Ready for a wake-up call? In just the first quarter of 2024, a record-breaking 622 CEOs stepped down – that’s a 49% jump from last year. CEO transitions are inevitable, as are the successions of any executive or key hires. But how you handle them can make or break your company.
The stakes are high. Forced successions have cost large companies an estimated $112 billion in market value.
So, how do you nail succession planning? By drafting a robust succession strategy. In this article, we’ll explore 30+ succession planning examples. You’ll discover practical strategies that top companies use to groom leaders, handle transitions, and maintain business continuity.
Most Common Types of Succession Planning With Examples
Succession planning isn’t just about preparing for the unexpected. It’s a proactive plan to build a strong talent pipeline. Many of your existing HR programs are actually building blocks for a solid succession plan.
Here are a few examples of common succession planning procedures in the workplace:
Leadership succession
Leadership succession planning involves systematically finding and developing future leaders to maintain organizational continuity. It includes assessing employees’ skills and knowledge to determine whether they are ready to be leaders and making plans for their growth to fill in any gaps.
Here are three practical examples of how to implement this effectively.
👉 Leadership development program: Establish an in-house educational institution. Choose employees with great potential and put them through a year-long program that combines classroom instruction, mentoring, and practical experience. Switch them up every three months among various departments. This will create well-rounded leaders who know your business.
👉 Executive shadowing: Pair possible successors with C-suite leaders over the course of six months. Trust them to sit in on important meetings, offer input during strategy sessions, and even spearhead some projects. Gradually increase their responsibility. This allows current executives to gain new insights while providing future leaders with practical executive experience.
👉 Strategic challenge initiative: Establish interdisciplinary groups headed by potential successors. Let them tackle a difficult company challenge and provide the tools they need to succeed. This method identifies those with strategic thinking, varied team leadership, and pressure-tolerant performance.
Family business succession
Research from BDC shows every 5 in 6 company owners think they can finish their organizational transition in 2 years or less. Experts, however, estimate that a changeover might take as long as five years to finish. This number can go up to ten for family businesses, though it really depends on how big and complicated the organization is.
Developing a succession plan is one effective strategy to reduce uncertainty during the business’s generational transfer. Let’s look at three succession planning examples:
👉 Next-generation leadership academy: Establish a structured program for family members interested in joining the business. The program should include external education (e.g., MBA programs), internal training on company operations, and rotations through key departments. It should also set clear performance expectations and evaluation criteria.
👉 Family council and board of directors: Create a family council to address family-related issues and a professional board of directors (including non-family members) to govern the business. Clearly delineate the roles and responsibilities of each body. Gradually involve next-generation members in both groups.
👉 Phased leadership transition: Design a multi-year transition plan in which the current leader gradually hands over responsibilities to the successor. Start with smaller areas of responsibility and progressively increase the scope. Include regular feedback sessions and adjust the plan as needed.
Emergency succession planning
What happens if a key leader suddenly leaves? Emergency succession planning prepares you for unexpected vacancies, ensuring business continuity in crisis situations.
When things go wrong, this planning can help you determine who to call on as interim leaders, what to do next, and how to make decisions quickly.
Consider these three succession planning examples:
👉 Leadership continuity dossiers: Create comprehensive dossiers for each key position, including role responsibilities, current projects, and immediate priorities. Identify potential interim leaders for each role. Update quarterly. This enables quick transitions and minimizes disruptions.
👉 Crisis management team: Form a cross-functional team trained in emergency response. Define clear roles and decision-making authority. Conduct regular simulations of leadership vacancies. This establishes a ready-to-act team familiar with emergency protocols.
👉 Interim leadership rotation program: Regularly rotate high-potential employees through interim leadership roles in various departments. Provide mentoring and feedback throughout. This creates a pool of leaders experienced in multiple areas, improving organizational flexibility.
Succession Planning Examples by Roles
Take a look at how your company is structured. Though the senior management chooses its long-term course, it is the company’s lower-level executives who are ultimately responsible for making that planning a reality.
That’s why comprehensive succession planning addresses multiple levels:
CEO succession
The chief executive officer (CEO) is the highest-ranking official in an organization. When it comes to succession planning, this is where the stakes are highest. In fact, appointing the wrong chief executive officer (CEO) at multinational corporations could cost the economy over $100 billion.
