Developing Future Leaders: Executive Readiness and Succession Planning

March 20, 2025 – Leadership changes can shape the future of a business. With challenges ranging from unexpected vacancies to planned retirements, having a robust succession plan is a strategic priority for companies of all sizes, according to a just released report from DHR Global. “Succession planning is more than just identifying potential successors. It’s about building a sustainable leadership pipeline that positions your organization for long-term success,” the study said.

Despite its importance, research from the Association for Talent Development found that only 35 percent of organizations have a formal succession planning process, leaving a majority vulnerable to leadership gaps. At the same time, 49 percent of organizations consider succession planning a top priority, signaling a growing awareness of the need to prepare for leadership transitions before they become urgent crises, according to findings from the Society for Human Resource Management. DHR asked its leadership consulting partners about trends, best practices, and real-world examples to help you prepare for leadership succession and create a culture of executive readiness.

So how has the approach to succession planning evolved over time, and should it be a top priority for all organizations? Former Yahoo CEO Marissa Meyer once said, “The first rule of succession planning is always to have succession planning.” The Securities and Exchange Commission emphasized the importance of succession plans for investment advisor companies in 2016, which has influenced organizations of all sizes.

“Succession planning continues to be top of mind for organizations,” said Tim Wiseman, managing partner. “Whether it’s a nonprofit, family-owned organization, or Fortune 500 company, executives are thinking, do I have the right people ready to move into key positions? If they’re not ready, how do I get them ready?”

“Succession planning has shifted from a secretive, behind-the-scenes process to one that’s fully transparent and strategic,” Mr. Wiseman said. “Despite this shift, many organizations still struggle to put structured plans in place.” Research from PwC shows that only 34 percent of family-owned businesses have a documented and communicated succession plan, increasing the risk of disruption when leadership changes occur.

“In the past, it was rarely discussed outside the executive suite, but today, companies are openly preparing for leadership transitions,” Mr. Wiseman said. “Having a formal succession plan should be a top priority, because it minimizes risks and ensures the right people are ready to step into key roles.”

Tim Wiseman focuses on the design, build, and deployment of large-scale, organizational-wide talent management solutions across multiple sectors including technology, professional services, financial services, chemical, retail, pharmaceutical, engineering, and construction. As part of DHR’s leadership consulting practice in the U.S. and APAC, he helps organizations assess, retain, reward, and develop their people. His work includes engagements across a wide range of organizations including multinational and Fortune 500 companies with public, private, and family-owned structures.

“In times of uncertainty and opportunity, a company’s strength lies in its ability to adapt,” Mr. Wiseman continued. “Strong succession planning builds resilience, allowing for smooth leadership transitions and ensuring that long-term strategic objectives are always within reach.”

The Succession Planning and Executive Readiness Process

“At DHR, we recommend a five-step approach,” said Maryanne Wanca-Thibault, partner, leadership consulting. “First, understand the business context by engaging with key stakeholders about the organization’s current state and vision for the next three to five years. Second, define key skills and attributes needed for leadership roles, focusing on gross profit drivers and risks.”

Related: Bridging the Leadership Gap: Succession Strategies For Future-Proofing Organizations

“Third, build an executive success profile of the minimum skills and a skill matrix outlining the preferred skills, focusing on business challenges,” she said. “Fourth, assess candidates and identify development opportunities using scientific methods, such as DHR’s Leader Lens, encompassing behavioral interviews, executive aptitude appraisals, case studies or simulations, and 360-degree feedback. Finally, create development plans using the 70-20-10 model to prepare candidates for their next roles, concentrating on on-the-job learning, learning from others, and formal learning.”

Maryanne Wanca-Thibault has more than 30 years of experience as a consultant and advisor in the areas of leadership assessment, organizational development and executive coaching. As a partner of DHR Leadership Consulting, she helps clients assess fit for executive, C-suite and board positions. Ms. Wanca-Thibault has extensive experience in assessment, organizational analysis & development and leader development & succession. 

“Succession plans should be structured, objective, and scalable,” Ms. Wanca-Thibault said. “They should incorporate thorough, data-backed assessments of potential leaders, clearly outlined role expectations, and structured development frameworks to equip successors for future responsibilities. CEOs and boards must revise these plans regularly to align with evolving business priorities and rising leadership talent. Ongoing assessments and adjustments are crucial to ensuring the strategy remains effective in a shifting business environment.”

Being Proactive

“Proactive succession planning is essential for managing anticipated and sudden leadership shifts while sustaining long-term success,” said Justin Menkes, partner. “A solid strategy helps organizations reduce the risks tied to leadership changes and stay aligned with their business objectives. Investing in succession planning reinforces stability and prepares companies for future growth.”

“Without clear plans, businesses risk operational setbacks, financial uncertainty, and difficulties in maintaining momentum,” Mr. Menkes said. “This is particularly concerning in publicly traded companies, where stability and confidence in leadership are critical. Forty-nine percent of public companies are actively developing CEO successors, yet nearly half still lack formalized/documented plans for a planned CEO departure to ensure a smooth transition. A thoughtfully designed succession strategy ensures continuity, minimizes disruption, and prepares leaders to take on critical responsibilities.”

Related: Seven Steps to Successful CEO Succession

Mr. Menkes provides the following examples of organizations doing this well. “A company anticipated five executive retirements within three years,” he explained. “The organization needed to assess internal talent for promotion or determine if external hires were necessary. Prioritizing internal growth, they sought a clear view of their high-potential directors’ strengths and development areas. We assessed N-2 leaders, provided a detailed succession plan, and designed customized developmental programs.”

With more than 20 years of leadership consulting experience, Justin Menkes has built his reputation as a thought leader with deep expertise in assessing senior leaders in service of business performance and value creation. He is a known entity and author in the assessment and advisory space. Prior to joining DHR, Mr. Menkes worked with multiple search and leadership advisory firms.

“In another engagement, we helped a CEO, who planned to retire within a year, find a successor to sustain the company’s growth,” Mr. Menkes said. “Evaluating internal and external candidates, we used leadership simulations, personality assessments, 360-degree referencing, and behavioral interviews as part of our Leader Lens tool. The board ultimately chose an internal candidate, setting the succession plan in motion.”

Leadership Readiness Requires Ongoing Assessment & Development

Succession planning isn’t a one-time event but a continuous process that evolves alongside an organization’s growth and challenges, according to the DHR report. “Regular leadership assessments provide valuable insights into talent readiness and highlight areas for improvement,” the study said. “By prioritizing continuous development, companies remain agile and prepared for future leadership transitions. While succession is a top priority for many, the fact that only 35 percent of companies have a formal process suggests more work is needed to turn intent into action.”

Since 1989, DHR Global has been a leading, privately held provider of executive search solutions with more than 50 wholly owned offices spanning the globe. The firm’s consultants specialize in all industries and functions, providing senior-level executive search, management assessment, and succession planning services.

Related: 5 Common Mistakes in Succession Planning and How to Avoid Them

Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor  – Hunt Scanlon Media