7 steps to building a strong Succession Planning for leadership continuity

What is succession planning?

Succession planning is a strategic process for identifying and developing future leaders within an organization to ensure smooth transitions in key roles. This approach prepares companies to handle unexpected departures and predictable changes, such as retirements, by creating a pipeline of talent ready to step into leadership positions.

It also aligns the company’s long-term vision with its talent development. By recognizing potential successors early, organizations can provide these individuals with the necessary training, mentorship, and experience, reducing the need to hire externally. This proactive process minimizes disruptions and supports continuity, stability, and sustained growth.

Many successful companies, particularly in family-owned businesses, rely heavily on robust succession planning to secure their legacy and preserve their values, identity, and stability across generations. This helps prevent leadership gaps and ensures qualified successors can continue the business’s legacy while driving future growth.

The main benefits of a succession planning

Below, we’ll outline four key benefits of effective succession planning and provide insights to help you develop a strong succession plan for your organization.

Increasing leadership availability

Effective corporate succession planning increases the availability of capable individuals who are prepared to assume leadership roles as they become available. This approach ensures that high-potential employees and key employees are developed and ready to fill these roles. Succession planning builds bench strength by fostering a pipeline of qualified candidates who can step into leadership positions as senior executives retire or move on.

Reducing the risk of leadership gaps

Succession planning significantly reduces the risk of leadership gaps by ensuring business continuity as senior leaders transition. Organizations maintain critical institutional knowledge and strengthen their leadership pipeline by prioritizing knowledge transfer from outgoing leaders to new ones. This proactive approach supports the continuity of critical roles.

Decreasing recruitment costs

Succession planning minimizes the time and financial resources needed to recruit new leaders, as internal talent is prepared for these positions instead. In situations where staffing needs change abruptly, having top talent already identified and trained within the organization is invaluable.

Thanks to having an existing pool of prepared internal candidates, organizations can streamline recruitment processes and reduce hiring costs.

Creating structured HR support

Succession planning offers human resources a structured framework for leadership selection. Emphasizing retention and securing buy-in at all levels helps HR avoid rushed hiring and strengthens the organization’s commitment to talent development. This approach also promotes a steady leadership pipeline and enhances workforce stability.

Preserving family values and vision

Succession planning in family enterprises ensures that leadership transitions align with the family’s long-term goals and values. By preparing successors within the family, businesses can maintain their unique identity and culture, fostering continuity and trust across generations while reinforcing the legacy that defines their enterprise.

How to write a simple succession plan in 7 steps

A well-structured succession plan is essential for building a resilient organization, especially for family businesses aiming to preserve their legacy and values across generations.

In family enterprises, succession planning goes beyond filling leadership roles – it involves aligning family members’ personal goals with business objectives, maintaining harmony within the family, and preparing the next generation for leadership responsibilities. By carefully navigating these dynamics, you can create a succession plan that ensures continuity, fosters growth, and strengthens both the business and family relationships.

Follow these seven steps to develop a succession plan tailored to the unique needs of your family business:

1. Identify critical roles

Begin by pinpointing the critical positions within your organization that are essential to its operations and long-term goals. Establish an action plan defining each role’s specific responsibilities and qualifications. This clarity supports decision-making processes and helps prioritize the critical roles to address first.

2. Define required competencies and skill sets

Next, assess the competencies and skill sets essential for success in these roles. This includes outlining the technical and soft skills required. Aligning these with your organization’s career development goals creates development opportunities that will prepare future leaders for the demands of their roles.

3. Organize career paths for high-potential employees

Design career paths that provide clear progression opportunities for high-potential employees within your organization. One way to identify them is through a leadership assessment. This step involves creating development plans that include learning experiences, mentorship, and skill-building activities to enhance employee engagement and readiness for advancement.

4. Establish a development program opportunity

Implement a structured development program to nurture employees’ growth. This should include resources for professional development, such as training courses, workshops, and relevant certifications that will prepare the next generation of leaders. Investing in employee growth fosters a pipeline of well-prepared candidates for future leadership roles.