Having a company’s visionary leader step down must be terrifying, right? That’s why smart organizations start planning for CEO succession years in advance.
For a solid CEO succession plan to work, it could include:
- Making a model of leadership competencies relevant to the chief executive officer position
- Recognizing possible internal candidates early on (often three to five years before the position is open)
- Giving these individuals challenging new tasks and executive coaching
- Reviewing potential successors regularly
- Having a backup plan for external talent pipelines
👉 Shadow CEO: For example, you can implement a “Shadow CEO” program where potential successors work closely with the current CEO on strategic initiatives, gaining invaluable hands-on experience.
Board member succession
Board members are very important to corporate governance. They are the wise owls who keep an eye on the business and make sure it runs well. However, even sage owls must eventually retire.
Corporate governance can only be effective with a well-thought-out strategy for board succession. It’s critical to have diverse backgrounds, experiences, and viewpoints represented in the boardroom.
Strategies for a successful board succession could be:
- Fixing retirement age requirements or setting term limitations
- Evaluating board composition regularly in light of future strategic requirements
- Keeping track of a “skills matrix” to find areas where the board is lacking in knowledge
- Establishing a diversified pipeline for prospective board members
- Making sure incoming directors have a solid onboarding procedure
👉 Board bench: For example, a board might conduct annual self-assessments, identifying areas where new expertise is needed. They might then work with executive search firms to identify potential candidates with those specific skills, building a “bench” of future directors.
Managerial succession planning
This is where things really get interesting as you move down the business ladder: managerial succession. The goal is to maintain high standards of quality and consistency throughout the whole executive team. After all, workers are more inclined to stick with a company and give it their all if they perceive a clear route for promotion.
Managerial succession plans that work could involve:
- Identifying key administrative roles in different divisions
- Developing management-level competency frameworks
- Recognizing potential employees through the use of a structured talent screening procedure
- Conducting impartial evaluations of managerial aptitude through the use of assessment centers
- Assigning challenging tasks and interdisciplinary projects to help employees grow professionally
👉 9-box: For instance, organizations can consider implementing a “9-box” talent grid, which evaluates employees on both their performance and their potential. This tool helps identify high-potential employees who could be groomed for future leadership roles.
Key position succession in different departments (HR, Finance, IT, etc.)
Let us now discuss the company’s core team — your IT professionals, finance consultants, and HR experts. While these people may not be the center of attention, they certainly ensure everything runs smoothly.
However, advancement is not the only goal. At times, it’s about taking a lateral approach. It’s no secret that Google promotes departmental transfers among its employees. A software developer can end up managing products. It adds variety and helps shape leaders with diverse skill sets.
Such successful strategies could involve:
- Locating key positions across all divisions whose loss would majorly influence the company’s operations.
- Developing comprehensive job descriptions and performance indicators for these roles.
- Getting present employees in key roles to mentor high-potential employees.
- Creating skill inventories to find gaps and guide training initiatives.
- Establishing protocols for knowledge transfer to protect institutional knowledge.
👉 Rising stars: For example, an HR department can create a “rising stars” program, where high-potential employees are given special projects and mentoring opportunities. In IT, pair programming or shadowing will ensure critical knowledge is shared among team members.
Real-life Succession Planning Examples
Success stories and lessons from tech giants to retail businesses will give insights into equipping internal talent, handling unexpected departures, and building a culture of continuous leadership development.
Apple
👉 If you look at Apple’s approach to succession planning, they created Apple University to teach employees to think like Steve Jobs. Still, when it came to replacing him, they chose Tim Cook, who hadn’t attended the academy. Cook had been COO since 2005 and interim CEO in 2009. His leadership skills made the officials believe he would be the right fit. He took over as CEO in 2011 and continues to lead Apple today.
IBM
👉 IBM’s long-term succession planning is our next example. Take Virginia Rometty; she started at an entry-level position and worked her way up for 30 years before becoming CEO in 2011. IBM’s investment in HR programs that identify and nurture high performers paid off. This strategy ensured a smooth transition when Rometty took over and when she handed the reins to Arvind Krishna in 2020.
