Succession Planning in Action: Insights from HR Leaders
It is estimated that between 35-47% of newly promoted executives fail within the first 18 months. Given the significant costs associated with executive-level turnover (e.g., estimated to be between 200-400% of annual salary) and an increasingly uncertain future facing so many organizations, the activity of succession planning is as important, and as complicated, as it’s ever been. We recently hosted senior HR leaders from various industries in a roundtable at our offices to discuss what is and isn’t working when it comes to succession management. From the myth of “ready now” to the struggles of actualizing successor potential and identifying the right success metrics everyone should be tracking, their candid reflections highlighted shared challenges and new tactics centered on building stronger, more resilient leadership pipelines.
Switching from “Ready Now” to “Ready Enough”
As one participating HR leader explained, “We had a culture where you had to be perfect. As a result, nobody was ever fully ready. Now, using the term ‘ready enough’ lets us be less conservative and empowers us to take smart promotional risks.”
The need for managing this mindset shift – from requiring absolute perfection of successors to accepting good enough – was echoed throughout the roundtable. Several organizations began defaulting to external hiring, assuming they could find a ‘Ready Now’ candidate externally that they were missing internally. However, some organizations have moved away from this default by giving themselves permission to take risks on internal candidates while simultaneously building support ecosystems for newly promoted leaders. Based on our experience, taking (intelligent) risk when promoting from within leads to improved morale and retention of key talent, while reducing uncertainty and shareholder unease.
The Optimal Balance of Build Versus Buy
While building a robust internal pipeline is crucial, there are of course times when an outside hire is the better strategic choice. The group discussed the ongoing tension they feel between developing internal successors and seeking fresh, external perspectives. “Sometimes we ask ourselves, ‘Why don’t we have the right person internally?’ Other times we realize we need new thinking.”
To help loosen the tension between build vs. buy, the group discussed:
- Setting internal promotion targets by level (e.g., 80% for VP and above)
- Clearly identifying high impact roles that demand greater rigor when sourcing candidates, both internally and externally
- Increasing transparency by openly posting roles that would have previously been filled quietly, broadening the pool of internal candidates
To Tell or Not to Tell
The question of transparency with potential successors sparked lively discussion. While some organizations hesitate to be open, fearing they might demotivate the majority of “B players” who are critical to daily operations, others view candor and transparency as a retention advantage. Ultimately, there was broad agreement that greater transparency is worth the risk.
One HR leader shared, “We found someone listed in five succession plans. When we asked him, he only wanted one of those roles.” Allowing succession planning to incorporate these two-way conversations can create stronger, more actionable plans.
This push for transparency is consistent with the research, which suggests high potentials likely know they have potential and are held in high regard by their employer, whether they are explicitly told or not. Failing to have candid and open discussions with this population is a missed opportunity for any organization.
Turn Plans-on-Paper into Action-in-the-Business
Identifying the right “good enough” successors is just the beginning of an effective succession planning system. Next comes the challenge of efficiently and effectively unlocking potential. As one HR leader noted, “Many leaders think they’re done after they’ve assessed potential and created the succession plan. But that’s when the real work begins- now you need to execute it.”
As the group shared strategies around the table, it became clear there are many approaches to this next stage of succession management, but all emphasized the importance of clear expectations and creating opportunities for shared learning and calculated risk-taking.
- Development cohorts: Groups of high-potentials progressing through shared learning experienced over a 6- or 12-month timeframe. This not only provides an opportunity to support learning on shared gaps and opportunities but also creates a cadre of “fellow travelers” that can act as supportive resources to each other over the course of a career.
- Co-ownership models: Assigning two executives to jointly support and advocate for a successor’s growth. This often includes the manager and an ELT advocate or sponsor. The CEO holds both equally accountable for successor development. Structuring clear accountabilities for development and creating a small but powerful ecosystem to support and encourage risk-taking can play a key role in accelerating readiness.
- Experiential learning: Giving candidates real challenges like leading transformations or business turnaround assignments tests resiliency, builds confidence, and grows their leadership capabilities. As one participant shared: “If you want to see what people are capable of, have them lead part of a transformation initiative. You’ll quickly find out who has the headspace and drive, and who is willing to put in the work.”
Measuring What Matters: The Conversion Metric
Are succession planning efforts working? Where and what might need attention to improve? How do you know? Several organizations are tracking how often succession candidates actually step into their targeted roles: the “conversion rate.” One HR executive reported an 80–90% success rate at the C-level, but a much lower conversion at the VP and below. Another organization found that a low percentage of high-potentials identified five years ago were still with the company and few had advanced.
“We believe we are assessing correctly but not supporting these leaders enough after being identified.” Developing strong analytics and being able to dig into these numbers and the story they tell can lead to the identification of simple but important improvements. Some of the impediments to success included a lack of accountability and follow-through on development, or not building supportive resources around the unique needs of each succession candidate (e.g., undervaluing certain important, yet non-traditional abilities and traits). Some of the strategies for accelerating development listed above were structured to address these impediments.
Most of the organizations at our roundtable now conduct regular “look-backs” to evaluate their succession efforts, go through structured after-action reviews conversations, and dive into their leadership pipeline data. After all, succession planning isn’t an event; it’s an ongoing process that requires continuous improvement.
Conclusion
Succession management is a strategic lever for long-term value creation, risk mitigation, and cultural continuity. Like most leadership challenges, it’s complex and nuanced, requiring an accurate (enough) read on two notoriously difficult and ever-changing targets: people and the future.
As the roundtable discussions made clear, organizations that treat succession planning as a dynamic, living system and not a static, “check the box” exercise, are better positioned to respond to change, retain key talent, and evolve in response to changing market conditions. By embedding succession into the fabric of how the business operates, through measurable outcomes, accountability at the top, and real-time learning and development, HR leaders can turn succession from a vulnerability into a competitive advantage.