Insights

Many businesses recognise the importance of succession planning for continuity and success. However, despite understanding its importance, 60% of companies say they do not have a succession plan for their CEO, and only 14% of businesses say they do well with succession planning.

Succession planning is closely connected to strategic workforce planning. When done well, it should not only focus on replacing key people but also on:

• Developing internal talent
• Recognising the importance of identifying critical roles across the company, not just at senior levels
• Ensuring the plan is connected to the overall business strategy and a solid understanding of the market
• Minimising the uncertainty that often occurs when leaders leave without an identified replacement
• Avoiding this uncertainty cascading to the rest of the business, resulting in further attrition
  
  

Succession planning should be implemented across all of the key roles in your company. Still, it is critical at the top level, where having a solid succession plan is essential to maintaining stability. Businesses should also be mindful that the average tenure of CEOs is dropping. According to the 2024 UK Spencer Stuart Board Index, the average tenure of current CEOs is now 5.2 years, continuing a three-year decline from 5.8 years in 2021. 

Another factor to take into account is the nature of our ageing workforce. As experienced people approach retirement, businesses must ensure they have a clear roadmap to develop talent and to transfer knowledge. The ageing workforce impacts all sectors but is especially significant for the four industries with the largest number of employees aged 50 and above: health, retail, education and manufacturing.

It can be helpful to approach succession planning as a development process, rather than a replacement process. The key is to plan well in advance and develop an understanding of your organisation’s direction and growth plans to understand what is needed to support that. As such, succession planning applies to all business-critical roles, not just C Suite positions.

Download our complimentary guide for more guidance on developing a succession plan for your organisation, or contact us directly to book a free, no-obligation consultation call.