The short version: A succession plan and a leadership development plan are not the same thing. Succession planning names who’s next. Leadership development makes them ready to run an executive office. Confusing the two is why poorly managed executive transitions in the S&P 1500 erase close to $1 trillion in market value every year. Here’s how to tell potential from readiness, and how to close the gap before you hand over the keys.
Your succession plan tells you who’s next in line.
It won’t tell you whether they’re ready.
Too many CEOs confuse identifying high-potential leaders with developing them. Putting a name in a box on an org chart isn’t development. It’s wishful thinking with better formatting.
You don’t want to learn the difference the day you hand someone the keys to the executive suite and discover they can’t lead at that altitude.
What’s the difference between a succession plan and a leadership development plan?
A succession plan identifies who’s next. A leadership development plan makes that person ready to do the job. One is a name. The other is a capability.
Most organizations have the first and skip the second. They treat the chart as the finish line when it’s barely the starting line. A name in a box tells you who you’re hoping for. It says nothing about whether that person can carry the weight of the role the day it lands on them.
How much does poor succession planning cost?
Close to $1 trillion in market value a year, across the S&P 1500 alone.
A study in Harvard Business Review, The High Cost of Poor Succession Planning, found that poorly managed CEO and C-suite transitions erase close to $1 trillion in market value every year. That leak isn’t happening because companies lack names on a chart. It’s because those names weren’t developed to handle enterprise-level complexity when the moment came.
On paper, a company with a plan looks better off than a competitor with none. That false comfort is exactly what makes it dangerous. It stops the questions that should keep getting asked.
How do you know if a leader is actually ready for the next role?
You watch them do the work before the promotion, not after. Readiness requires proof, not assumptions.
A static succession chart is like handing a junior chef a stack of complex recipes and assuming they can cook for a state dinner. Knowing the ingredients on paper means nothing if they’ve never run a high-stakes kitchen.
Success in the current role is a signal. It is not a guarantee that someone can operate a level up. The most reliable way to know is to watch how a candidate performs on stretch assignments that force them to:
- Navigate ambiguity and higher-stakes decisions
- Influence people beyond their direct authority
- Manage broader cross-functional responsibilities
- Operate with the visibility and judgment expected of senior leadership
Until someone has done those things in practice, they are not a ready successor.
Here’s the fastest gut check. Ask yourself: “If I handed this person the keys to the executive suite tomorrow, could they lead at that level?” If you hesitated even for a second, you have a promising candidate who still needs development.
How do you develop successors before the vacancy exists?
You give them enterprise-level problems, senior-level exposure, and coaching now, while the seat is still filled.
Beyond stretch assignments, do this.
Expose candidates to enterprise-level problems and watch how they operate across the organization. Are they pulling teams together to solve fast, or barking orders and managing by fear?
Put them in the room. Increase access to senior executives so the people you are grooming are present when the hard decisions get made. Pair each candidate with a senior leader outside their reporting line to widen their view of the business.
Use coaching as risk mitigation. Don’t wait until a leader gets tapped for the top job to discover they can’t collaborate or lack executive presence. Executive coaching now smooths out the blind spots before they become an expensive failed transition.
What questions should you ask for every critical role?
Four. For every critical role, and every name in every box, answer these.
- Who have we identified?
- What will they need to do in the new role that they aren’t doing now?
- What specifically aren’t they ready for yet?
- What are we doing about it now?
Then build a customized development plan for each person on the chart. The worst time to find out your successor isn’t ready is the moment you need them to step in.
It doesn’t have to go that way. With disciplined planning and development that starts before the vacancy exists, you skip the scramble, the uncertainty, and the disruption that follow when a key player leaves. Instead of managing a leadership crisis, you’ll have confidence in your bench. You might even make it home in time for dinner.
Work with Roberta
If your bench looks good on paper but you’re not sure it would hold under pressure, that’s the gap worth closing now, not the day someone resigns. I coach executive and director-level leaders to be ready for the keys to the executive suite before the vacancy exists. Let’s talk, or reach me directly at roberta@matusonconsulting.com.
For building a bench you don’t have to scramble to replace, my book Evergreen Talent shows you how to grow the talent you’ll need before you need it.
