Succession Planning: A ‘don’t panic’ guide to handing over the castle keys

Quick takeaways

• Succession planning is about identifying lynchpin roles and critical knowledge across your business and ensuring that no single departure can derail the business
   
• It’s more than a back-up plan, it’s structured talent development and a culture of mentorship and growth that helps retain talent
   
• It’s not a static document but a dynamic process that changes and evolves in alignment with your business strategy and your team’s goals

Almost every startup or SME has someone who holds the keys to the castle—maybe it’s you. The invisible map. The password for the chamber of secrets. This is what succession planning is designed to address, especially for small businesses. It’s less of a physical document and more a mental library: what ink the printer takes; how to sweet talk that one client into paying their invoice on time; who prefers a phone call over an email; how to get the coffee machine to stop dripping; where the (metaphorical) bodies are buried.

You know the one. Love them or loathe them, the business simply can’t function without them. So what happens when they get a better offer? Or retire? Or win the lottery and trot off to fulfil their lifelong dream of opening a goat farm in rural Wales? Disaster!

If thinking about a particular person leaving the business sends a shiver of dread down your spine, you don’t have a management problem – you have a succession problem.

In a small business, the indispensable manager working 60 hours a week who knows every system inside out isn’t a ‘hero’, they’re a single point of failure. Without a succession plan, a leadership transition is less a passing of the torch and more a mad scramble in the dark.

Even though (hopefully) no one has died, succession planning in a business is often treated like funeral planning – something you know you need to do but avoid because it’s not nice to think about. But the risks of having no succession plan are stark:

• Strategic drift – if a leader goes the long-term vision is lost with them, so people lose focus and projects stall.
• Talent exodus – high-performers and young workers are increasingly struggling to find their purpose at work because they can’t see a path upwards in the company, assuming the top spots are already spoken for.
• Knowledge vacuum – years of unwritten rules, nuance and experiential insight are lost overnight when someone retires.

While it might seem like doom and gloom, succession planning actually breathes life into your business – it’s adding structural reinforcements that ensure the house you’ve built doesn’t fall down just because one person takes their hands off the ceiling. Think of it as an insurance policy for your culture, and a clear signal to your staff that the business is stable, forward-thinking and seriously invested in its (and their) future.

Tempting as it may be, succession planning is not a time for Logan Roy style Machiavellian mind games. It’s not about creating competition to try and boost performance; it’s a strategic process of identifying and developing internal talent and in-work progression to fill key roles so that no matter what changes to personnel occur, your business operations, service level and standards remain stable. And someone always knows the WiFi password.

You can think of succession planning as kind of like a relay race. In a rubbish relay team, the first runner would stop running before the second runner takes over. A winning team would ensure the second runner is already up to speed when the baton is passed over. Which team would you want to be part of?

There are two types of succession planning you need to think about:

Short-term succession planning

This is the ‘in case of emergency’ plan for sudden gaps. An unexpected resignation. A sudden chronic illness. This is about how you keep the lights on tomorrow morning. Who’s stepping in or stepping up?

Long-term succession planning

Here we’re looking at more of a five-year-plus horizon. You’re thinking about your business goals for 2030 and beyond. Who do you want to lead the department that you haven’t even created yet? What role would you need to create to ensure X stays with the business and not be poached by a competitor? This is less about filling a vacancy and more about nurturing potential.

Creating a succession plan doesn’t require a whole team of lawyers and a 500-page manifesto. It just takes honesty, observation and a bit of structure. You can break it down into 7 easily actionable steps:

Identify the ‘lynchpin’ roles

This isn’t just C-suite. Look for the roles that are critical to daily operations. The people without whom, everything falls apart and quickly – clue: this is rarely management. If in doubt ask, “If this person was away for a month, would the business survive?” If the answer is no, it’s a lynchpin role and a succession plan for it is needed.

Define the key competencies

This isn’t about a job description or technical skills, this is the behaviours and ‘soft skills’ that are hard to replace. The ability to deliver on schedule in the face of adversity; a knack for calming down stressed clients; a communication style that gets through to introverts and extroverts alike.

Assess your internal talent bench

Look around internally and assess your existing team. Who is hungry for more responsibility? Who is motivated to progress? Who is a ‘technical wizard’ but shies away from the client-facing stuff or prefers to work alone? There are tons of great tools online you can use to profile your people and assess their readiness for progression.

Develop future leaders

When you’ve identified your talent pipeline, don’t just tell them they’re special, invest time and resource into training, mentoring and career development for young leaders so that when the time comes to step up, they’re ready. This needs to be on-the-job rather than on paper – think job shadowing and holiday cover for senior roles.

Document the succession plan

Once you have a plan, document it. Clear succession charts and development plans with timelines show that you’re serious and keep everyone accountable. You also need to get any business-critical knowledge out of people’s heads and into your systems, otherwise it’s lost with them. Documenting your succession plans can also add value to your business if you decide to sell your business one day.

Communicate the plan clearly

The first someone hears of their new role shouldn’t be when their new team is ringing them up on Monday morning asking what to do. 

Transparency and communication is key to succession planning. If you tell Sarah she’s the heir apparent and then you don’t follow through, you’re going to have a problem on your hands. But if you keep your cards too close to your chest and tell no one who’s in the frame for a promotion, you risk losing them to pastures presumed greener. Again, learn from the mistakes of Logan Roy.

Review and refresh regularly

It’s no use locked away in a filing cabinet gathering dust. A succession plan is a living organism – people change, goals shift and your ‘ready now’ top pick might move to Japan. Revisit your plan regularly to ensure it still reflects the reality of your organisation.

Best practices

Succession planning is highly personal to your business, but there are some common traps to avoid and best practices to adopt that should set you up for a successful succession.

Avoid the ‘mini-me’

Looking for carbon copies of current leaders, aka ‘mirror hiring’, is a big mistake. Diversity is a strategic asset, and a good succession plan should bring in fresh ideas and perspectives for the next phase of growth – think about how your business will look in 10 years’ time and look at who aligns with that vision.

Use data, not gut feeling

Integrate your plan with your performance management systems and use metrics (KPIs, feedback, project success rates) to track readiness. It’s not a popularity contest.

Use tech to stress-test your succession plan

The data and visibility that leave management software provides can help you immensely – look at the rules you’ve applied for who can be off at any one time, which can help identify those lynchpin roles. Leave data can also give you a ‘real world’ stress test – when a manager took a two-week holiday, what happened to productivity? Who stepped up in their absence? If their team’s productivity stayed high and errors were low, you’ve got a potential successor right there who’s already doing the job.

Succession planning is the final act of leadership. It’s accepting that the business is bigger than any one person. You’re not pre-empting or suggesting an exit; you’re being proactive and protecting all of your employees’ futures and creating a forward-thinking culture of continuous progress and seamless transition.

With a strong succession plan in place, ‘who’s got the keys?’ is a question you’ll never have to ask. Start identifying your future leaders today, and everything you’ve built will still be there tomorrow.