Can You Afford Succession Planning?

Figuring out how much succession planning costs is relatively easy. You can put a price tag on what it costs to staff and implement your ongoing succession planning activities and your associated leadership development efforts. What's harder to figure out is how much it costs your organization not to invest in intentional succession planning and the leadership development that goes along with it. The more important questions might be:

• What are the opportunity costs to your business in productivity and human capital?

• What are the costs to culture and engagement? 

• What are the costs, like turnover, we can easily calculate but steadfastly ignore? 

Leadership turnover costs more than you think. And if you're not intentionally investing in leadership development with an eye on your organization's long-term succession plan, you're adding to unwanted turnover in your organization in two ways:

1.  The best leaders want to work for organizations that invest in their growth and have a clear plan for their future. If you won't invest in them, they'll find an organization that will.


2. When organizations promote from within, they can expect a 70-80% success rate. That success rate drops to 50-55% for an external leadership hire (page 61 here). 

Even if you're already on board with the idea that succession planning is a priority, you're in the minority if your succession and development programs are highly effective.

• Only 37% of leaders rate the quality of their organization's leadership development as high or very high (page 13 here). 

• Only 10% of organizations say they have excellent succession programs, and 51% say their succession programs are weak or non-existent (page 19 here). 

The organizations that are ahead of the curve on this know something the rest are missing. They’re focusing on the right thing – potential. They’re developing people who have the aptitude to be highly successful leaders even though they don’t have high-level leadership experience and performance – yet. 

How do they identify those people? That’s where companies like mine come in. At Talent Plus, we take a comprehensive, scientific approach to assessing potential. We’ve studied thousands of leaders and potential leaders, and our scientifically validated interviews help our clients figure out who their high potential leaders are so they can make high quality investments in training and developing them for higher-level leadership. 

• Who are your high potential leaders? 

• Which of them have the talent to be your thought leaders of the future? 

• Which can be your process ninjas? 

• Who has the potential to become your next CEO or executive team member? 

The bottom line: 

• If you're considering the costs of succession planning and leadership development, consider the much higher costs of NOT investing in them. 

• Leadership turnover is more expensive than you think, and growing your own talent from within can reduce your odds of incurring those costs by as much as 50%. 

• You need to go beyond performance to identify potential and invest in it at all levels within your organization.