Amazon
👉 The Amazon succession plan that Jeff Bezos has put in place is rather remarkable. Long before he announced his resignation in 2014, he nominated Andy Jassy as his successor. Jassy, who was hired by Bezos in 1997, made a name for himself by growing Amazon Web Services into a $40 billion company. The handoff from Bezos was so seamless that operations resumed as normal the day after he stepped down.
General Electric (GE)
👉 GE’s Crotonville leadership development center is a hub for cultivating future leaders. It identifies high-potential workers early on and provides them with extensive training, career-changing experiences, and mentoring. GE seems to constantly plan ahead and make sure it has skilled leaders on hand to take charge when necessary. For GE, this strategy means fewer leadership problems.
Procter & Gamble (P&G)
👉 P&G’s succession planning is not merely a responsibility but a key element of its corporate culture. They consistently evaluate talent and discuss potential successors for important positions. Additionally, they adopt a “development-to-role” strategy, molding workers’ abilities to suit upcoming positions. Their focus seems to be perpetually on the future, with capable leaders poised to take charge whenever necessary.
Microsoft
👉 After Steve Ballmer retired, Microsoft’s succession plan became a hot topic. The search was extensive, spanning the organization’s internal and external sources. Ultimately, they settled on Satya Nadella, a veteran worker at Microsoft. Nadella’s triumphant tenure demonstrates the significance of effective succession planning, especially for upper management positions inside a corporation.
Unilever
👉 Equal opportunity and diversity are key components of Unilever’s succession plan. They put a lot of effort into creating a diversified talent pipeline to ensure that women and other underrepresented groups are fairly represented in leadership positions. Unilever thinks this method leads to more innovation and better business performance, so it’s not just about being fair.
The Coca-Cola Company
👉 Coca-Cola takes a methodical approach to succession planning. It uses specific metrics to gauge its progress, such as the percentage of key positions with identified successors and the diversity of its successor pool. This data can be used as a benchmark to measure the performance of its succession planning initiatives and adjust accordingly to meet the demands of future leadership.
3M
👉 3M prioritizes balance in its succession planning. It cultivates talent from the inside while simultaneously seeking external applicants for critical positions. It creates a robust internal pipeline and, when needed, brings in other viewpoints, so it’s like having the best of both worlds. By using this strategy, 3M can maintain its market leadership.
Johnson & Johnson
👉 Johnson & Johnson’s decentralized organizational structure makes its succession planning strategy unique. Though they all adhere to corporate policies, every business unit manages its own succession planning. It’s like having a unified strategy that’s flexible enough to meet the specific needs of each part of the business. This balance helps J&J build leaders who understand their unit and corporate strategy.
McCormick & Co.
👉 It was clear that McCormick & Co. CEO Robert Lawless had a keen sense of future planning. Over five years, he invested part of his own compensation into finding and training Alan Wilson, who would eventually succeed him. During this time, the organization monitored the actions of prospective employees. A well-executed succession strategy paid off in 2008 when Lawless delegated authority to Wilson.
Walmart
👉 Tradition and innovation are both important to the Walton family when it comes to running Walmart. They have remained faithful to the original vision of founder Sam Walton while embracing new retail trends and technology. What makes their strategy special? To ensure open communication and decision-making, the firm shares are managed by a trust and a Family Council. It’s a great example of how to keep a family business going strong for many years.
Marriott International
👉 Marriott International demonstrates another succession planning example for family businesses. J.W. Marriott Jr., the founder’s son, spearheaded the company’s worldwide expansion. Marriott’s success results from its dedication to maintaining the corporate culture, excellent leadership, and first-rate customer service. It proves the hospitality sector can achieve lasting prosperity with well-thought-out succession planning.
Barneys New York
👉 An exemplary case of effective succession planning was the CEO transition at Barneys New York in 2017. Before Daniella Vitale succeeded Mark Lee, they spent five years training her. Vitale was allowed to oversee nearly every aspect of the company and was mentored by Lee. It highlights the significance of providing aspiring successors with practical experience and mentorship before assuming leadership positions.
