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Over the past several months, a major theme has continued to surface in our client conversations: succession planning.
It’s happening across industries, often before organizations are truly ready. Leadership transitions that once felt safely “a few years away” are now becoming immediate. The costs of unexpected leadership transitions can be severe: according to Gallup, replacing leaders and managers can cost up to 200% of a role’s salary.
When organizations realize they don’t have a clear bench, these succession conversations become harder (and more expensive) to have – but the longer you wait, the more challenging they become.
Preparing for the Founder Transition
We recently worked with a privately owned construction firm in which the founder, after 32 years, decided to move into the Chairman role sooner than expected.
The plan had always been “we’ll figure it out in a couple of years,” but no one was having the real, logistical conversations. So, when the time came, there was no clear internal successor. Sure, there were plenty of star leaders within their individual functions, but there was no single leader with the operational experience to take the reins of the company.
What followed was a six-month executive search for a President with both industry expertise and the emotional intelligence to step into a founder-led culture. Though it took some time, our team was able to find the right leader for this group, after several alignment discussions and an extensive interview process.
We have found that top candidates want to know if the company has an aligned plan for leadership transition and a strategy for developing the next generation. Companies that can clearly articulate their succession plan (even at a high level) are winning trust. Those who cannot often struggle to attract the very talent they need most.
Remember: the market is always watching, and right now it’s looking for stability during times of transition.
The Hidden Risk: Mid-Level Leadership Gaps
When you think of succession planning, the first thing that comes to mind is the C-suite. But smart succession planning isn’t only about CEOs.
In one real estate development firm, two senior asset managers gave notice within three months of each other. Both were long-tenured, institutional knowledge carriers, and there was no formal development plan beneath them.
The result?
- Increased pressure on ownership
- Delayed decision-making
- Temporary outsourcing of financial analysis
- Cultural uncertainty among junior staff
Replacing one leader is manageable, even without much notice. Replacing two without a bench is destabilizing, unless you have a strategy already in place.
Succession Planning from the Candidate and Company Perspective
Unsurprisingly, both candidates and companies are starting to talk more about succession planning. Candidates want to know what advancement looks like at a given company and whether there’s a clear leadership track. They’re thinking ahead: what will their careers look like, and how will leadership transitions impact them?
In one recent search for a Director of Finance, a strong candidate withdrew late in the process after realizing there was no defined succession roadmap. The compensation was competitive, and the culture was strong. But the long-term path felt unclear, and that’s what made the decision.
Top performers are thinking five to ten years out. If the company isn’t, these individuals notice.
From what we’re seeing, effective succession planning includes:
- Identifying critical roles beyond just the CEO
- Assessing internal readiness honestly
- Developing emerging leaders intentionally
- Creating transparency around long-term ownership plans
- Beginning executive searches before transitions become urgent
The strongest organizations treat succession planning as a strategic growth initiative at all times, rather than a reactive replacement effort.
We expect leadership transitions to accelerate over the next 3–5 years across our core markets. Many founders and senior executives delayed decisions during economic uncertainty. Now, those conversations are back on the table.
Organizations that proactively build their leadership bench will preserve stability, culture, and enterprise value. Those who wait may find themselves searching under pressure.
If succession planning is on your radar — whether at the executive or operational level — we’re happy to share what we’re seeing in the market and how other businesses are preparing!
