The future belongs to the prepared

New Zealand faces a host of long-term, well-known challenges — from climate change and broken water infrastructure to an education and health system in decline. These issues, much like Wellington’s crumbling water pipes, persist and worsen over time, as short-term business or political cycles fail to address them adequately. Similarly, we are seeing top talent leak overseas, and a heavy reliance on outdated models of workplace learning & development and succession planning that no longer meet the evolving needs of the country.

In this context, the importance of effective succession planning becomes even more critical. With high turnover, shorter tenures, challenges in attracting leaders to New Zealand, and an aging workforce – growing talent from within is essential to maintaining leadership capacity. Organisations that prioritise internal talent pipelines will not only build resilience but also achieve long-term stability and growth. However, succession planning often takes a back seat, with many businesses overly dependent on external hires to fill leadership roles. Boards and Chief Executives must recognise the strategic importance of developing strong internal talent pipelines if New Zealand businesses are to thrive amid growing uncertainty.

What is succession planning?

Succession planning is the process of identifying the skills and capabilities required for future leadership and developing a talent pool of potential successors who can step into key roles. Rather than focusing solely on individuals, it also emphasises building the capabilities and leadership readiness needed to ensure business continuity. This approach helps organisations prepare for leadership transitions by creating a pipeline of leaders who are ready to meet evolving business needs.

Why is succession planning important?

Effective succession planning is a powerful driver of business performance. Organisations with structured succession plans often achieve up to 50% better business results compared to those without. Despite this, many New Zealand companies rely on external hiring to fill leadership gaps, a strategy that can be up to 1.7 times more expensive than promoting from within. This cost includes not only recruitment and onboarding expenses but also the extended time it takes for new leaders to integrate into the organisation. Reactive approaches can disrupt team dynamics, lower morale, and make current employees feel overlooked, leading to decreased motivation and engagement.

In contrast, companies with strong succession plans demonstrate a commitment to their employees’ growth, significantly boosting engagement and retention. Research by Gallup shows that organisations with embedded succession plans in place experience 147% higher earnings per share. Moreover, succession planning is more than just a cost-saving strategy. It prepares organisations for unexpected changes, such as sudden retirements or departures, ensuring continuity and stability - especially during times of crisis - and fostering a resilient, future-ready workforce.

HR leaders also need to work closely with the C-suite to prioritise succession planning as it becomes an increasingly important topic in boardroom discussions. The Institute of Directors (IoD) demonstrates that succession planning is becoming a more pressing issue at the Board level. Recent examples such as BNZ's three-year preparation for Doug McKay's departure and ANZ's readiness for Scott St John's unexpected transition are instances of boards leading the way and setting the standard for preparing for leadership changes with structured strategies and early integration.

Why succession planning falls short

The most common reason for why succession planning fails is because organisations approach it without a clear idea of what leadership capability the organisation requires. Much like shopping without a list, this lack of clarity can lead to bias, judgment calls, and missed opportunities to prepare future leaders. For example, a common bias among boards is the preference for external CEO candidates, largely due to their limited knowledge of internal talent relative to external prospects. The allure of a "fresh perspective" often overshadows the potential of existing leaders.  General Electric, for instance, has a long history of seeking external CEOs, believing they hold the key to reinvigoration, yet this has led to some notable missteps, such as the brief tenure of John Flannery.

In the same vein, the pursuit of high-profile candidates, or “the biggest name in town,” often results in misaligned hires that fail to match an organisation’s true leadership capability requirements. Yahoo's appointment of Marissa Mayer, a renowned Google executive, is a clear example, as despite her impressive background, she struggled to revive Yahoo's fortunes. Jim Collins, in Good to Great, emphasises that promoting from within is often more effective, as internal leaders are deeply aligned with the company’s values and mission. His research shows that companies making lasting improvements typically chose internal—"Level 5 leaders"—who bring humility and a long-term focus, while external hires often focus on short-term gains. This highlights the importance of thorough internal talent assessments and aligning leadership capabilities with organisational needs, rather than being swayed by external prestige or quick fixes.

Structural and cultural challenges further complicate succession planning. Many organisations do not have dedicated functional owners for succession planning, and it is often treated as an afterthought on the people and culture agenda. Without strong accountability, organisations tend to adopt a fragmented and reactive approach, lacking clear processes or reliable data to identify and develop future leaders. This disconnect makes it difficult to align leadership development with strategic business needs, leaving leadership pipelines underdeveloped and unprepared for future demands.

Navigating succession planning is also complicated by emotional and political sensitivities, particularly when there is insufficient clarity around the process and its objectives. Leaders are more willing to support the initiative when they see it as a pathway to sustained growth and personal development rather than as a risk to their current positions. A lack of transparent communication can create feelings of insecurity–fuelling misunderstandings, resistance, and a lack of buy-in.’

Organisations can also struggle to balance the formal processes of succession planning with the personal relationships involved. Some companies focus too much on the mechanics—using rigid assessments and checklists that feel removed from the people involved—while others fear that honest conversations might disrupt team dynamics or hurt feelings. Successful planning needs to adequately balance both the structured process and the people at the heart of the process.

