Succession Planning That Works in All Industries

Every organization eventually faces the departure of key leaders—whether due to retirement, career moves, or unforeseen events. Succession planning is the strategic process of preparing for these transitions so the business can continue to thrive. It’s not just a concern for big corporations or family businesses; companies of all industries and sizes need succession plans to ensure continuity. Yet many businesses neglect this critical area. Surveys show that while 86% of leaders consider succession planning an urgent priority, only 13% believe their companies do it well. In fact, only about 1 in 5 organizations actually have a formal succession plan in place. This gap leaves countless firms vulnerable to chaos and setbacks when a top executive or expert leaves unexpectedly.

Furthermore, shifting workforce demographics are raising the stakes for succession planning. In many sectors, a large portion of senior leadership is nearing retirement age. For example, in the United States a record number of Baby Boomers are reaching age 65 each year, which foreshadows a wave of retirements across industries. The same is true in countries like Kenya, where seasoned industry pioneers are gradually exiting the workforce. Companies must prepare now to fill the impending leadership void and capture the wisdom of veteran leaders before they depart.

Why Succession Planning Matters Across Industries

No matter the industry—be it finance, manufacturing, tech, healthcare, or government—the departure of a crucial team member can disrupt operations and erode stakeholder confidence. The impact is even more pronounced for small and mid-sized businesses, which may rely heavily on a few individuals’ institutional knowledge. Without a plan, companies risk scrambling to find a replacement, potentially choosing underprepared candidates or experiencing long vacancies in leadership roles. The result can be lost productivity, strategic drift, or even business failure.

The evidence for the importance of succession planning is stark. Consider family-owned businesses as an example: globally, only about 30% of family businesses survive to the second generation and a mere 12% to the third generation. A major reason for this low survival rate is the lack of effective succession planning and governance in these firms. When a founder or patriarch steps aside without a clear successor and transition plan, internal conflicts and leadership vacuums often emerge, imperiling the company’s future. Even in large public companies, inadequate succession planning can be costly—studies have found that companies forced into an unplanned CEO change (for instance, due to a sudden firing or illness) can lose significant shareholder value compared to those with a planned succession process.

On the positive side, organizations that prioritize succession planning reap numerous benefits. They ensure business continuity: customers, employees, and investors feel reassured that the enterprise can weather a change at the top. Internally, having a succession plan tends to boost morale and engagement. Employees see that there’s a path for advancement and that the company is investing in their future. In one survey, 94% of employers said having a succession plan positively impacts employee engagement, and over half of employees agreed they’d be more engaged at work if they knew a clear plan for advancement existed. In short, succession planning not only secures the future of the business but also motivates the talent you have today.

Key Elements of an Effective Succession Plan

Succession planning is not about picking a replacement at the last minute; it’s about building a pipeline of talent and a roadmap for transition well in advance. Here are the core components of doing it right:

• Identify Critical Roles and Skills: Start by pinpointing which positions, if suddenly vacant, would pose a serious risk to your organization. Often this includes C-suite executives (CEO, CFO, etc.), but it can also be specialized roles or managerial posts that are vital to operations. In a hospital, for example, the chief surgeon or lead administrator might be critical; in a tech startup, it could be the head of engineering. Identify the leadership competencies and technical skills that those roles require for success.
• Identify Potential Successors: For each critical role, look within your organization for high-potential employees who could one day step into those positions. Succession planning is not just about CEOs—every level of leadership can be planned for. Unfortunately, 72% of organizations focus their succession efforts only on senior executives, neglecting lower management layers. A better approach is to cast a wide net and develop multiple candidates for key positions. Use performance reviews, mentorship input, and competency assessments to help spot the employees with the capability and ambition to grow. Ensure this process is inclusive – consider a diverse slate of candidates (different backgrounds, genders, etc.), as a variety of perspectives in leadership can spur innovation and resilience. And while developing internal talent is ideal, acknowledge that sometimes the best successor may come from outside the organization; succession planning should also prepare for a potential external search if no internal candidate is ready.
• Development and Training Plans: Selecting “heirs apparent” means little without preparing them. Once you have potential future leaders in mind, create individualized development plans. This could involve rotating them through different departments to broaden their experience, providing leadership training, or pairing them with mentors/coaches. For instance, an operations manager identified as a potential future COO might need exposure to finance or strategic planning responsibilities to round out her skill set. Give these employees stretch assignments that simulate aspects of the bigger role. The goal is that when the time comes, your successors are not walking in cold—they’ve been groomed for the challenge.
• Knowledge Transfer: Often, key leaders hold decades’ worth of institutional knowledge in their heads. It’s crucial to capture and transfer that knowledge before they exit. Encourage documentation of processes, decisions, and contacts. Have the outgoing person actively train or brief the successor over a transition period if possible. Some companies implement “shadowing” programs where the successor gradually takes on duties under the wing of the current leader. By the time the official handover happens, the new leader is already familiar with the role’s demands and the outgoing leader’s wisdom isn’t lost.
• Formalize the Plan: A succession plan should be documented and approved by top management (and the board, if applicable). It’s a living document that outlines who the potential successors are for each key role and what the development steps and timeline look like. It can also cover emergency scenarios—emergency succession planning identifies who would take over on an interim basis if a leader were to leave suddenly tomorrow. This kind of foresight is part of good risk management. Make sure the plan is communicated appropriately: key stakeholders (like board members or senior executives) should know it exists, and in some cases, high-potential candidates can be made aware that they’re on a succession path (this must be handled carefully to avoid overpromising or creating jealousy, but when done right, it can encourage them to stay and grow with the company).
• Review and Update Regularly: Businesses and people are dynamic; therefore, revisit your succession plan at least annually. Promotions, departures, or shifts in company strategy might require changes. Maybe someone thought to be a successor leaves the company, or a new role becomes critical due to market changes (for example, suddenly you realize you need a Chief Data Officer and must plan for that). By reviewing the plan periodically, you keep it realistic and relevant. Succession planning should become an ongoing part of talent management, not a one-time project.

