Navigating Leadership Transitions: How to Create a Succession Plan

Leadership succession isn’t exclusive to family businesses—that’s just one slice of the pie. You see, without certain roles, no company would fulfill its mission, make its vision come true, or achieve its goals. But leaders retire, change careers, resign, and even get fired. And companies must operate—and thrive—past that. The answer? To plan for leadership succession.

Find out what a leadership succession plan looks like and the steps to create one. Take a look at our (free) leadership succession planning checklist, download it, and follow it the next time you craft one of those plans on your own.

What is leadership succession?

Leadership succession is the process of planning effective leadership transitions. It consists of all the steps between identifying the fundamental leadership roles in your company that call for succession and implementing action plans to prepare actual successors to step into those roles.

But be aware that it takes time to develop the competencies of handpicked employees to succeed in fundamental leadership roles. They may have outstanding foundations competency-wise, but growing their leadership skills by implementing a leadership succession plan is a long-haul process.

On the other hand, leadership succession planning makes your company stronger as a whole. It guarantees the continuity of the business and retains current and prospective leaders. It offers them a career growth opportunity and sets them up for success in a higher-visibility position.

Now, career growth is a long-term perspective, but succession planning and leadership development—the short-term approach to growing successors’ careers—have a strong connection. That’s because getting successors ready to take on fundamental leadership roles in the long term involves leadership development—or the more immediate steps toward performing those roles successfully. For instance, leadership development includes going through a leadership training program designed to build leadership competencies in successors.

Steps to create a leadership succession plan

Although a leadership succession plan—or succession development plan if you prefer—depends on the role and the individual who will step into that role, the steps to craft the plan are rather the same. And it all starts with reviewing your organizational structure and pinpointing the leadership roles that matter for succession.

Identify fundamental leadership roles

Leadership succession applies to leadership roles that are fundamental to the company’s mission, vision, goals, and operations. Managers in fundamental functional areas (such as HR, finance or marketing), directors, and other top executives—all of them will need successors sooner or later. But there may be more in your company, like division managers organized by region, market, industry, product line, or customer type.

Just make sure you don’t leave out any leadership position that would be hard to refill because it calls for a great deal of knowledge about the company, the products, the way the company operates, and the organizational culture. Think, “Could the company reach its business goals without someone like that in this position?” If the answer is “definitely not,” then that’s a fundamental leadership role.

Determine fundamental leadership competencies

Now, for each role identified in the previous step, list the abilities, knowledge, skills, and behaviors necessary to perform the role.

Those competencies will define the criteria for choosing successors, the topics on which leadership development initiatives should focus, and the performance expectations for the chosen employees.

Identify high-potential employees

At this point, you know the profile that leaders in each fundamental position must have to live up to their responsibilities. But you must flag those who fit each profile more closely and those who’d want to step into the role that closely matches their profile.

You might find high-potential employees at every seniority level, with different tenures, and across all departments and divisions. So, you might find there’s potential in staff members who are yet to take on managerial roles, first-time managers, or recently promoted directors. But be mindful of time constraints and choose the high-potential personnel who can develop the required leadership competencies in time to step into the role.

Check out our leadership assessment tool and effectively evaluate current and aspiring leaders for succession!

Plan leadership succession actions

The next step is to lay out two things in a leadership succession plan:

• The actions of all those involved in the leadership transition process, from board members and top executives to communications staff
• The leadership development actions and other types of leadership succession actions that each interested high-potential employee must perform to prepare for the corresponding leadership role they’ll step into

But because individual competency sets are unique, and so are the competency sets of each role, having a broad leadership training program and defining multiple learning paths—one for each successor—is the best strategy.

Regardless, your leadership training program will likely cover topics like decision-making, strategic planning, effective communication, negotiation, team management, crisis management, organizational change, and problem-solving.

And you’ll likely need to deliver the program using different training methods, such as eLearning courses, webinars, in-person workshops, mentoring, case studies, or role-play simulations.

Take a look at our off-the-shelf leadership eLearning courses to kickstart the development of your leadership training program!

Assess the leadership succession plan’s success

Once you put a leadership succession plan in writing for each fundamental leadership role, outline the actions that each successor must perform, and have the successors complete those actions, it’s time to evaluate how effective each plan was.

And for that, you need to measure whether fundamental leadership positions were filled quickly and whether the employees who stepped into those positions performed as expected. You may also broaden the evaluation to assess whether your company retains high-potential employees and whether they grow along their career paths and develop their leadership competencies.

