By Robert Half
Most companies know they need a plan for filling leadership vacancies. But knowing is much easier than doing. New research from Robert Half shows that while 87% of organizations have some form of succession planning in place, only 52% have a comprehensive, documented strategy.
That gap matters. The same survey of 2,000 hiring managers found that the vast majority are dealing with succession planning challenges like knowledge transfer headaches and shrinking talent pipelines. And with artificial intelligence (AI) reshaping which skills leaders need, the stakes keep rising.
Here’s what the data tells us about where organizations are struggling and how to build a plan that works when you need it.
What is succession planning?
Succession planning is the process of identifying and developing employees who can step into key roles in a business when the current occupants leave. A strong plan covers leadership positions at all levels—anyone whose departure would create a significant gap in your operations.
Executed well, business succession planning does more than minimize risk. It creates clear career paths that keep your best people engaged. It surfaces development needs before they become emergencies. And it gives you time to develop internal talent rather than always competing for external candidates on the open market.
The numbers: where organizations stand today
The good news, according to a Robert Half survey, is that most companies have at least started thinking about succession. The concern is that many of those plans don’t go far enough.
Fifty-two percent of businesses have a comprehensive succession planning strategy—the gold standard. Another 36% have plans limited to certain leadership roles, leaving other key roles exposed. And 11% have no formal plan at all, though around half of those say they’re developing one.
Business size matters. Among companies with fewer than 100 employees, 76% have some kind of succession planning underway, compared to 89% of organizations with 1,000 or more workers. And just 33% of small businesses have plans that are comprehensive, versus 56% of larger ones.
That’s a clear and present danger for smaller organizations. When you employ fewer people, each departure creates bigger ripples, making a solid succession strategy more important, not less.
The biggest succession planning challenges
Only 13% of hiring managers say they’re not experiencing any succession planning challenges. For everyone else, the same obstacles keep coming up.
-
Lack of knowledge transfer tops the list. More than half (53%) of hiring managers cite difficulty capturing and passing on institutional knowledge from departing leaders. When a 20-year veteran walks out the door, years of relationships, processes and unwritten know-how go with them. Legal departments feel this most acutely, with 67% reporting knowledge transfer challenges, the highest of any sector surveyed.
-
Limited internal talent pools come in second. Nearly half (49%) say they don’t have enough internal candidates ready for advancement. This is especially pronounced in legal (60%) and marketing and creative (54%) functions.
-
Attracting external leadership is getting harder, too. About 41% struggle to bring in outside candidates for senior roles.¹ Competition for proven leaders is fierce, and if your internal pipeline isn’t producing candidates, you’re competing with every other company in the same position.
How AI is reshaping leadership pipelines
The survey asked hiring managers how AI implementation has affected their succession planning. The responses reveal both opportunities and warning signs.
Over half (55%) say AI has accelerated promotion timelines for employees with strong AI skills. People who can work effectively with AI tools are simply moving up faster. In legal departments, that number jumps to 69%. If your high-potential employees aren’t building AI proficiency, they may find themselves passed over.
Not surprisingly given those numbers, another 52% report that the skills needed for future leaders have fundamentally changed. That includes more than just familiarity with generative AI tools like ChatGPT, Claude or Microsoft Copilot. Leaders increasingly need to understand predictive analytics platforms, AI-powered business intelligence tools and automation workflows, plus the judgment to determine the appropriate level of human review for AI outputs. Your succession criteria from even two years ago may already be outdated.
Finally, 41% say AI has reduced entry-level positions, creating cracks in their future leadership pipeline. In other words, automation is shrinking the traditional stepping-stone roles where tomorrow’s leaders learn the business. That’s a long-term problem that requires attention now.
7 steps for building a succession plan that works
With the challenges clear, let’s discuss how to address them. The following steps can help you build a plan that delivers when you need it.
1. Start before you need to
Sometimes you’ll know well in advance when a leader is leaving—a planned retirement, for instance. Other times, a departure catches you completely off guard.
If you’ve been putting off succession planning, take a moment to imagine what happens when someone critical needs replacing and you’re not ready. That thought alone should create some urgency.