Adapting Succession Planning to Different Industries

While the fundamentals of succession planning apply universally, different industries might have unique considerations:

• Industry-Specific Skills: In some technical fields (say, aerospace or medicine), the talent pipeline might require specialized expertise that takes years of education to obtain. Companies in such fields need to start grooming successors early and perhaps partner with educational institutions to ensure a flow of qualified candidates. In contrast, in fast-moving industries like software, the focus might be on strategic thinking and innovation, and high-potentials might emerge quickly. Tailor your criteria for successors to the context of your industry. For example, a bank might prioritize successors who excel in risk management and compliance, whereas a creative agency might look for client relationship skills and creative vision.
• Family Businesses vs. Corporations: In family-run enterprises (common across Africa and globally), succession often involves balancing family dynamics with business needs. The planning might include deciding whether to pass leadership to a family member or an external professional. Formal governance structures (like family councils or boards) and clear communication are key to making these transitions smooth. In contrast, publicly-traded corporations might have more formal requirements: boards may insist on seeing CEO succession plans and might even engage executive search firms to benchmark internal candidates against external talent.
• Scale of the Organization: A small business might identify just one or two backup candidates for the owner/operator roles and cross-train employees to cover each other’s duties. A multinational corporation will have a much more elaborate program, possibly with global leadership development rotations and a full HR process to support succession planning. But the principle is the same: ensure that for every key position, someone is ready to step up.
• Regulatory Environment: In certain industries, regulators and stakeholders expect to see succession plans. For example, banks and insurance companies often must have contingency plans for leadership to satisfy governance expectations. Similarly, government agencies or nonprofit organizations may need transparent succession processes to assure the public of continuity of service. Knowing these expectations can shape how you document and communicate your plan.

Despite these differences, the heart of succession planning remains people-centric and proactive. Any organization, whether a cutting-edge tech firm or a traditional manufacturing company, thrives when it can cultivate its next generation of leaders from within.

Making Succession Planning a Success

To truly work, succession planning must be embedded in the company culture. Leaders at the top should openly support the initiative, and managers should be held accountable for developing their team members. Human Resources plays a pivotal role by facilitating the process—bringing data about talent, providing training resources, and keeping the plan updated.

It’s also important to address the “human” side of succession. Discussions about who might replace whom can be sensitive. Approach the topic with tact and confidentiality. Emphasize that the goal is to ensure everyone’s hard work in building the organization carries on, even as people eventually move on or retire. When done right, succession planning isn’t about pushing anyone out; it’s about being prepared and investing in people’s growth.

Another key to success is measuring progress. Develop some metrics: for example, track how many leadership positions were filled by internal candidates (a high rate suggests your succession pipeline is effective). Monitor retention rates of high-potential employees—if they are sticking around, it could mean they see opportunities for advancement. If they’re leaving, you may need to communicate better or improve development efforts.

Finally, don’t hesitate to seek outside help if needed. Sometimes an external perspective can identify gaps in your succession strategy or bring new ideas for leadership development. Hessons Consulting Group works with organizations across various industries to create customized succession planning frameworks. By analyzing a company’s strategic needs and talent pool, Hessons can help design a succession process that fits its culture and goals, whether that means mentoring programs for a tech startup or governance structures for a family conglomerate.

In conclusion, succession planning is not one-size-fits-all, but it is universally important. The companies that handle leadership transitions best are those that prepare early and deliberately. They have the right people ready at the right time, so that when change comes—as it inevitably will—there is no crisis. Instead, there’s a smooth handover, business as usual, and a new leader ready to take the organization to its next phase of success. Every industry, from agriculture to aerospace, benefits from that kind of foresight. By investing in succession planning now, you secure your enterprise’s future for years—perhaps generations—to come.