Organizations across the U.S. are facing a leadership imbalance that is outpacing most succession plans, as baby boomer “cuspers” and senior leaders retire at historically high rates while mid-level talent pipelines are not developing as quickly to fill the resource gaps. Often referred to as a senior talent exodus, this growing mismatch is creating measurable risk for organizations, particularly family business owners, but preparation remains limited.
A Society for Human Resource Management (SHRM) survey found that only 21% of organizations have a formal succession plan, and more than half have no plan at all. For organizations with lean leadership structures, especially, the departure of a single senior leader may result in considerable adverse effects, undermining both organizational stability and performance and weakening enterprise value. Failed or weak transitions from leadership gaps are one of the biggest destroyers of generational wealth.
In this sense, leadership succession planning can no longer be a long-term aspiration to pursue only when time and resources become available. For many organizations, it’s an immediate business requirement, particularly where mid-level leaders are expected to step into senior roles sooner than anticipated. More importantly, modern succession plans must incorporate leadership capability development for this mid-level group for business owners seeking maximum value in a future transaction.
Understanding the Senior Talent Exodus
Workers aged 55 and older represented nearly 24% of the U.S. workforce in 2022, a 10% increase from 1994. But now, those workers are retiring at a high rate. According to Pew Research, roughly 10,000 baby boomers (born 1946 – 1964) reach retirement age each day. They have been since 2011 and will continue to be until 2030.
Executive turnover is also rising, with CEO exits accelerating in 2025 and departing leaders averaging 63 years old. It is not just age contributing to these surging numbers; several studies indicate that many CEOs felt unprepared for the job.
As experienced leaders exit, organizations lose senior decision-makers, but more importantly, institutional knowledge and relationships built over decades, which are rarely documented and difficult to replicate. When leadership transitions occur before that knowledge is transferred — and many times they do — organizations often experience:
- Disrupted operations
- Slow decision-making
- Client losses
- Long learning curves
- Forced, reactive hiring decisions
Why Succession Planning Must Now Focus on Mid-level Talent
Historically, succession planning has focused on identifying executive replacements, rather than building the capability and readiness of future leaders across the organization. Many mid-level leaders have not yet had the time, exposure or developmental experiences required for senior roles.
SHRM notes that more than one-third of HR leaders report leadership competency deficiencies within their internal pipelines, particularly in strategic thinking, navigating complexity and leading at scale. Additional data reinforces this concern, with 69% of organizations lacking viable internal successors for key leadership roles within one year.
As retirements accelerate, organizations are increasingly forced to make advancement decisions on compressed timelines, often before successors are fully ready. So how can organizations — particularly family-owned and owner-led businesses — create leadership succession plans that support sustainability and build value? We’ve identified five essential elements to effective succession plans in today’s workforce.
5 Key Elements of a Modern Succession Plan: A Checklist
1. Design the Future Organization (Three to Five Years Out)
Start with where the business is going, not where it is today.
Organizations evolve quickly. The structure, roles and capabilities required in three to five years will likely look very different from today. Growth, diversification, technology and scale all change what leadership is needed.
Business owners should define:
- What the organization needs to look like to execute the strategy
- What roles will exist and how they will operate together
- Where leadership depth will need to expand
This step helps to ensure succession planning is aligned to future value creation, not just replacing today’s roles.
2. Define What Success Looks Like in Critical Roles
Once the future organization is clear, identify the roles that matter most and define what great looks like.
For each critical role, develop a success profile that includes:
- Core values of the organization (how leaders lead)
- Three to seven key accountabilities (what they must deliver)
- Behavioral competencies (how they operate and lead)
Qualifications related to knowledge required, functional experience/exposure and career-level experience/exposure
This creates objective, consistent criteria for evaluating leadership, rather than relying on tenure or subjective judgment.
3. Identify High-potential Talent Through a Structured Talent Review
Not all strong performers are future leaders, and not all potential is obvious without intentional review.