Example: IMD’s First 90 Days® program equips leaders transitioning into new roles with the tools and strategies to succeed during this critical period. Delivered through a virtual, interactive format, it combines expert guidance, peer collaboration, and individual coaching to help participants diagnose challenges, set strategic goals, and create an actionable plan for their first 90 days in a new position.

5. Create a succession planning template and toolkit

To streamline and standardize the succession process, develop succession planning templates and a toolkit that provides guidelines, checklists, and tools for managing succession efforts across departments. The template should be consistent and efficient, making it easier for all stakeholders to follow the plan.

Here are some succession planning templates to consider, and what each might include:

Individual Development Plan (IDP)

An Individual Development Plan (IDP) is a personalized tool designed to help employees grow their skills, enhance their performance, and achieve their career goals while aligning their development with organizational objectives. It is both a roadmap for personal and professional growth and a structured way for organizations to invest in their talent.

Key components for an IDP:

Section	Purpose
Employee Information	Personal and role details of the employee.
Current Role and Performance	Assessment of current responsibilities and performance.
Career Goals	Long-term aspirations and areas of interest.
Development Goals	Skills or competencies to be enhanced.
Action Plan	Specific steps for achieving development goals.
Resources and Support	Tools, training, and mentorship needed.
Timeline	Milestones and deadlines for achieving goals.
Progress and Feedback	Mechanisms to evaluate and adjust the plan.

An IDP is not just a document but an ongoing process that promotes continuous learning, adaptability, and alignment between individual ambitions and organizational success. It is a win-win strategy for fostering growth and sustaining a competitive workforce.

Talent Management Checklist

The talent management process is a strategic approach to attracting, developing, retaining, and optimizing an organization’s workforce to meet business objectives. It encompasses a series of interrelated activities that ensure the right talent is in the right roles, performing at their best, and aligned with the company’s goals.

This process ensures that an organization not only attracts skilled employees but also nurtures and retains them for long-term success. To this end, we prepared a checklist so you can ensure a smooth succession planning in your company:

Step	Checklist item	Details
Performance Management ✅	Set clear performance goals	Define expectations and key performance indicators (KPIs).
	Conduct regular feedback sessions	Schedule one-on-one meetings for constructive discussions.
Learning and Development ✅	Identify skill gaps	Conduct assessments to pinpoint areas for improvement.
	Provide training programs	Offer workshops, e-learning, or certifications and allow employees to learn skills outside their primary role.
Succession Planning ✅	Identify high-potential employees	Use talent reviews to pinpoint future leaders.
	Develop career progression pathways	Create plans for advancement based on skills and performance.
Employee Engagement ✅	Conduct engagement surveys	Gather insights into employee satisfaction and areas for improvement.
	Recognize achievements	Celebrate milestones and contributions publicly.
Retention Strategies ✅	Offer competitive compensation	Benchmark salaries and benefits to stay competitive.
	Promote work-life balance	Offer flexible schedules, remote options, or wellness programs.
Workforce Planning ✅	Analyze current workforce data	Evaluate demographics, skills, and turnover rates.
	Forecast future talent needs	Align hiring and development strategies with business growth plans.

Readiness Assessment Template

A readiness assessment in a succession planning strategy is a tool used to evaluate whether potential successors are ready to step into key roles within an organization. The goal of this assessment is to identify the strengths and development needs of individuals being considered for leadership or critical positions, ensuring they are adequately prepared to take on those responsibilities when needed.

This assessment involves evaluating key competencies, skills, and experiences required for a specific role. It also helps determine whether the individual has the necessary leadership qualities, organizational knowledge, and ability to perform under pressure. A readiness assessment not only identifies gaps in skills and experience but also provides insight into the areas that need focus in an employee’s development plan.

Here is a template for implementing the readiness assessment strategy in your company’s succession planning. The objective is to evaluate each employee individually across all relevant qualifications in order to determine which candidate best meets the established criteria.

