Imagine this: your CEO retires early. A department head is poached by a competitor. A key technical leader leaves abruptly. What happens next?
For two-thirds of companies, the answer is panic. Despite the well-known risks, only 35% of organizations have a formal succession plan in place. That means most businesses are one resignation away from serious disruption.
So why does this gap persist and what can you do about it?
The Succession Planning Gap Is Real and Risky
Recent studies confirm what many HR professionals already suspect:
- Just 35% of companies report having a structured succession plan.
- 69% either lack a formal plan or are relying on outdated ones.
- Yet 82% of CEOs believe succession planning is essential to long-term success.
This disconnect creates vulnerabilities in operations, morale, and market reputation. In fact, unplanned executive exits can cost companies millions; replacing a C-suite leader can run up to 213% of their annual salary in transition costs alone.
Why So Few Companies Actually Plan
With all that’s at stake, why do so few organizations plan ahead? The most common reasons include:
- No executive ownership: Over 60% of businesses say no one is clearly responsible for succession planning.
- Limited internal expertise: Many HR teams lack the tools or frameworks to design a long-term pipeline.
- Short-term thinking: Companies tend to focus on immediate business needs rather than future leadership gaps.
The Hidden Costs of Doing Nothing
Failing to plan for succession leads to more than just awkward transitions. Here’s what’s at risk:
- Operational instability: Sudden departures can stall projects, demoralize teams, and damage customer relationships.
- Leadership failure: Up to 60% of newly promoted or hired executives fail within 18 months when transitions are rushed or poorly supported.
- Talent drain: Without clear pathways for advancement, high-potential employees may leave for better growth opportunities.
What an Effective Succession Plan Looks Like
Good succession planning isn’t just about identifying a backup for the CEO. It’s about building a leadership pipeline across roles and functions. A strong plan includes:
- Identifying critical roles – Not just at the top, but across departments that would impact continuity if vacated.
- Assessing internal talent – Use performance reviews, 360 assessments, and predictive tools to spot high-potential leaders.
- Developing your bench – Provide future leaders with mentorship, stretch assignments, and visibility into the strategic goals of the business.
- Tracking and revisiting plans annually – Succession planning should be part of your long-term business strategy, not a once-a-decade task.
The Business Case for Planning Ahead
Companies that invest in succession planning see measurable returns:
- 30% higher leadership retention
- 60% greater profitability
- Stronger alignment with strategic objectives
- Greater resilience during times of transition or crisis
So, Does Your Company Have a Plan?
If your answer is no or not really, it’s time to act. Waiting until a key leader walks out the door is too late.
Need help building a plan that works? We’d be happy to help assess your leadership pipeline, identify gaps, and create a custom roadmap for long-term organizational strength. Contact 3D Tek to learn more.
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