The importance of succession planning for business success

In today’s fast-moving business landscape, boards cannot afford to treat CEO succession as a future problem. Claire Skinner, global managing partner at Heidrick & Struggles, argues that the way companies prepare for leadership change is often the difference between long-term success and sudden instability.

Right now, many organisations aren’t prepared. In the UK and Ireland, just 28% of boards are considered true “succession strategists.” Even more concerning, just one in four say they actively prioritise CEO succession at all. That raises some important questions: Are companies thinking far enough ahead? Has long-term planning lost out to short-term urgency?

To understand what effective succession planning looks like, look no further than Warren Buffett. As he prepares to step down from Berkshire Hathaway later this year after more than 50 years in charge, the spotlight has been on the end of an era. But the real story is how quietly and carefully that transition has been handled. Buffett didn’t wait for a crisis. He positioned Greg Abel as his successor years ago, giving the organisation time to prepare and the market time to adjust – a low-profile but highly strategic move.

Buffett has said that the biggest risk a company faces is choosing the wrong CEO. That idea has clearly shaped his approach – and it should serve as a wake-up call to boards everywhere. But according to our recent Route to the Top global research report, most boards aren’t taking that risk seriously enough.

The research identified three common approaches to CEO succession:

• About 25% of boards take a long-term, continuous approach. They actively manage leadership pipelines and make succession part of their broader business strategy.
• Just over half act only when a change is near, focusing on a few top candidates.
• The remaining 21% wait until a crisis hits before addressing the issue at all.

The difference in outcomes is clear. Among the boards that plan continuously, 78% say they are confident in their leadership pipeline. 70% feel prepared for a CEO transition, and most importantly, 76% outperform their competitors financially. These figures are stark in comparison to boards without strong planning in place, where only 33% report similar performance.

Boards are already feeling pressure from shareholders and regulators to step up. Succession planning is no longer just good governance – it’s becoming a core driver of company valuation and long-term resilience. Among boards lacking confidence in their current approach, most agree the solution lies in making planning a continuous process, not a one-off event. Others advocate aligning it more tightly with corporate strategy, involving the full board, or enlisting senior leaders to drive the effort.

What’s increasingly clear is this: succession planning is no longer optional. It’s a strategic imperative – and the boards that treat it as such will be the ones best positioned to lead through change, not be led by it. Indeed, Warren Buffett didn’t treat succession as a one-time decision. He treated it as a leadership responsibility that unfolds over years. More boards would benefit from doing the same.