Why Succession Planning Should Go Beyond the C-Suite

What would happen if one of your key team managers left tomorrow? Would their team thrive, or stall? Many companies have a succession plan for the CEO or other members of the C-suite. But your organization may not have a similar strategy for replacing people leaders or other employees who hold business-critical knowledge and keep day-to-day operations running.  

According to SHRM’s 2025 CHRO Priorities and Perspectives report, roughly 1 in 3 CHROs (37%) say developing succession plans across the organization remains a significant challenge. That issue is likely to become even more critical as a growing number of U.S. workers retire and a long-term labor shortage is on the horizon. Organizations need to take succession planning more seriously than ever, and it shouldn’t stop with executives.

Midlevel leaders and other key contributors play a crucial role in team performance, acting as a bridge between organizational strategy and execution. Gallup research shows that 70% of variance in team engagement is directly attributed to the manager. Lose the manager, and you risk losing momentum, morale, and institutional knowledge.

In a world defined by disruption, succession planning must extend beyond the top levels of leadership. This means designing scalable systems for midlevel knowledge transfer, leadership development, and internal mobility to build resilience and future-proof operations — no matter who steps away.

The Blind Spot in Traditional Succession Planning 

Succession planning is often associated with C-suite or board-level roles. However, being able to place capable leaders where and when they’re most needed across all levels of an organization shouldn’t be overlooked.

According to Deloitte, 86% of leaders recognize leadership succession planning as an urgent or important priority, yet only 14% believe their organizations execute it effectively. This gap highlights a common disconnect: Companies recognize the need to prepare for leadership transitions, but they often postpone action.  

In today’s unpredictable business climate, preparedness is essential. Departures, layoffs, and reorganizations are commonplace. While executive vacancies attract the most attention, managers also play key roles in driving organizational performance, including employee engagement. SHRM research finds 92% of HR executives say people managers are critical for their organization’s overall success. Managers can also influence the engagement of other employees. Workers with highly effective managers are more than twice as likely to feel a deep sense of commitment and belonging to their employer and to say they are valued at their organization, compared to those with non-highly effective managers.  

To avoid the disruption of losing critical people managers, many organizations are exploring AI as a solution. Gartner predicts that 20% of organizations will use AI to flatten their organizational structures through 2026, potentially eliminating over half of middle management roles. Yet while AI can preserve institutional memory and smoothen transitions, it can’t fully replicate the influence and value of great managers — those who inspire, engage, and motivate. The most resilient succession strategies will instead use technology to support intentional, organizationwide preparedness and leadership development at all levels.

Why Middle Management Is Critical to Organizational Continuity 

Often, middle managers are responsible for championing strategic initiatives. They translate big-picture vision into actionable goals, bridging the gap between leadership and teams. In many ways, they are the organization’s connective tissue.

While artificial intelligence promises to transform the workplace and disrupt the organizational chart, research by Letian Zhang of Harvard Business School suggests that middle managers will still play a key role, even in innovation-heavy industries such as software development. They often know how and when to connect teams with distinct skills — including engineering, sales, and market analysis — to keep projects on track. 

Middle- managers and people leaders hold critical knowledge: vendor relationships, legacy system workarounds, team dynamics, and unspoken risk factors. They facilitate the flow of information horizontally and vertically throughout organizations. For example, when an operations manager departs, they take with them the rationale behind prioritization, insights from user testing, and the nuances of stakeholder expectations. Their absence is felt in processes that are not only complex, but frequently undocumented.

“Without strong middle managers, strategy gets lost in execution,” said SHRM CHRO Jim Link, SHRM-SCP. Losing these leaders creates a knowledge gap that traditional succession plans often overlook.  

“Organizations must account for the influence and institutional memory that middle managers carry,” Link said. “Succession planning can’t stop at the top."

The Knowledge Transfer Challenge 

Despite advancements in data management, most knowledge lives in people’s heads or in hard-to-access silos. By 2025, it’s predicted that 80% of worldwide data will be unstructured, encompassing formats including emails, chats, and documents, and making it increasingly challenging to organize and utilize effectively.

A study of 1,000 IT managers in the U.S. and U.K. revealed pressing concerns about knowledge retention within organizations: 

• 67% of IT managers were worried about the loss of critical knowledge and expertise when employees leave.  

• 64% said their organization has already experienced significant knowledge loss due to staff turnover.

The loss of institutional knowledge doesn’t just impact individuals. When managers leave, that knowledge goes with them, disrupting collaboration, decision-making, and overall efficiency of teams — unless systems are in place. To mitigate this risk, organizations should consider approaches such as: 

• Peer shadowing, which allows workers to develop cross-functional skills.

• Comprehensive documentation of critical responsibilities, workflows, and other institutional knowledge to assist in knowledge transfers. 

• Transitional mentoring to help preserve institutional knowledge.

These approaches ensure a smoother transfer of expertise, safeguarding critical insights and fostering continuity within the organization. 

Creating an operational continuity file or "electronic turnover binders" helps ensure that key responsibilities, contacts, processes, and institutional knowledge are regularly updated and accessible. This approach minimizes disruptions when a people manager exits, whether planned or unexpected. Ultimately, leadership development isn’t just about training successors. It’s about capturing and distributing know-how that keeps the organization running.

Building a Culture of Leadership Readiness 

Leadership development needs to begin earlier and extend deeper within organizations. It’s essential to identify potential at all levels and cultivate it continuously, rather than waiting for a vacancy to arise. To ensure effective knowledge transfer, fostering midlevel growth and encouraging internal mobility should become key priorities.  

“Succession should be a continuous, evolving process — not a one-time event,” Link said. “Organizations must prioritize the process, not just the role once it becomes vacant.”

Another consideration is that emerging leaders are often evaluated on their performance as individual contributors, rather than their ability to influence, collaborate, and lead others. This narrow focus on execution can cause organizations to overlook people who could become effective leaders — and limit their capacity to build high-performing teams of the future.  

“Establish a baseline for measuring leadership readiness,” Link advised. “When organizations fail to assess the human-centric skills required for advancement into a managerial leadership role — or when requirements are too vague and subjective — they risk promoting for reasons other than true leadership potential.”

Takeaways for HR and Business Leaders

Succession planning should be a business continuity strategy that touches every level. To achieve this, try the following practices:  

• Audit where your current succession plans end. Do they extend beyond the executive team? Identify roles where critical knowledge or decision-making is concentrated in one or two individuals. Plan to replace people, not just job titles.

• Strategize intentionally. Include strategies such as rotational programs, future leader cohorts, and manager-as-coach models to cultivate leadership depth and agility across functions.

• Build leadership continuity by decentralizing your pipeline. Empower managers and teams at every level to identify and cultivate emerging talent, embedding leadership growth into everyday work and culture.

• Invest in knowledge transfer and internal mobility as business resilience strategies. This is not only to retain talent, but to protect institutional memory and organizational resilience. 

• Foster psychological safety around succession conversations. Leaders shouldn’t feel threatened by preparing others to step up. Rather, they should be empowered to build what comes next.

Fostering Succession Preparedness to Fuel Future Success

Focusing too heavily on C-suite continuity while neglecting midlevel leadership pipelines is a blind spot that can undermine long-term stability. Organizations that invest in broader succession planning efforts aren’t just preparing for “what if” scenarios: they’re creating a more agile and future-ready workforce. The question isn’t just who will lead next — but whether your organization is ready for that moment when it matters most.

Drive sustainable change and align talent strategy with business goals through SHRM’s Organizational Development program.