The Succession Planning Mirage: Why Companies Are Still Caught Off Guard

Every few months, another high-profile leader departs unexpectedly and leaves their organization scrambling. It’s the same story in many businesses: despite having a “succession plan” tucked away in a binder, when a leadership vacancy hits, nobody is truly ready to step in. This succession planning mirage gives executives false confidence until reality bites. In fact, recent research shows a glaring disconnect: nearly all senior executives think they have a solid succession plan, yet far fewer HR leaders agree. Too often, succession planning is treated as a checkbox exercise rather than a living, breathing strategy.

Paper Plans vs. Reality

Many corporate succession plans amount to little more than lists of names. People might be labeled as "potential successors" for key roles, but beyond that designation, not much happens. No one verifies if those individuals actually have the skills (or desire) to succeed in the top job. Consider the not so hypothetical scenario: a CFO leaves abruptly, and though an internal successor list exists, leadership realizes none of the names on it are truly prepared for the role. The result? A frantic external search, an interim leader juggling two jobs, and months of lost momentum. A plan on paper means nothing if it hasn’t translated into action and readiness.

The Great Disconnect

If you ask CEOs, they’ll often insist succession is under control, after all someone presented a plan at last year’s board meeting. But talk to HR, and you might hear a different story. In one survey, 97% of business leaders believed their organization had a succession plan, but only 64% of HR professionals agreed. This gap speaks volumes. Executives may be lulled by optimism or formality, whereas HR sees the day-to-day reality of unprepared talent pipelines. Another study found that only about one-third of companies actually have a formal succession plan in place, a sobering statistic given how many leaders are retiring or resigning in today’s volatile market. It’s as if companies are collectively saying, “We’ll figure it out when we get there,” and then acting surprised when they’re caught flat footed.

The Hidden Costs of Being Unprepared

When succession planning is more illusion than reality, organizations pay the price. Vacant leadership roles can mean delayed strategic decisions, loss of client confidence, and overwhelmed teams. High potential talent may grow frustrated and leave if they see no clear path upward, fueling a cycle of talent loss. A lack of a credible succession pipeline also often forces companies to spend big on external hires and recruitment fees, only to incur longer onboarding and culture fit risks. According to McKinsey, organizations with strong succession processes are far more likely to outperform peers during leadership transitions. The inverse is also true: companies that ignore succession planning often stumble, experiencing performance dips and higher attrition around transition times.

From Mirage to Meaningful Strategy

How can companies turn their succession plan from a mirage into something real? It starts with honest assessment. Executives and HR need to regularly review and update succession lists and not just in perfunctory annual meetings. Identify not one, but multiple candidates for critical roles and invest in their development. This means deliberate stretch assignments, coaching, and yes, candid conversations about career aspirations. Leadership teams must also scenario test their plans: “If our CEO left tomorrow, what would we do?” If the answer induces panic, the plan is not working.

Forward thinking organizations treat succession planning as a continuous discipline. They integrate it into talent reviews and tie it to leadership development programs. Some companies even establish succession plan “fire drills”, simulating sudden departures to ensure there’s a ready response. The key is shifting from a mindset of replacement to one of readiness. Succession planning isn’t about picking a name and hoping for the best; it’s about systematically building a bench of capable, agile leaders. For most companies, this means a cultural change: being willing to talk openly about future vacancies (even at the very top) and to invest in people long before a role is open.

No one likes to imagine worst case scenarios, but leadership turnover is inevitable. The companies that navigate it best do so because they faced the uncomfortable questions early. They refused to be satisfied with a false sense of security. Instead, they put in the work to ensure that when a leader steps down, the organization keeps moving forward without missing a beat. In short, they transform succession planning from an empty ritual into a robust strategy, turning a mirage into an opportunity to shine when it matters most.