. If you have no clear successors today, start with what a plan should include when there are no backup leaders, then book a free consultation.
Related reading
- What Should a Succession Plan Include When You Have No Backup Leaders?
- Leadership Development From New Managers to Executives: What Each Level Needs
Frequently asked questions
What is the difference between succession planning and replacement planning?
Replacement planning names who fills a role if someone leaves. Succession planning goes further: it develops people so they are ready, and it covers critical roles across the whole leadership pipeline, not just the top.
How often should a succession plan be reviewed?
Review it every quarter with a named owner, and do a full review with the board or owners at least once a year. Plans that sit untouched for a year are usually out of date.
How many successors should each critical role have?
Aim for at least two named candidates per critical role, with at least one who is ready now or close to it.
Does The Executive-Panel help companies build succession plans?
Yes. The Executive-Panel maps critical roles at every level, assesses bench readiness, develops the next leaders with coaching, and plans transitions. It starts with a free consultation.
