If talent is the oxygen of a company, succession planning is the life-support system. Yet too many organizations treat it like an org chart exercise, waiting until someone resigns or retires before scrambling to find a replacement.
When a leader walks out, the ripple effects are immediate: strategy stalls, teams lose momentum, and culture wobbles overnight.
The bigger problem? Most companies aren’t ready when it happens.
According to DDI’s 2025 HR Insights Report, only 20% of CHROs say they have leaders prepared to step into critical roles, and just 49% of those roles could be filled internally today. That means most organizations are closer to a leadership crisis than they realize. This isn’t just an HR issue; it’s a business continuity risk.
The Spreadsheet Trap
Too often, succession planning lives in a spreadsheet. Once a year, leaders review “ready now” candidates, check the box, and move on. But when someone exits suddenly, those names on paper don’t always translate into reality.
I’ve seen it firsthand. At one company where I worked, the president resigned unexpectedly. On paper, there were successors. In practice, none were ready. The company scrambled to find an external hire, losing momentum and market confidence.
Contrast that with PMI Worldwide (the owner of the Stanley brand), where culture and succession planning went hand in hand. The CEO and leadership team lived the values, held open forums, and celebrated wins. They didn’t just plan for future leaders; they developed them into leaders. When growth accelerated, the bench was ready.
One company had a spreadsheet. The other had a system. The difference was everything.
The Succession Reality
Turnover remains high. The Work Institute projects that 35–40 million employees will voluntarily quit in 2025, even as overall quit rates soften. That includes top performers you can’t afford to lose.
Employee tenure is shrinking, too. For those under 35, the median is just 2.7 years, according to the U.S. Bureau of Labor Statistics. Replacing leaders can cost up to 200% of their annual salary, per Gallup and the Society for Human Resource Management (SHRM), and it takes more than a year for new hires to become fully productive. To make matters worse, 38% of new hires leave within their first year, often before being considered for promotions.
Meanwhile, DDI reports only 20% of HR leaders believe their workforce is future-ready. Without a deliberate pipeline, companies expose themselves to leadership gaps, stalled strategies, and avoidable financial hits.
From Planning to Culture
Succession planning isn’t a list of names; it’s a culture of growth. That means development is ongoing, not episodic. Leaders are accountable for building their bench. Talent sharing crosses functions and geographies. Data guides investment in development.
A proactive succession process signals to employees that advancement is real, not theoretical. It drives engagement, strengthens retention, and ensures seamless transitions when leadership inevitably changes. Most importantly, it tells your people: your future has a place here.
Treat Succession Like a KPI
The companies that succeed don’t treat succession as a side project. They operationalize it. That means:
Measuring it like a KPI. Leadership bench strength should be reviewed with the same rigor as financial results. At Amazon, where I led succession processes, leadership readiness was tracked as closely as customer metrics through indicators like internal promotion velocity, bench strength ratios, time-to-fill critical roles, and successor readiness scores. These metrics weren’t HR dashboards—they were business metrics.
Stress-testing before a crisis. Ask: If this leader left tomorrow, what’s our real plan? If the answer is silence, you’re not ready.
Embedding it into daily development. Succession isn’t built once a year in a talent review. It’s built through mentoring, stretch projects, and intentional growth opportunities.
What Great Succession Planning Looks Like
Succession planning isn’t about “who’s next in line.” It’s about creating a continuous flow of leaders when the business needs it most. Done right, it:
- Identifies high-potential employees early, using performance + potential, not tenure.
- Differentiates between “ready now” and “ready in 1–2 years” and develops both.
- Prepares for both planned exits (retirements) and unplanned ones (attrition, poaching).
- Aligns talent strategy directly to growth priorities.
- Assesses the impact of loss. If a leader leaves, what projects stall? What revenue streams are at risk?
- Balances internal with selective external hires.
Leaders should review succession with the same urgency they give to financials. Ask yourself:
- Do our successors have the skills to succeed today?
- Are leadership capabilities aligned with future growth?
- Where are we most vulnerable to leadership gaps?
- Are we over-reliant on external hires at the expense of internal talent?
If the answers are unclear, the plan isn’t strong enough.
The ROI of Getting It Right
Effective succession planning delivers measurable returns. It helps retain top performers, enables smoother transitions, and strengthens culture. When employees see investment in their development, they’re more likely to stay and more likely to be ready. The numbers back it up. DDI’s research shows companies with strong leadership pipelines are 2.4 times more likely to financially outperform their peers. Succession isn’t a cost center; it’s a competitive advantage.