In New Zealand, "tall poppy syndrome" refers to the tendency to cut down or criticise individuals who stand out or achieve more than others. This can discourage employees from actively seeking promotions or leadership roles, as they may fear being judged or resented by their peers. As a result, high-potential employees might hold back from showcasing their abilities or expressing interest in leadership, making it harder for organisations to identify and develop future leaders. This can create gaps in the leadership pipeline, as those who may be best suited for advancement choose to stay under the radar.

Similarly, New Zealand’s cultural emphasis on equality and fairness can add to the challenge. Many employees may feel uncomfortable with the idea of climbing the corporate ladder, preferring to be seen as part of the team rather than standing out. In Māori culture, for instance, leadership is often viewed as a collective responsibility rather than being centered on individual achievements. This can sometimes conflict with traditional Western succession planning models that focus on identifying and grooming individuals for top roles.

A strategic approach to succession planning for HR leaders

To foster effective succession, HR leaders need to create a dynamic strategy that integrates seamlessly with their organisation’s culture and goals. Here’s how to approach succession planning with thoughtful, actionable steps that move the needle in a meaningful way.

Ownership is key

A successful succession planning process starts with appointing a dedicated leader. This isn’t just about ticking boxes – you need someone who understands the company’s vision and can get buy-in from other leaders. Choose someone who can handle both the technical and interpersonal aspects of the process. Make sure they have the time, resources, and clear responsibilities needed to succeed. Succession planning should be ongoing, not a once-a-year activity. The leader must regularly connect with senior leadership and be held accountable.

Experiment, then commit

Many organisations rush into buying assessment tools without fully thinking about the specific skills and capabilities they need to develop. Common tools like psychometric tests, 360-degree feedback, and behavioral interviews can be helpful, but their value depends on how well they are used. It is important that these tools are connected to your organisation’s leadership and capability goals, not just general skills. For example, 360-degree feedback should focus on hearing from the people who are being led to give real insights into leadership impact. Psychometric tools are also common but often do not match the specific leadership needs of the organisation. No tool will be a perfect fit right away, so it’s better to start small by testing a few tools and making sure they work for your desired organisational capabilities and are supported by the wider team before fully committing.

Focus on what the business really needs

A common pitfall in succession planning is focusing on “who is next” instead of “what is needed.” Success profiles should be forward-looking, outlining the skills and behaviours required for future leadership – both now and in five years. For instance, instead of just considering the current strengths of the CFO, explore what the role will demand when the company doubles in size or faces new regulatory challenges. This future-focused approach prevents promoting leaders who are only prepared for today’s needs. By shifting the conversation from specific individuals to the capabilities required, you can navigate sensitivities and gain greater buy-in.

Make it authentic

"Doing business in New Zealand is about more than just transactions; it's about building relationships, respecting the culture, and contributing to the community. It's a place where success is measured not just in profits, but also in the positive impact on people and the environment."

Succession planning that overlooks culture is destined to fail. Leaders who don’t align with the organisation’s values will struggle to succeed long-term, regardless of their skills. In New Zealand, values like manaakitanga (support) and whanaungatanga (relationship-building) are essential and should be woven into leadership development programs to enhance their effectiveness and relevance. By prioritising cultural alignment in your leadership criteria, you open the door to a more diverse group of employees to step forward—especially those who may not identify with traditional leadership models.

Recognising leadership in all forms

“There’s zero correlation between being the best talker and having the best ideas” – Susan Cain

Succession planning needs to recognise that leadership comes in many forms, and not all great leaders fit the mould of extroverted, charismatic personalities. Sometimes, organisations are drawn to appoint leaders with big personalities and/or egos, but rarely this bias produces the desired outcome of true leadership.  Recognising and nurturing different types of leadership in your succession plan means providing dual pathways that engage a broader range of talent. Whether through mentoring, leading projects, or cross-functional team roles, there are ways for employees to grow and stand out without necessarily fitting stereotypes. This flexibility not only respects individual strengths but also helps fill out your leadership pipeline.

Make informed decisions

"Without data, you're just another person with an opinion" – William Edwards Deming.

The future of succession planning lies in data-driven insights. With tools like psychometric assessments and 360-degree feedback, you can collect a wealth of information about your potential leaders. The challenge is using that data and information effectively. This is where a talent analytics dashboard comes in. By centralising key metrics – like leadership readiness, development progress, and role-specific competencies – you give HR and leadership teams a clear view of where each employee stands. Regularly review this data in talent calibration sessions to ensure you’re making informed decisions about who to develop and promote.

Test leadership in action

No amount of training can replace real-world experience. High-potential employees need opportunities to prove themselves in challenging environments, whether it’s through leading cross-functional projects or stepping into interim leadership roles. These experiences give them the chance to develop their leadership skills in a tangible way, while also allowing the organisation to assess their readiness for bigger responsibilities. The key is to align these opportunities with the success profiles you’ve developed so that the experiences are directly tied to the skills and attributes you want to cultivate.

The cost of inaction is too high. Failing to invest in robust succession planning puts the long-term interests of New Zealand businesses at serious risk. True leadership is not just about managing the present; it’s about safeguarding the future. Many leaders view their legacy as defined by the success of their tenure, but truly great leaders build organisations that thrive long after they’ve moved on. The true measure of success is not how indispensable a leader becomes but how well they develop others to take over. When a leader can step aside, confident that the talent they have nurtured is ready to carry the organisation forward, they have truly succeeded. Investing in succession planning means building a future where your impact lasts beyond your time at the helm, ensuring resilience and growth for generations to come.