Leadership Succession and Organizational Stability

Saturday, August 23, 2025

Is your organization prepared for a leadership transition, or is it risking its long-term stability and effectiveness assuming a smooth transition will happen naturally? Organizations, including higher education institutions, often fail to appropriately plan for a leadership succession event. This oversight can have negative consequences for the organization’ s performance and continuity (Bano et al., 2022a; Fernández-Aráoz et al., 2021; Siambi, 2022). Improved succession planning could enhance organizational performance and stakeholder outcomes (Fernández-Aráoz et al., 2021).

Organizations incur high costs due to poor succession planning. There is a tendency for organization to hire leaders externally. This coincides with external hires receiving 15% more in pay while demonstrating worse performance and an 84% greater likelihood of turnover in their first three years (Bano et al., 2022a; Fernández-Aráoz et al., 2021; Siambi, 2022). External hires have helped organizations in need of major turnarounds and culture changes, however, the disruption they cause can affect established processes (Bano et al., 2022b; Fernández-Aráoz et al., 2021;).

The departure of senior executives may lead to the loss of institutional knowledge, intellectual capital, and experience (Bano et al., 2022a ; Fernández-Aráoz et al., 2021; Siambi, 2022). Fernández-Aráoz et al. (2021) reported that this equates to a reduction of $251 billion annually in shareholder returns. It is worth considering how this might relate to educational institutions as well. When organizations replace leaders from within, the inadequate preparation of these successors commonly results in lower performance and greater inefficiencies (Bano et al., 2022a; Fernández-Aráoz et al., 2021; Siambi, 2022).

There are differences between succession planning and replacement planning (Bano et al., 2022a; Bano et al., 2022b; Siambi, 2022). Succession planning is focused on the long-term cultivation of a talent pool. This is a strategic, systemic and proactive approach. Replacement planning, to contrast, is focused on immediate backups for critical positions. Replacement planning is reactive and short-term in nature. Effective succession planning includes strategies that ensures knowledge continuity and readiness of the leadership talent pool.

Tacit Knowledge

Vital for organizational success, tacit knowledge is the unwritten, unspoken, experiential wisdom held within seasoned leaders (Siambi, 2022; Bano et al., 2022a). One simple way to prevent the loss of this precious resource is to implement structured transition periods so that departing leaders can include members of the leadership talent pool (Siambi, 2022). This would be the organizational equivalent of passing the baton. While it may be possible to codify some of this knowledge, it may be possible to preserve senior leader insights through internal guides (Bano et al., 2022a; Siambi, 2022). Another similar approach involves rotating members of the talent pool into temporary stretch assignments thereby exposing them to the internal wisdom. This practice allows the leadership pool to gain diverse experiences while improving internal networking that resembles mentoring.

Mentorship Programs

Mentorship programs promote the growth of the leadership talent pool. Organizations should formalize these programs and ensure that the leadership pool is paired with experienced leaders. As complex challenges arise, mentors can guide future leaders while providing advice and expertise. Complementary to a formalized mentorship program, peer-to-peer coaching allows for the passing of organizational wisdom across roles (Bano et al., 2022a). Assuming the organization has a track record of successfully identifying high-potential leaders, senior leaders should be partnered with these high-potential leaders to help flatten the learning curve.

Technology and Knowledge Management

Technology is a tool designed to facilitate processes. Dedicated HR platforms can be used as repositories to store data on employees including their potential, skills, experience, and improvement plans (Bano et al., 2022a; Bano et al., 2022b). These platforms commonly allow for the deployment of web-based learning modules much like a learning management system. Traditional classroom-based learning can be supplemented or replaced with web-based courses that improves accessibility and flexibility for employees looking to grow their knowledge and skills. These courses also function as digital archives that show established best practices and how they have evolved over time.

Conclusion

We have seen that failing to properly plan for the next leadership transition is costly for organizations in many ways. By simply adopting some best practices like maintaining tacit knowledge, implementing mentorship programs, and leveraging technology as a facilitator, it may be possible to minimize the challenges that most organizations experience during leadership turnover. The goal is not to replace a leader, but to produce a generation of future leaders who are ready to step in and keep the organization aligned with its mission, vision, and goals.

References

Bano, Y., Omar, S. S., & Ismail, F. (2022a). Succession planning best practices for large and small organizations. Mediterranean Journal of Social Sciences, 13(2). https://doi.org/10.36941/mjss-2022-0013

Bano, Y., Omar, S. S., & Ismail, F. (2022b). Succession planning best practices for organizations: A systematic literature review approach. International Journal of Global Optimization and Its Application, 1(1), 39–48. https://doi.org/10.56225/ijgoia.v1i1.12

Fernández-Aráoz, C., Nagel, G., & Green, C. (2021, May–June). The high cost of poor succession planning. Harvard Business Review, 99(3), 2–11.

Siambi, J. K. (2022). Leadership Succession Planning and Organization Transition: A Review of Literature. International Journal of Managerial Studies and Research (IJMSR), 10(3), 16–30. https://doi.org/10.20431/2349-0349.1003003