Leadership transitions are inevitable—retirements, career changes, relocations, or unexpected events happen. Without a plan, these changes can disrupt operations, culture, and client relationships.
Succession planning works best when it’s shared across the organization. It should never sit with HR alone. Executives set direction, managers at every level provide insight into skills and potential, and HR helps coordinate the process. Many small and mid-sized companies also rely on a PEO or HR outsourcing partner to support the work and keep everything compliant.
What Is Succession Planning?
Succession planning answers one critical question:
If a key leader left tomorrow, what would we do?
It involves:
- Identifying critical roles
- Defining required skills and experience
- Assessing internal talent
- Developing employees through training and growth opportunities so that tomorrow’s leaders are getting the skills they need now
This applies to every role in your organization, at every level, from frontline staff to senior executives.
Why It Matters
- Median U.S. employee tenure: 4 years
- Replacing an employee costs months of salary in recruiting, training, and lost productivity
Without a plan, sudden departures cause:
- Operational gaps
- Client service issues
- Loss of institutional knowledge
- Compliance risks
A solid succession plan provides:
- Stability during transitions
- Clear career paths
- Fair promotion decisions
- Opportunity to promote internal talent
- Confidence for clients and candidates
6 Steps to Start Succession Planning
Map Your Organization – Update your org chart and note upcoming retirements.
- Identify Critical Positions – Focus on roles that impact operations, compliance, or client relationships
- Clarify Role Requirements – Update job descriptions with skills, certifications, and leadership expectations
- Review Internal Talent – Assess performance, leadership potential, and cultural fit.
- Create Development Plans – Offer projects, cross-training, and leadership opportunities
- Revisit Annually – Update roles, skills, and plans as your business evolves
How HR Outsourcing Helps
A partner, such as a Professional Employer Organization (PEO) can provide:
- Templates for job descriptions and development plans
- Guidance on fair promotion and employee evaluation criteria
- Turnover and risk analytics
- Training and leadership development resources
You maintain control of your culture and leadership. Your partner provides tools and structure to make succession planning easier.
This article was prepared with the assistance of Dell Rice, Assistant General Counsel and Senior Human Resources Consultant, Engage PEO.
*This article does not constitute legal advice.