Starbucks
👉 The CEO turnover at Starbucks should serve as a lesson in the importance of succession planning. Howard Schultz’s multiple stints as CEO revealed the company’s difficulty in selecting a worthy successor. Once Kevin Johnson stepped down as CEO in 2022, Schultz took over again as interim leader, openly declaring that they were not looking internally for a replacement. This decision could be an example of ineffective succession planning that can go wrong.
PepsiCo
👉 Take note of PepsiCo’s strategy for the next chief financial officer. The former chief financial officer of PepsiCo, Arun Nayar, discussed his preparation for the position. He actively sought out operational experience to supplement his knowledge of finance. As a result, he founded the “No Fear Club” to mentor budding financial experts. It’s a model for how businesses can push their future leaders to continue learning and growing.
Toyota New Zealand
👉 Toyota New Zealand views succession planning as a long-term endeavor. Alistair Davis, the former CEO, worked for the company for more than 40 years, developing his leadership skills over many years. With only two outside management recruits in the last 20 years, they prioritize internal promotions. Their approach comprises 360-degree evaluations, continuous learning, and extensive industry expertise. It’s a holistic approach to developing leaders internally.
Unilever
👉 The Future Leaders Program at Unilever is another outstanding example of long-term succession planning. For example, Jade Wright-Komal entered the program shortly after finishing college and rose quickly through the ranks to become the HR director. The program offers rotations in various teams and responsibilities to provide participants with a wide range and in-depth exposure. With this method, high-potential staff members can advance quickly into leadership roles.
ASHE
👉 ASHE is addressing a distinct succession planning issue in the administration of healthcare facilities. They are tackling the shortage of suitable applicants for these specialist positions, which are essential to hospital operations. A key component of ASHE’s strategy is the establishment of well-defined career pathways and cultivating future professionals. It’s a preemptive move in response to a growing skills gap as many of the present managers prepare to retire.
McDonald’s
👉 McDonald’s really nailed succession planning during a tricky time. They started prepping their pipeline six years before Jim Skinner became CEO. When two CEOs unexpectedly left, they had ready replacements. Skinner, who started as a trainee, became CEO and continued the tradition. He believed in having two potential successors ready – one for now, one for the future. This approach helped McDonald’s navigate forced successions and thrive.
Wrapping Up
We’ve explored diverse succession planning strategies across industries, from tech giants to family businesses. Moving forward, consider evaluating your current succession strategy. Are you identifying high-potential employees early? Do you have a robust leadership development program? Is your emergency succession plan up to date?
Remember, effective succession planning is an ongoing process. So, you need regular assessment and adjustment to align with your organization’s evolving needs and goals. Do this, and you’ll you’ll build resilience, support employee growth, and ensure your organization’s long-term success.
FAQs
1. What is succession planning in simple words?
Succession planning is a strategy for identifying and developing future leaders at your company, at all levels. It ensures that businesses continue to run smoothly after the company’s key employees retire or leave, reducing the risk of a leadership vacuum.
2. How do you write a good succession plan?
Writing a good succession plan involves several key steps. Here’s how to do it:
- First, pinpoint the roles that are crucial for your business.
- Then, look at your current team. Who has the potential to grow?
- Help these promising employees level up their skills.
- Plan out how responsibilities will shift when changes happen.
- Keep checking and tweaking your plan to make sure it’s still on track.
3. What are the five steps in succession planning?
Effective succession planning boils down to these five key steps:
- Figure out which roles are essential for your company’s success.
- Take a good look at your current talent pool.
- Invest in developing your high-potential employees.
- Map out how knowledge and responsibilities will be handed over.
- Regularly review and update your plan to keep it relevant.
4. What is the role of HR in succession planning?
The five key steps in effective succession planning include:
- Bring different departments together to identify key roles and potential successors.
- Create programs to help future leaders grow.
- Keep track of who’s ready to step up when needed.
- Help smooth the transition between outgoing and incoming employees.
- Make sure everything aligns with company goals and industry standards.
5. What is an example of succession planning?
Let’s say a tech company’s CTO is planning to retire. The HR team identifies a few promising candidates within the company who could potentially fill those shoes. These candidates then get opportunities to lead projects, receive mentoring from the current CTO, and participate in leadership development programs. Over time, one candidate stands out as the best fit. Then, a detailed plan is put in place to ensure a smooth handover of responsibilities.
