A succession plan is a strategic process organizations use to identify and prepare employees to fill key leadership and business-critical roles when they become vacant.
Imagine this - your company is running great. You're crushing your numbers and expanding beyond your wildest dreams. Then your CEO comes back from a trip to Japan and informs you that he's going on a "cultural walkabout" for an indefinite amount of time and will be quitting in two weeks. If you don't have a plan in place, you're going to be scrambling to replace him.
Succession planning ensures business continuity by developing internal talent pipelines rather than relying solely on external hiring. It can apply to executive leadership, management roles, or specialized positions that are critical to operations.
5 reasons why succession planning matters
Succession planning is about building a resilient organization that's ready for anything, including the loss of key employees. Here are five reasons why succession planning matters for your business:
- Business continuity. With a succession plan, you can keep your business running smoothly, no matter what changes come your way. By preparing for retirements, resignations, or sudden absences, you prevent disruption and keep critical leadership and expertise right where they're needed.
- Risk management. Running a business comes with risks, so it's wise to reduce it wherever you can. A strong succession plan mitigates risks associated with leadership gaps and institutional knowledge loss.
- Employee retention. A clear succession plan shows your team that growth isn't just possible, it's planned for. By signaling future career opportunities, it strengthens engagement and helps you keep your best talent on board.
- Investor and stakeholder confidence. Want to inspire trust in your leadership? Write a succession plan. It indicates organizational stability and a long-term vision.
- Compliance in certain sectors. Some industries, such as finance and healthcare, may require documented succession planning for regulatory purposes.
Despite the importance of a succession plan, most organizations - some 56%, per a survey by the Society for Human Resource Management (SHRM)-do not have one in place, leaving them vulnerable to the sudden departures of important players, such as C-suite leaders or essential individual contributors (like a super-fast coding whiz at a tech company).
Employer considerations
With a clear succession plan in place, you can build a strong pipeline of talent ready to lead when it matters most. Make sure your plan includes information about how to balance transparency vs. confidentiality, handle global teams, use HR technology to your advantage, and ensure diverse representation in leadership roles.
Transparency vs. confidentiality
It's a balancing act! You want to be open enough to build trust and show employees that career growth is possible, but too much disclosure can unintentionally create tension or uncertainty. Sharing who's being considered for future roles might motivate some team members but discourage others. That said, you need to find out if potential replacements are even interested in leadership roles. For example, a top seller may not be interested in transitioning into a sales executive role. Better to know this sooner rather than later.
The secret is to communicate the purpose and benefits of your succession plan-emphasizing that opportunities are open to everyone-while keeping specific decisions and timelines confidential until you're ready to act.
Global teams
When you're managing global teams, succession planning gets more complex. Cultural expectations around career progression, leadership styles, and communication can vary dramatically from one country to another. What works in your headquarters might not resonate with teams in other regions.
Thinking about moving talent across borders? If so, you'll need to navigate different legal requirements around promotions, transfers, and work permits when
The smartest approach is to build a flexible succession framework that respects local norms while maintaining consistency in your overall strategy, ensuring every office has the leadership continuity it needs.
Technology tools
HR technology makes it easier to identify and develop future leaders. Many companies use human resources information systems (HRIS) or talent management platforms to track employee performance, assess readiness for advancement, and manage their succession pipelines in one place. These tools help you with succession planning by visualizing talent gaps, flagging critical roles, and ensuring leadership development stays on track.
With real-time data and analytics, employers can make more informed decisions and adjust their plans proactively as business needs evolve. But what if your company organization is relatively small, without useful data sets? If you are a company that doesn't have your own internal data that you've collected and can look historically back on, broaden your lens," HR consultant Joanne Taylor told HRMorning's podcast. "Data's out there and it's out there for specific industries."
Diversity and inclusion
Diversity and inclusion should sit at the heart of effective succession planning. By intentionally developing a wide range of employees for leadership roles, you not only create equal opportunities but also improve your company's bottom line.
McKinsey's research since 2015 has routinely shown that the more diverse a leadership team is, the better a company performs. The difference diversity makes is significant: "Companies with representation of women exceeding 30 percent … are significantly more likely to financially outperform those with 30 percent or fewer. Similarly, companies in our top quartile for ethnic diversity show an average 27 percent financial advantage over others."
Use succession planning to ensure diverse representation in leadership roles.
Core elements of a succession plan
To make sure you're ready for any leadership change, you need a clear framework that covers every stage of the process. From identifying critical roles to developing future leaders and keeping your plans current, these core elements ensure your organization stays prepared and resilient:
- Role identification. Identify positions critical to business continuity. Focus on roles where replacements would be difficult or time-sensitive.
- Talent assessment. Evaluate current employees' performance, potential, and leadership readiness. Use performance reviews, skills assessments, and leadership competencies to figure out who is ready to step into leadership roles.
- Development strategies. Offer mentorship, training, and stretch assignments to prepare potential successors. Provide leadership development programs tailored to organizational needs. Don't leave training to chance. (Offering career advancement opportunities helps reduce turnover anyway.)
- Transition planning. Document knowledge transfer strategies (the last thing you want is your CFO leaving without sharing where the proverbial key to the lockbox is). Outline interim leadership arrangements if a successor is not immediately ready.
- Reviews and updates. Succession planning is not a "set it and forget it" proposition. You need to regularly revisit succession plans to account for organizational changes. Adjust based on employee movement, market shifts, or business growth.
Plan for success(ion) with Pebl
Succession is an important part of business. And for your succession planning to work, you need access to the best talent.
Why not let Pebl help?
Our global HR services help you identify, develop, and transition talent seamlessly in 185+ countries worldwide. From talent assessment to compliance support to streamlined workforce management, we make it easier to build leadership pipelines that work across borders. When you're ready to future-proof your organization, let's talk.
Disclaimer: This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided "as is," and no representations are made that the content is error-free.
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