Why Get Expert Remuneration Benchmarking Before Succession Planning

Succession planning is a critical process for any organisation aiming to ensure continuity, long-term stability, and sustained leadership. It involves identifying and developing potential candidates within the company to step into key roles when leaders retire, leave, or take on new challenges. While many factors go into effective succession planning—leadership development, talent identification, and alignment with future company goals—one often overlooked but essential aspect is remuneration benchmarking.

Expert remuneration benchmarking should be a key component of any succession planning process, ensuring that compensation packages are competitive, fair, and aligned with market standards. By incorporating benchmarking early in succession planning, organisations can avoid potential disruptions, maintain employee morale, and stay competitive in the talent market. Let’s explore why expert remuneration benchmarking is indispensable before embarking on succession planning.

1. Aligning Compensation with Market Standards

Succession planning is inherently forward-thinking, focusing on leadership transitions that may occur in the future. As part of this process, it’s essential to ensure that compensation for the incoming leaders is aligned with current market standards and the expectations of the roles they will be stepping into.

Without proper benchmarking, an organisation might unknowingly offer compensation packages that are too low or too high compared to industry standards. Offering too low can result in losing potential internal candidates to external opportunities, or failing to attract top talent from outside the organisation. Overpaying, on the other hand, can lead to inefficiencies in your compensation budget and even disgruntle other employees within the company who may feel unfairly compensated.

Expert remuneration benchmarking provides insights into how other companies in your industry or geographical region are compensating executives, managers, and specialised roles. This information helps HR teams and decision-makers craft competitive compensation packages for key positions that will soon be vacant, ensuring the organisation remains attractive to both internal and external candidates.

2. Ensuring Internal Equity and Fairness

Succession planning typically involves promoting or transitioning individuals from within the organisation into leadership roles. In such cases, it’s crucial to ensure that pay packages are not only competitive externally but also fair internally. Without transparency and fairness in compensation structures, internal candidates may feel undervalued or undercompensated compared to their peers or incoming external hires.

Remuneration benchmarking can help identify and address internal pay inequities, which could otherwise lead to dissatisfaction or retention issues. It ensures that pay is distributed equitably among employees, especially when those moving into leadership roles may have different backgrounds, experiences, or skill sets. Internal equity is critical to maintaining a positive work culture, avoiding resentment, and ensuring a smooth leadership transition.

Fairness in compensation also contributes to a sense of organisational justice, where employees believe that rewards and benefits are distributed fairly. This perception is key to fostering a motivated workforce that remains engaged and loyal throughout periods of leadership transition.

3. Attracting External Talent

In some cases, succession planning may require looking beyond internal candidates to fill leadership roles. This is particularly true for highly specialised roles or when a fresh perspective is needed at the executive level. To successfully attract external candidates, offering a competitive remuneration package is essential.

External candidates are often well-versed in market expectations and will compare any offer with similar opportunities. If your organisation's compensation lags behind competitors, top candidates may look elsewhere. Conversely, offering an attractive, well-benchmarked package helps make your company stand out as a desirable employer.

Expert remuneration benchmarking not only helps define salary bands but also includes insights into bonuses, incentives, stock options, and other benefits that can sweeten the deal for top talent. This comprehensive view ensures your organisation is prepared to compete for the best talent during the succession planning process.

4. Supporting Leadership Development Programs

Effective succession planning often includes leadership development programs designed to nurture and prepare employees for future executive roles. By integrating remuneration benchmarking into these programs, organisations can create a clear link between development and compensation.

This transparency benefits both the company and its employees. For the organisation, it ensures that those who invest time and effort into leadership development are fairly rewarded. For employees, understanding the financial rewards associated with leadership roles can act as a motivating factor, encouraging them to actively participate in training and skill-building initiatives.

Benchmarking also helps define clear performance metrics and compensation structures that align with the future responsibilities of leadership roles. This not only clarifies the career path for potential successors but also ensures that they are adequately compensated for the increased responsibilities they will eventually assume.

5. Preparing for Leadership Retention Challenges

One of the key objectives of succession planning is to retain high-potential employees by showing them a clear path to leadership within the organisation. Compensation plays a major role in retention, particularly for individuals who may already be in high-demand roles or who are viewed as top talent by other companies.

Remuneration benchmarking ensures that these high-potential employees are adequately compensated and not enticed by competitors offering better packages. During succession planning, organisations need to be proactive in adjusting compensation to ensure retention of key players.

For instance, if a valued senior manager is a strong candidate for a future leadership role, ensuring that their current and future compensation package is competitive will reduce the risk of losing them before the transition takes place. Expert benchmarking ensures that these adjustments are made strategically, balancing the needs of the employee with the financial constraints of the organisation.

6. Maintaining Shareholder Confidence

For publicly traded companies, leadership transitions can be a point of concern for shareholders. They want to be assured that the incoming leadership team is capable and that the compensation packages being offered are justified based on market standards and organisational performance.

Remuneration benchmarking offers transparency and accountability in compensation decisions, which helps maintain or even increase shareholder confidence. By demonstrating that CEO and senior leadership compensation is aligned with market data and industry norms, companies can avoid unnecessary shareholder scrutiny or dissatisfaction.

Conclusion

Succession planning is a delicate and complex process that requires careful consideration of many factors—one of the most important being executive and leadership compensation. Expert remuneration benchmarking provides a data-driven foundation for making fair, competitive, and transparent compensation decisions, ensuring that leadership transitions happen smoothly and effectively.

Whether your organisation is promoting from within or hiring externally, benchmarking ensures that compensation aligns with both market standards and internal equity. It supports talent retention, attracts top-tier external candidates, and strengthens leadership development programs. Ultimately, expert remuneration benchmarking before succession planning can safeguard the future of your organisation by ensuring continuity and stability during leadership transitions, while maintaining morale and competitiveness in the market.