Start by identifying which roles matter most to your operations. For each one, ask: What’s the day-to-day impact of this position? What happens if this person leaves tomorrow? If the answer involves significant disruption, that role belongs in your succession plan.
2. Identify successors
Once you understand which departures would have the greatest impact, identify who could realistically step into those roles.
The obvious successor might be the next person on the org chart, but don’t stop there. Look for people who display the skills needed for leadership, regardless of their current title. Part of good succession planning is staying attuned to employees at any level who could step up when the situation calls for it.
Once you’ve identified successors, let them know. Explain that they’re being considered for positions of increasing responsibility. Be clear that there are no guarantees; circumstances change for both companies and individuals. But having these conversations prepares people mentally for bigger roles and signals that you’re investing in their future.
This is also the time to talk with current leaders about their timelines. A frank conversation about retirement horizons, career goals and willingness to mentor successors will save you from being blindsided later.
3. Invest in targeted upskilling programs
Given how technologies like AI are reshaping what leaders need to know, your development programs must keep pace.
-
Job rotation lets candidates gain exposure to different parts of the business. For example, a senior finance leader who spends time in the warehouse learns that extending supplier payment terms can cause a stockout, where the company runs out of needed materials, leading to production delays and costly expedited shipping.
-
Mentorship connects rising talent with experienced leaders who can share insights that don’t show up in any training manual. The best leaders have strong communication skills along with abilities like empathy and diplomacy—qualities that are hard to teach in a course but grow through real working relationships.
-
AI upskilling deserves special attention. Leaders don’t need to know all aspects of an AI-enabled process, but they do need to understand how AI fits into their team’s actual workflows so they can talk about it in more than abstract terms. Just as important: helping employees move past the fear that AI will replace them. Leaders who can show teams how AI reduces repetitive tasks will get far more willing adoption than those who simply mandate its use.
4. Tackle knowledge transfer before it’s urgent
As the data shows, knowledge transfer is the top succession planning challenge organizations face. Don’t wait until someone announces their departure to start documenting what they know. Shadow programs let successors observe leaders during high-stakes situations—client negotiations, board presentations, crisis management—where the unwritten rules are learned through experience rather than memos.
Documentation systems that capture processes, key relationships and decision-making frameworks take time to build, but losing that knowledge when someone leaves costs far more. Regular knowledge-sharing sessions where senior leaders present to broader teams can also help distribute institutional knowledge more widely.
5. Do a trial run
Don’t wait until there’s a crisis to test whether someone has what it takes for a bigger role.
When a manager takes a vacation, have their identified successor assume some responsibilities. When a special project needs leadership, tap a high-potential employee. These trial runs accomplish several things: The successor gains real experience and they get a chance to demonstrate their capabilities. Additionally, you can assess where they need more development.
6. Bridge gaps with interim expertise
Even the best succession planning can’t anticipate every scenario. When a key leader leaves unexpectedly or your internal successor needs more development time, contract professionals and interim managers can maintain continuity.
Interim leaders aren’t just keeping a seat warm. Experienced professionals can bring fresh perspectives, implement best practices from other organizations and even help mentor your internal candidates while keeping operations stable.
7. Integrate succession planning into your broader talent strategy
Once you’ve identified employees as successors for critical roles, take note of the talent gaps they’d leave behind if promoted. That insight should inform your recruiting priorities. If your future CFO is currently your controller, you’ll eventually need a new controller. Start building that pipeline now rather than scrambling after a promotion. Develop internal talent, cultivate external relationships and engage recruiters early. The best recruiters and staffing firms engage with companies even without an immediate opening, taking time to understand future needs so they can keep proactively identify the right candidates.
And don’t skip the step leaders often avoid: planning for your own replacement. The same succession principles apply to you as they do to everyone else.
Most organizations have work to do on succession planning. Whether you’re starting from scratch or strengthening an existing plan, the key is treating this as an ongoing priority rather than a one-time exercise.
Your workforce isn’t static. People retire, pursue new opportunities and sometimes leave when you least expect it. Effective business succession planning doesn’t eliminate those realities, but it does ensure your organization is ready to handle them.
