What is the Succession Planning Process?

Finding the next CEO—or any key executive—is one of the most critical, yet challenging, decisions a company can make. Many organizations underestimate how long and complex the succession planning process can be, leading to leadership gaps, disruption, and uncertainty.

We’ve heard time and time again that “we should have started earlier” – some even say they never should have stopped the process in the first place.

Succession planning goes further than identifying a replacement when a leader departs; it’s about strategically developing future leaders over time. The best organizations approach succession as an ongoing, proactive process rather than a one-time event. Yet, many companies realize too late that they should have started earlier. The most common feedback we hear from executives deeply involved in succession planning is: "We should have started this years ago."

In this guide, we will explore the best practices for building a structured succession planning process, avoiding common pitfalls, and ensuring leadership continuity that aligns with long-term business strategy.

How Frequently is the Succession Planning Process Needed?

Since 2022, the frequency of CEO successions has risen demonstratively, based on the record high departure rates leading up to the pandemic and the marked decline in transitions after it began, when many companies put their plans on the back burner. Then too there are the new and upcoming resignations and departures to consider. Not only do we expect more CEO turnover in the years to come, filling these positions may be especially challenging since mandates are calling for expanded leadership capacities which most potential (and existing) CEOs are still learning how to grow into.

Want to learn more about the right timing for triggering a CEO succession? Check out this article.

Level Setting: What is the Current Landscape for CEO Successions?

As we found in our study, It Starts with the CEO, that surveyed 1000 CEOs, their role grew in ways they never could have predicted. They anticipate the need for more as they approach leading through unrelenting uncertainty and the many challenges and shifts in work looming ahead. CEOs acknowledge without hesitation that they must keep transforming themselves to successfully be the change agents and motivators their organizations will need. This calls for a new caliber of open, highly curious, capable leaders who can both deliver on traditional metrics of performance as well as meet the widened expectations for more inclusive leadership and diverse stakeholder management surrounding broadened and pressing environmental, social, and governance issues.

Talent like this is not something that just arises; it has to be carefully trained for, and succession planning must account for this. 

Today, potential CEOs need to be groomed and conditioned like athletes to create the stamina and agility needed for the more complex leadership journey. It takes quite a while to determine the best candidates as well as to convince them that they really want to pursue that top spot. More and more, we see and hear individuals wary of throwing their hat in the ring. 

Many now wonder, “Is it still worth it…?”

The world is not just gifted with the right person immediately ready and available. And that person certainly can no longer be evaluated and selected based chiefly on their past. As the former CEO of Best Buy, Hubert Joly, writes in his recent book, The Heart of Business, “the notion of born leaders with innate abilities is a bygone one.” 

The need for the delineated, immersed development of potential successors is much more pronounced. Even so, no new CEO will ever be prepared for the role, the step up can never be fully anticipated. Still, there is little question of the clear advantages of a more purposely planned and carefully measured process.

Ask a Sitting CEO: What Capabilities Should a Good CEO Possess?

In our 2024 survey, The CEO Response, we asked sitting CEOs, “Today’s complexity calls for more adaptive and relational skills. How important are the following for you to successfully master these challenges?” 

Here’s what they had to say:
 

All of these elements are incredibly important to consider in your CEO succession process – especially since these insights are coming from current, sitting CEOs who live and breathe the role day-in and day-out. 

Download the full report to learn more.

Why the Succession Planning Process Needs to Start Early

Many organizations fail to plan for leadership transitions until they are imminent, leaving them scrambling for a successor. A well-structured succession planning process should begin years in advance to ensure that internal candidates are developed and external options are evaluated.

Here’s why early succession planning is essential:

• Leadership transitions take time. Identifying, assessing, and developing potential successors is a multi-year effort.
• Unplanned departures can destabilize a company. A sudden CEO resignation or executive departure can create uncertainty among employees, investors, and customers.
• Developing leadership skills is a long-term process. Future leaders need exposure to different roles, mentorship, and professional growth opportunities before stepping into high-stakes positions.
• Board confidence increases with early planning. A strong succession plan reassures stakeholders that the company has a clear leadership trajectory.

Organizations that view succession planning as a continuous, strategic initiative rather than an HR function set themselves up for long-term success.

Viewing Succession as an Ongoing Process Vs. a One-Time Act

Though hard to execute, succession is best conceived as an ongoing, future-oriented progression that renews itself the day a new successor takes over. 

Few can successfully accomplish this; usually more immediate matters usurp that focus. Those who instigate early succession planning stand by the rewards. The long lens of an entrenched, disciplined process becomes a “gift that keeps on giving,” imbuing the organization with forward-looking findings and renewed vitality. 

8 Key Steps in the Succession Planning Process

It is really the process that is the key, more than where the decision goes—the process becomes the active agent of sorting, development and discovering which moves the organization organically to optimal outcome(s).
 

Here are the eight key steps to consider in your succession planning process (please note that this is just a high-level overview for simplicity purposes – each step takes time, consideration, and considerable effort):

1. Identify Key Roles and Future Leadership Needs

Organizations should begin by assessing the roles that require succession planning—this includes not only the CEO but also other C-suite and mission-critical leadership positions.

2. Develop a Negotiable and Non-negotiable List of Qualities You Want This New Leader to Possess

Selecting the right successor is not just about identifying a candidate with the right experience—it’s about defining the leadership qualities that will shape the company’s future. Before engaging in the succession planning process, organizations must clearly outline the attributes they need in their next leader. This includes both non-negotiable traits that align with the company’s core values and strategic goals, as well as negotiable qualities that can be developed over time.