Leadership succession plan example

Let’s say you have a CEO succession plan at your company. This is what it might look like:

Role: CEO

Qualifications:

• Bachelor’s degree from a recognized college or university or equivalent experience
• Advanced degree in business administration or equivalent experience
• 10 years of experience in leadership roles
• Broad experience working closely with a board of directors
• Extensive track record of building teams, leading the development and implementation of strategic initiatives, and achieving goals and corporate visions while managing risk effectively

Competencies: 

• Advanced subject matter expertise
• Extensive knowledge of how companies in the industry are structured and operate
• Strong awareness of the ever-changing business landscape, funding conditions, and technological transformation
• Solid understanding of marketing and sales, operations, HR, and finance
• In-depth understanding of the company’s mission
• Ability to achieve consensus and change structures, behaviors, or processes through relationship building, influence, and social awareness
• Ability to motivate and earn the trust and respect of employees, clients, partners, and funders
• Ability to maintain a close relationship with top executives and board members
• Ability to develop relationships with members of communities and organizations across the industry
• Exquisite written and verbal communication
• Ability to convey messages effectively and inspire, whether that’s one-on-one or in front of a large audience
• Ability to make decisions based on sound business knowledge and the exhaustive analysis of available information
• Ability to synthesize complex information, answer questions about decisions made, and address associated concerns

• Highly grounded, resilient, pragmatic, and flexible, yet able to take strong stands when needed
• High tolerance for ambiguity
• Ability to maintain composure under pressure
• Autonomous, yet collaborative
• Problem solver
• Active listener with openness to reasonable and thoughtful ideas, suggestions, and advice

Personal traits:

• Energetic and dynamic
• Charismatic
• Unshakeable integrity
• Exceptional personal and professional ethics
• Self-driven
• Passion for and commitment to the industry

Actions: 

1. The outgoing or acting CEO informs the board chairperson of the absence or departure by phone.
2. Within 24 hours

1. The board chairperson and the outgoing or acting CEO notify the executive committee by email.
2. The outgoing or acting CEO notifies staff in person or by email.

3. The board chairperson meets with the outgoing or acting CEO to understand the reason for the absence or departure.
4. Within 24 hours of notifying the executive committee, the board chairperson and the outgoing or acting CEO jointly notify the remaining board members by email.
5. Within 24 hours of notifying all board members, the outgoing CEO, the acting CEO, and the VP of marketing and communications meet to kickstart the execution of an internal and external communications plan to announce the absence or departure.
6. Within 72 hours of notifying all the board members, the board chairperson and the outgoing or acting CEO jointly notify, by email, all the organizations where the outgoing CEO performs a role.
7. Communications staff announce the absence or departure on the company’s website and to the media.
8. HR posts the open position for CEO on the company’s website.
9. The board chairperson appoints the acting CEO, who must be a senior staff member.
10. If the appointee is unwilling to step into the acting CEO position, the company appoints the backup fill designated by that person or hires an outside consultant to perform the role.

10. In consultation with senior managers—individuals in the CEO position or higher—the acting CEO appoints a temporary person to assist them in performing the role of CEO during the interim leadership period.
11. The board chairperson and the executive committee oversee the work of the acting CEO.
12. The acting CEO provides updates to the executive committee as frequently as the board chairperson determines.

12. Within 14 days of the CEO announcing their absence or departure and in consultation with the executive committee, the board chairperson appoints a leadership transition committee that will search for a new CEO, select them, plan the transition further, and manage the process.
13. The leadership transition committee assesses the company’s leadership needs and makes sure the new CEO fits the role’s functions, qualifications, competencies, and personal traits as well as the company’s mission, vision, values, goals, and culture.
14. The leadership transition committee assigns responsibilities for candidate search and decides how senior managers will be consulted for candidate selection and further involved in the succession planning.
15. (Optional) In consultation with the leadership transition committee, the board chairperson decides to hire an executive search firm.
16. In consultation with the outgoing CEO, the leadership transition committee determines the outgoing CEO’s role during the transition and communicates it to all board members.
17. (Optional) The outgoing and acting CEOs develop leadership development plans to prepare interested high-potential employees to take on the CEO role.
18. The board of directors decides who will fill the CEO position and makes an offer to that person.
19. The new CEO accepts the offer.
20. The successor is announced.

Rules:

The acting CEO has the same authority as the outgoing CEO. The acting CEO also carries out the duties of the outgoing CEO during the interim leadership period.

The acting CEO won’t perform the role of CEO for more than three months.

The leadership transition committee must have five members and include the board chairperson.

The leadership transition process may take up to 12 months.

Applications from both internal and external candidates are eligible.

If a board member decides to apply for the CEO position, they must submit their resignation letter to the board chairperson for their application to be considered, and the board will elect a new board member.

The company will work to build a diverse candidate pool for the CEO position.

Attachments: 

• List containing the CEO’s role functions
• List with email and telephone contacts for notifications
• Leadership succession communications plan
• RFP draft for selecting an executive search firm
• Leadership development plans for the CEO role, one for each interested high-potential employee
  
  

Leadership succession planning checklist

Download our free checklist for you to print and follow when tackling leadership succession at your company. It contains all the steps to strategically plan for leadership succession rather than filling fundamental leadership positions as they become vacant—which would be a quick fix, not sustainable in the long term. Also, the checklist is organized into stages for improved comprehension.

Taking the next steps in succession planning

If you want your company to thrive beyond the tenure of its current leaders, you must create a thoughtful leadership succession plan for each fundamental leadership role. That’s how you’ll strengthen your leadership pipeline and support the long-term success of the business.

From identifying fundamental leadership roles and competencies to flagging high-potential employees and defining individual learning paths, each step contributes to effective leadership transitions. By using tools like leadership assessments and ticking all items in our downloadable leadership succession planning checklist, you’ll go beyond reactive hiring and move towards sustainable leadership.