How to Build a Strong Succession Plan for Your Business

Succession planning is often treated as the corporate equivalent of writing a will: everyone knows they need one, but no one wants to think about it, and so it gets pushed to the bottom of the to-do list.

However, a succession plan is not just a retirement schedule for the CEO. It is a critical risk management strategy. When a key leader departs unexpectedly, whether due to illness, poaching by a competitor, or a sudden resignation, the absence of a plan creates a vacuum. This vacuum leads to a drop in shareholder confidence, internal political scrambling, and a loss of strategic momentum.

Building a strong succession plan requires shifting your mindset from “replacement planning” (who takes this desk when it’s empty?) to “talent development” (how do we build a pipeline of leaders capable of driving the future business?).

It’s always best to get advice from succession planning experts such as CJPI to access the tools and knowledge required for successful planning and execution. However, we’ve put together a detailed, phased approach to building a succession plan that actually works for most organisations.

Phase 1: Aligning Succession with Business Strategy

The most common mistake organisations make is planning to replace the current leader with someone exactly like them. But the business environment of today is not the environment of tomorrow.

Before you look at any names on a spreadsheet, you must look at your strategic roadmap.

• Where is the business going in the next 3 to 5 years? 
• Are you planning aggressive international expansion?
• Are you shifting from a service-based model to a product-based model?
• Are you preparing the business for a sale or merger?

If your current CEO is a visionary founder who built the business from scratch, their successor might need to be an operational specialist who knows how to scale and implement processes. You are not hiring for the job as it exists today; you are hiring for what the job will demand in three years’ time.

Phase 2: Identifying Critical Roles

Succession planning should not be restricted to the C-suite. A sudden vacancy in a highly specialised, mid-level technical role can sometimes disrupt operations more severely than the loss of a Managing Director.

You need to identify the “value creators” and the “risk mitigators” deep within your organisation.

Ask yourself:

1. Which roles have the highest impact on our revenue or strategic goals? (e.g., the lead software architect, the top sales director).
2. Which roles hold deep, undocumented institutional knowledge? (e.g., the procurement manager who holds all the supplier relationships, the payroll manager who knows the legacy software).
3. Which roles would be the hardest to fill externally due to market shortages?

These are your critical roles. Your succession plan must cover all of them.

Phase 3: Assessing and Mapping the Talent Pool

Once you know which seats need covering, you must assess the talent available to sit in them. This requires an objective framework and some assessment tools to prevent bias and favouritism.

A basic tool for this is the 9-Box Grid, which is a standard HR methodology that evaluates employees across two axes: Current Performance and Future Potential.

• Performance: Does the employee consistently meet or exceed their current KPIs?
• Potential: Does the employee demonstrate the emotional intelligence, strategic thinking, and adaptability to operate at a higher level of complexity?

By plotting your workforce on this grid, you identify your “High Potentials” (HiPos)—those sitting in the top-right boxes. These are the individuals you will actively groom for succession. Crucially, this exercise also highlights your “steady state” employees (high performance, low potential), who are valuable in their current roles but should not be placed on an executive succession track.

For senior leaders, assessments are often more useful if accompanied by 360 reviews of board dynamics and requirements, and creating an ideal profile.

Phase 4: Emergency vs. Long-Term Planning

A robust succession plan actually consists of two parallel plans:

1. The Emergency Plan

If your CFO resigns tomorrow morning, who steps in on Monday? The emergency successor does not need to be the long-term solution. They simply need to be a safe pair of hands capable of keeping the department running, authorising payments, and maintaining stability for 3 to 6 months while a permanent search is conducted.

2. The Long-Term Plan

This maps out candidates who will be ready to take over in 1 to 3 years. It involves identifying the gaps in their current skillset and proactively building a development programme to close those gaps. One major error we see companies make is trying to fit their existing team into a development programme which would far exceed the time horizon of a planned departure. The reality is, not every business has a succession bench which is close enough to the wider external market, meaning that many companies must consider how executive search fits into their succession plan.

Phase 5: Development & Knowledge Transfer

Identifying a successor is only 10% of the work; the remaining 90% is developing them (if that’s possible!). You cannot simply tap someone on the shoulder and expect them to suddenly possess executive presence.

Development must be intentional and structured:

• Stretch Assignments: Give the successor a project that forces them outside their comfort zone. If they are a brilliant Marketing Director, put them in charge of an operational efficiency project to test their cross-functional management skills.
• Job Rotation and Shadowing: Allow the successor to shadow the incumbent during high-stakes situations, such as board meetings or major client negotiations.
• Mentorship and Executive Coaching: Provide them with an external executive coach. An external coach can help them navigate the transition from “peer” to “leader,” which is often the hardest hurdle to overcome.
• De-risking Institutional Knowledge: Force incumbents to document their processes. If a leader’s methodology only exists in their head, they are a single point of failure.

Remember, just because you should look to “close the gap” on internal candidates, you must do this in the context of “what else is out there and how does this person compare to the wider leadership market at this level”. A “gap” of 50% is significantly different to a gap of 5-10% and you should consider whether an external candidate should be compared or considered as part of the process.

Phase 6: Communication

If going internally, should you tell a candidate they are the chosen successor? This is the most hotly debated topic in succession planning.

• The risk of silence: If you do not tell your high-potential employees that they have a future at the top of your organisation, a headhunter will eventually offer them a clear path elsewhere, and you will lose them.
• The risk of transparency: If you tell someone they are the successor, they may become complacent. Alternatively, if business needs change and you ultimately hire an external candidate, the internal successor will feel betrayed and likely resign.

The Best Practice: Have “career trajectory” conversations rather than making concrete promises.

Instead of saying, “You are the next COO,” say, “We see you as a high-potential leader with the capacity to reach the C-suite. Over the next two years, we are going to invest in your development to make you a primary candidate for the COO role when it becomes available. However, the final decision will always be based on the specific needs of the business at that time.” This provides motivation and clarity without creating a legally or emotionally binding contract.

Phase 7: Avoiding Common Pitfalls

As you build your programme, be wary of these common traps:

1. The “Mini-Me” Syndrome: Incumbents naturally gravitate towards successors who look, think, and act exactly like them – or simply those who they get on with. Senior leaders responsible for succession planning must act as an objective third party to challenge this bias and ensure diversity of thought – HR is often a good “grounding” for this process to add objectivity, as are external advisors who approach this with an objective, external and experienced lens.
2. Ignoring the External Market: A good succession plan should also map the external market. Sometimes, the honest answer is that you do not have the right talent internally. You should know which external executives at competitor firms you would target if a vacancy arose.
3. Treating it as a “One and Done” Exercise: A succession plan is a living document. People leave, strategies pivot, and high-flyers burn out. The plan must be reviewed by the board and HR at least every six months.

Summary Checklist