Criteria	Description
Current Role and Experience	Brief description of the employee’s current role and relevant experience.
Key Competencies for the Role	List the competencies required for the succession role (e.g., leadership, strategy).
Leadership Ability	Assess the employee’s leadership skills and ability to manage teams or projects.
Strategic Thinking	Evaluate the employee’s ability to think strategically and make long-term decisions.
Decision-Making Skills	Evaluate the individual’s ability to make informed decisions under pressure.
Interpersonal Skills	Assess the ability to collaborate, communicate, and maintain relationships.
Cultural Fit	Determine how well the employee aligns with the company’s culture and values.
Development Needs	List areas where the employee needs further development or training.
Readiness Level (1-5)	Rate the employee’s readiness to assume the role (1 = Not Ready, 5 = Fully Ready).
Mentorship/Coaching Plan	Outline any mentorship or coaching needed for the employee’s development.
Feedback from Supervisor	Summary of the supervisor’s feedback on the employee’s potential for the role.
Timeline for Readiness	Provide a timeline for when the employee is expected to be fully ready for the role.

6. Monitor progress and performance metrics

Tracking metrics related to succession activities, such as readiness assessments and skill gaps, will help you evaluate the plan’s effectiveness. Implement a performance management system to monitor each employee’s growth and the overall long-term success of the succession strategy.

Here are key metrics to assess the progress and effectiveness of succession planning:

1. Readiness assessment scores. Track the percentage of successors deemed ready to step into critical roles.
2. Skill gap analysis. Identify the number and severity of skill gaps resolved over time.
3. Internal promotion rate. Measure the percentage of leadership roles filled by internal candidates.
4. Retention of high-potential employees. Monitor the retention rate of employees identified as high-potential.
5. Bench strength. Assess the number of ready and near-ready candidates for each critical role.
6. Time to fill critical roles. Evaluate the average time taken to fill key leadership positions.
7. Successor development progress. Track the completion rate of IDPs for potential successors.
8. Knowledge transfer completion. Monitor the percentage of key knowledge areas successfully transferred from current leaders to successors.
9. Performance in leadership roles. Measure successor performance ratings after transitioning into new roles.
10. Stakeholder satisfaction. Collect feedback from leadership and stakeholders on the effectiveness of the succession process.
11. Turnover in critical positions. Track turnover rates in leadership and other key roles.
12. Employee engagement scores. Measure engagement levels of successors and employees involved in the succession process.
13. Cost savings. Calculate reductions in recruitment and onboarding costs due to internal promotions.
14. Diversity in leadership pipeline. Evaluate the representation of diverse candidates in succession plans and leadership roles.
15. Training ROI. Measure the return on investment for training and development programs included in succession planning.

7. Engage stakeholders and the leadership team in succession efforts

A successful succession plan requires buy-in from key stakeholders and the leadership team. Actively involve team members across departments and get key leaders to champion the succession initiatives. This collaborative approach strengthens the plan and promotes a culture of leadership development throughout the organization.

Prepare for the future with a solid succession plan

Effective succession planning is vital for any organization to maintain leadership continuity, minimize disruptions, and cultivate internal talent for future success. Investing in a well-structured succession plan reduces risks, supports long-term stability, and fosters a culture of growth and preparedness. Each step of the succession process, from identifying key roles to establishing clear development paths, contributes to a resilient organization ready to handle transitions smoothly.

IMD offers the “Leading the Family Office” program for those seeking to enhance their succession planning strategies. This program supports families through pivotal moments such as business sales, liquidity events, or succession planning, ensuring effective leadership and continuity.

Participants learn to govern, preserve, and transfer their wealth and values across generations, gaining actionable insights into structuring Single-Family Offices, navigating business transitions, and fostering family unity. With expertise from IMD’s Global Family Business Center, this program equips families with strategies to build sustainable legacies while addressing the unique challenges of managing private wealth.