How to Build a Strong Succession Plan with Fractional Leadership Expertise

By Sara Daw

There’s no doubt about it, successful succession is hard.

Research by Deloitte finds that “While 86 per cent of leaders believe leadership succession planning is an ‘urgent’ or ‘important’ priority, only 13 per cent believe they do it well^[1].

On the one hand succession planning is no different to any other change management process or corporate initiative which must be prepared for in detail, measured, executed, and continuously managed and monitored. Yet experience tells us that while ‘what’ to do might seem obvious ‘how’ to do it is surprisingly hard.

Human and emotional factors play a huge part here. Bringing up the topic of succession can be perceived as a lack of confidence in the current leadership if initiated by the owners; a signal of future intentions if it comes from the current leadership^[2]; and for entrepreneurial and family businesses where the original founders are looking to retire or step away the emotions are heightened even further.

These human factors, combined with succession being a long-term programme which must transcend short-term priorities mean that most businesses don’t give it the attention it needs and lack a clear process, methodology, and tools.

The Common Issues in Succession Planning

There are generally three common scenarios for businesses facing succession: The family or entrepreneurial business is over-reliant on the founders and wants to ‘grow their own’ next generation of leaders to continue the business and create a legacy; Scaling entrepreneurial organisations focused on an exit and wanting to professionalise their leadership to maximise value; and larger organisations that want to build functional succession into their DNA.

All the businesses in these scenarios, however, will face the same issues:

• Lack of financial resources to support the incumbents and the next generation simultaneously^[3];
• The new generation not being ready to step up including a lack of interest, support, and inadequate skills³; and
• The capability and inclination of the incumbent leadership to train, coach, and mentor the next level.

These are very real problems and take time to solve which is why it is never too soon to start succession planning, and the incumbent leadership must get the very best people around them for guidance when embarking on this journey.

Bringing in Fractional Leadership Support

This is where the support and expertise of fractional leadership comes in, operating across the disciplines of finance, marketing, people, technology, and so on. These top calibre individuals with extensive knowledge and experience have left corporate to gain more flexibility, variety, and control over their lives. They have chosen to become self-employed and work with a portfolio of growing entrepreneurial businesses or larger organisations, each on a part-time basis, say one day per week or two days a month to fit the needs of the organisation, dialling their time up and down as required.

Fractional CFOs, CMOs, CHROs, and so on are passionate about sharing their knowledge and experience and want to ‘give back’ and make a difference to the lives of others. Critically they have ‘been there, seen it, and done it’ many times over when it comes to succession and can work with small and large businesses flexibly to fit their budgets.

The advantages of utilising fractional C-suite leadership expertise for succession are:

Flexibility and Cost-Effectiveness

It is a flexible and affordable way for organisations to bring in the very best real-world expertise, skills, and knowledge by function to grow their own future leaders while not over-burdening the incumbents. Time commitments can be flexed easily up and down to fit tight budgets, with clear priorities and outcomes agreed, yet there’s no doubt about it, the best return is that the next level of leadership will get up to speed faster with this dedicated support;

Access to Proven Expertise and Mentorship

These seasoned veterans know what it feels like to be a bigger organisation and how to get there, after all they’ve done it many times over. They can mentor, train, and coach the next generation of leadership into their new roles and be a sounding board for the incumbent leadership to help them adapt and make way, which is often a delicate path to navigate.

Filling Gaps in Leadership Roles

Sometimes for scaling and entrepreneurial organisations there isn’t an incumbent leader in a function, perhaps the business has never had a CFO before. Fractional leadership can fill this gap affordably and have a priority to give on-the-job training and mentoring to the next level down to fill this role in the future or indeed they can help to recruit the right talent to develop.

Non-Threatening Presence

Importantly, fractional leaders are non-threatening. They have chosen portfolio work deliberately and don’t want to go back into full-time employment for one organisation. This means they aren’t looking for a job, so they are not competition for the individuals they are mentoring nor the incumbents they are supporting. In fact, their sole focus is to enable these individuals to be the very best they can be.

Oversight and Risk Mitigation

While the next level management are learning the ropes, fractional leaders provide important oversight and guidance, acting as a safety net for the organisation to spot any significant risks and step in to help if needed.

Succession Planning and Management

Lastly, fractional leaders can be used to plan, oversee, and run the whole succession process inside the organisation. They can contribute much needed objectivity, wider perspective, outside knowledge, and best practice to ensure succession gets the focus it needs.

Utilising experienced fractional leaders for entrepreneurial SMEs and larger organisations makes so much sense on many levels but when it comes to the tricky issue of succession it could change the game forever.

About the Author

Sara Daw is Group CEO of The CFO Centre and The Liberti Group, and the author of Strategy and Leadership as Service – How the Access Economy Meets the C-Suite, which explores the fractional leadership trend.

References

1. [1] Adam Canwell et al., “Leaders at all levels: Close the gap between hype and readiness,” Deloitte University Press, March 7, 2014.

2. [2] Jeff Rosenthal et al., “Solving the succession paradox,” Deloitte CFO Insights, 2024.

3. [3] Dr Richard Shrapnel., “Succession Redefined: Family Business Succession in the 21^st Century.” The European Business Review, September 19, 2014.