Conduct a structured talent review to identify individuals who demonstrate:
- Strong performance in current roles
- Capacity to operate at higher levels of complexity
- Interest and motivation for leadership growth
This step builds a pool of real candidates, not just assumptions or informal opinions.
4. Assess Readiness Against the Role, Not the Person
A key distinction: succession planning is not about naming successors; it is about understanding readiness.
Evaluate each potential successor against the full success profile to determine:
- Where they are fully ready
- Where gaps exist
- How quickly they could become ready
Most organizations discover gaps in areas such as:
- Enterprise and strategic thinking
- Leading through sustained change
- Managing complex stakeholder environments
This readiness assessment creates clarity regarding areas where the candidate is ready and gaps in knowledge, experience and exposure that need to be addressed in the coming year to improve readiness.
That unbiased and objective assessment is critical to identifying gaps avoiding subjective or premature transitions.
5. Invest Intentionally in Development To Close Gaps
Succession plans only create value if development is intentional and executed. Each potential successor should have an individual action plan focused on closing readiness gaps through:
- Experiential Learning: Expanded roles, stretch assignments, cross-functional exposure — highly effective
- Coaching and Mentoring: Direct access to senior leaders, guided development
- Formal Training: Effective where lack of knowledge is the gap being closed
Succession planning is an ongoing discipline, and the most effective organizations revisit this process annually, continuously reassessing their future structure, critical roles and leadership readiness. Over time, this builds meaningful depth across the leadership team, reduces dependence on any one individual, and strengthens the organization’s ability to execute through change. Taking this long-term approach avoids one of the most common and costly mistakes: waiting until the year before a transition, whether a sale, retirement or leadership exit, to address leadership risk.
Responding Strategically With Leadership Succession Plans To Address the Senior Talent Exodus
The senior talent exodus is already reshaping leadership teams. Organizations that delay succession planning or rely on informal approaches face increasing disruption as retirements continue to outpace mid-level readiness.
By prioritizing leadership succession planning and accelerating the development of mid-level talent, organizations can reduce risk, preserve institutional knowledge and sustain performance through inevitable transitions.
How HR Consulting Services Can Help
Succession planning delivers the most value when it is aligned to future strategy, grounded in objective criteria, and executed as an ongoing discipline, not a one-time exercise. Cherry Bekaert’s HR Consulting Services team helps business owners move beyond informal planning to a structured approach that builds leadership depth, sustains performance through transition and protects enterprise value.
Our advisors support organizations by:
- Designing the future organization to align leadership roles with the company’s three to five year strategy
- Defining success profiles for critical roles, including accountabilities, competencies and experience requirements
- Conducting structured talent reviews to identify high-performing, high-potential leaders
- Assessing readiness against role expectations, distinguishing between potential and near-term capability
- Developing targeted action plans focused on experiential growth, coaching and knowledge transfer
- Embedding succession into broader business processes, including workforce planning, performance management and leadership development
This approach helps organizations reduce key person risk, strengthen leadership continuity, and create the flexibility to sustain operations, transition ownership, or maximize value in a future transaction.
Learn how Cherry Bekaert can help you prepare business owners for leadership transitions and build a foundation for long-term organizational and generational success.
Frequently Asked Questions About Leadership Succession Planning
Leadership succession planning is a structured approach to identifying and developing internal talent to fill critical leadership roles as senior leaders retire or exit. It prioritizes readiness and continuity rather than reacting to vacancies.
Senior leaders are retiring faster than mid-level talent is ready to replace them, increasing the risk of leadership gaps, lost knowledge and disruption.
Organizations without succession plans are more likely to rely on reactive hiring, lose institutional knowledge, experience disruption during transitions and incur higher costs through external recruitment and onboarding.
No. Succession planning should include operational, functional and people leadership roles. Many leadership gaps emerge below the C-suite, where transitions can significantly affect execution.
Leadership development helps prepare mid-level leaders for broader responsibility, complex decision-making and enterprise-level challenges, supporting smoother transitions into senior roles.
Succession planning should begin well before anticipated retirements or departures. Accelerating senior exits leaves limited time for development once transitions become imminent.
