Succession Planning: Preparing Businesses and Leaders for What Comes Next
Succession statistics are sobering: only 1 in 10 Canadian business owners (9%) have a formal plan in place for a smooth transition. And globally, just 20% of HR leaders say their organizations have the talent pipeline to fill critical business roles.
The result? A looming transition crisis, with tens of thousands of businesses at risk of instability, rushed or undervalued sales, and even closure.
Most leaders recognize the value of succession planning, but it’s like life insurance—important, yet easy to put off until tomorrow. I get it; leaders are naturally focused on operations and growth, not what-ifs. For some, it’s uncomfortable, while others may overestimate their irreplaceability. And in smaller organizations, day-to-day demands often push succession planning further down the to-do list.
Regardless of company size, it’s vital to make time to plan for succession. Because in business, as in life, “tomorrow” can come a lot faster than expected.
Leadership Succession: Built-In Resilience
In 2020, I was leading a division at a global multinational when the pandemic struck, and I was tasked with creating a succession plan four layers deep. I’ll admit, it struck me as a bit extreme. But then again, so were the circumstances. If one of our leaders were incapacitated by illness, who would step in to take their place? If a key person was called away to care for a loved one, who was next in line? And if they couldn’t do it, who was behind them?
That level of planning paid off. Although we never had to activate it, the process revealed just how vulnerable many of our functions were, and where our talent pipeline needed work. Outside of the crisis mode of a global pandemic, the risks are real. Your CFO might win the lottery and resign. Your finance manager can experience a sudden health issue. Or your IT lead might leave during the stress of a cyberattack.
For smaller and mid-sized organizations, the impacts of unplanned departures can be especially tough. Often, just one or two people hold vital institutional knowledge and decision-making authority. Without a plan, losing a single one of them can put your operations at risk.
Succession planning at the leadership level isn’t just about org charts. It’s about resilience: identifying potential points of failure, developing talent, and ensuring continuity in critical roles when the unexpected happens.
Business Succession: Preparing to Exit
Beyond leadership, entire companies face transition. In Atlantic Canada alone, it’s estimated that 25,000 businesses will change hands or shutter in the next decade as aging owners look to retire. This reflects a national trend, with a 2023 report by the Canadian Federation of Independent Business (CFIB) finding that 76% of business owners plan to exit within the next decade, potentially representing assets worth over $2 trillion.
For many founders, there is no next generation waiting in the wings. Children may not be interested, and management teams aren’t always positioned for a buyout. That leaves selling to an outside buyer or, in the worst cases, closing the doors.
This isn’t just an owner’s problem. When a business closes, communities lose essential services, employees lose their jobs, and customers lose trusted suppliers. On the other hand, a well-planned transition can create opportunities through management buyouts, employee ownership, or strategic sales that preserve both value and legacy.
Succession Planning is Strategic
Done well, succession planning isn’t just risk management: it’s a competitive advantage. According to research, companies that invest in succession see:
- Reduced disruption, with continuity in operations and strategy.
- Greater retention, as employees see clear career pathways.
- More agility, with leaders ready to respond to shifting markets.
- Future-proofing, by developing adaptable leaders for tomorrow’s challenges
Where to Start
Strong succession planning doesn’t have to be complex. It starts with three simple questions:
- Where are our single points of failure?
- Who could step in tomorrow?
- What’s our long-term vision for leadership and ownership?
From there, organizations can conduct a risk analysis, identify gaps, and align succession models with long-term strategy. Examples of successful leadership succession planning include a technology firm implementing rotational leadership programs to build versatile executive teams, a consumer brand that establishes talent academies and structured mentorship for high-potential managers, or a Fortune 500 company using workforce analytics to anticipate retirements and proactively develop successors.
While small to mid-sized businesses might not have such robust resources at their disposal, the principles are the same: it’s all about identifying key roles, developing your internal talent by filling skills gaps, and being ready for planned and unplanned exits.
For owners, it means planning early for valuation, tax implications, and potential buyers.
Proactive is Prepared
We live in an era of constant change, with pandemics, cyber threats, climate events, and economic shocks contributing to a shifting sense of instability. Succession planning is one of the most effective ways to build resilience in the face of these challenges and prepare for what’s next.
Leadership succession ensures continuity. Business succession secures legacy. Together, they give organizations the stability to thrive through change and the confidence to move intentionally into the future with purpose.
Michael J. Lavigne, Head of Market Development and Senior Advisor for Strategy & Transformation, has worked with some of the world’s largest brands throughout his international career. As a former CEO/COO/SVP, he brings executive-level expertise in sales, marketing, operations, and M&A across multiple industries, including SaaS, government, healthcare, hospitality, startups/scaleups and venture capital.