Repeatedly today, beyond any other one factor, we see that it is the demonstration of an insatiable curiosity from potential successors which is becoming the most crucial and defining element of CEO identity. Those who can really tap into it are far better prepared to keep meeting the expanded capacity and ongoing adaptability the role now requires. 

3. Assess Internal Talent & Develop High-Potential Leaders

Identify promising internal candidates and provide structured leadership development programs, mentorship, and cross-functional experiences to prepare them for future roles. 
 

4. Benchmark Against External Talent

While internal candidates often provide continuity, external talent can bring fresh perspectives. A thorough succession plan evaluates both internal and external options.

5. Engage the Board & Leadership Team

Boards should be actively involved in succession planning, ensuring alignment with business strategy and long-term vision. Transparency and regular updates keep all stakeholders informed.

6. Test & Prepare Candidates with Development Assignments

Candidates should be given opportunities to lead key projects, manage crises, and gain exposure to different functions to assess their readiness for the role.

7. Formalize the Transition Plan

Once the successor is chosen, establish a clear timeline, communication strategy, and onboarding process to ensure a smooth transition.

8. Provide Post-Transition Support

New leaders need continuous coaching and support during their first year to ensure success.

Need some more guidance? Download the Succession Planning Template as a starting point.

Common Pitfalls in the Succession Planning Process (and How to Avoid Them)

Many companies make critical mistakes that undermine succession planning efforts. 

Here are some of the most common pitfalls and how to avoid them:

• Pitfall: Failing to develop internal talent early enough. 
  • Solution: Organizations should invest in leadership development well before succession is needed.
• Pitfall: Overlooking the need for diversity in leadership pipelines. 
  • Solution: A more inclusive approach ensures a stronger, more innovative leadership team.
• Pitfall: Focusing only on past performance instead of leadership potential. 
  • Solution: Leadership skills must be actively developed and tested before a successor is chosen.
• Pitfall: Ignoring the role of culture and alignment. 
  • Solution: A successor should embody the company’s values and strategic direction, not just meet functional requirements.
• Pitfall: Waiting until a transition is imminent. 
  • Solution: Succession planning should be an ongoing process, not a last-minute scramble.

Case Study: Lessons Learned from a Successful Succession Planning Process with Mastercard

As an example, we can look at our experience conducting a succession planning process with Mastercard. 

From the get-go, incumbent Ajay Banga came into the role invested in an immersed, carefully executed long-term succession process. He set the term limits of his leadership to ten years, believing that, by that juncture, it would be time for new blood. Before he was even hired, Ajay and Chairman Rick Haythornthwaite shared their vision for an organic transition from one leader to the next. In their ensuing leadership partnership, they continued to infuse the process with curiosity, transparency, and inclusivity, and an impassioned commitment to the development of potential leadership. This unwavering commitment with, as Rick added after the fact, “a bit of luck,” brought the desired ends over time.

The process really began in earnest a few years into Ajay’s tenure by looking at the broad scope of internal potential. Over the next three years careful attention was paid to the ongoing growth of a narrowing group of potential leaders, specifically through inner development work as well as job rotations and special assignments, all designed to expose them to different experiences of cross-functional expertise and developmental progress by confronting blind-spots and strengthening personal goals.

Through immersive leadership development programs combined with personal coaching, candidates gained invaluable perspective on their strengths, the areas holding them back, as well as their weaknesses. Much like a tennis player employs one coach for work on her/his forehand and another for the backhand, this customized self-development directly addressed the individuals’ unique needs and journeys. The deepened commitment to personal development and widening exposure of the candidates became the defining factors in presenting the optimal choices for succession. It also ensured high retention across the senior leadership team.

Mastercard’s succession was also distinguished early on by a deliberate and unfailing commitment to continuous board involvement. It was established as a full board decision from the outset, involving all independent directors working in close collaboration with the incumbent and the Chair. Board members were consistently exposed to the talent of the company across the long span of the entire succession process. And throughout it all, a diversity of opinion was encouraged to assure inclusivity and avoid both groupthink and premature prejudice, keeping the decision alive and successfully leading to a clear consensus by the end.

But, again, finding these rising stars and nurturing that progress takes time and work. During another succession process at a $4.2 billion multinational insurance company, for example, the new CEO was not found in the first wave of “obvious” internals at the N-1 level or throughout the executive leadership team (or by going externally), but instead by grooming and developing a young executive with clear potential found deep in the N-2 level of the pipeline. This emerging leader displayed remarkable curiosity and enthusiasm for his development, as well as a distinct vision for the company. Although no one could have ever guessed it at the onset, he was singled out as the clear choice after three years invested around the decision. 

Now, in year five of his tenure, this leader still has the full backing of his board and has been hailed for his leadership. Repeatedly, the investment in a disciplined, evolving succession process produces results across even the most dynamic and challenging of scenarios.

Turning On the Succession Planning Process Switch

Succession planning is not a one-time event—it’s an ongoing, strategic process that ensures leadership continuity and long-term success. No matter where you are in your journey, one thing is certain: change is inevitable. With historic levels of CEO transitions on the horizon, organizations that take a proactive approach will be best positioned to thrive.

At Egon Zehnder, we specialize in guiding organizations through the complexities of leadership transitions. From identifying high-potential successors to designing a robust, future-focused succession strategy, we help you develop the next generation of leadership with clarity, confidence, and precision.

The most successful organizations don’t wait until a transition is imminent—they start early, embedding leadership development and succession planning into their long-term vision. Now is the time to take action.

Partner with Egon Zehnder to build a strong, adaptable leadership pipeline that ensures your business is ready for the future. Contact our team today to learn how we can help.