Large corporations have established succession planning frameworks as a cornerstone of their organizational strategy. These frameworks are built on years of operational data and often include dedicated teams and significant resources.
However, in the case of startups, there is a consistent underinvestment in succession planning. The priority for early-stage companies, especially those from seed through Series C, is centered around immediate challenges such as product development, market fit, and securing funding. This often leaves critical long-term strategies like succession planning on the back burner. This oversight can lead to significant operational disruptions and financial costs when key roles unexpectedly become vacant.
We are firm believers in succession planning at Recruiting from Scratch (RFS) and have seen it pay off for the 549+ startups we partner with who invest in their leadership searches. Based on 0+ technical hires we’ve made since 2019, proactive planning significantly mitigates risk. Below, we are sharing the benefits of succession planning, what the role of the CEO should be, and how to start thinking about succession planning if you are a startup.
Succession planning identifies and develops talent within an organization, ensuring a pool of competent individuals ready to assume key positions in case of departures, retirements, or sudden leadership vacancies. This foresight minimizes disruptions and maintains stability, which is crucial for fast-growing companies. Without a plan, the departure of a critical technical leader, such as a VP of Engineering or Head of AI/ML, can halt critical projects for months. While Recruiting from Scratch's average time to fill a standard technical role is 29 days, leadership positions typically take much longer, often 60-120 days or more, directly impacting product roadmaps and investor confidence.
When organizations take the time to identify and develop successors beforehand, they minimize large gaps in talent. This directly alleviates negative impacts on productivity and performance that arise when a key hire is absent. For a startup reliant on a small, high-impact team, even a few weeks without a critical leader can lead to missed deadlines, stalled initiatives, and increased workload for remaining staff. Proactive planning reduces the inherent uncertainty of hiring in competitive markets and ensures that the operational engine of the startup continues to function without unexpected interruptions.
Succession planning serves as a powerful retention tool. When leaders openly discuss succession and promotion pathways, it demonstrates a tangible commitment to employee growth and career progression. This transparency boosts morale, motivation, and job satisfaction – making employees less likely to seek opportunities elsewhere. Employees who see a clear path for advancement within their current company, potentially leading to roles with an average salary of ~$252K for placed engineers, are more invested in the company's long-term success and less likely to leave. This also fosters a culture of continuous learning and internal talent development.
Turnover is expensive, particularly for leadership roles in high-demand fields like Engineering and AI/ML. The direct costs include the time leaders spend hiring, which diverts focus from strategic initiatives, and the recruiting fees, which at Recruiting from Scratch are typically 25-30% of the first year base salary. For a role with an average salary of ~$252K, this means a fee of ~$63,000 to ~$75,600. Beyond direct costs, there's significant lost productivity. An open leadership position for several months can cost a startup hundreds of thousands of dollars in lost opportunities, delayed projects, and reduced team output. For example, if a critical engineering leader earning ~$252K is absent for six months, the lost productivity and potential revenue impact can easily exceed their half-year salary, making the total cost of inaction substantial.
The role of the CEO or Founder is paramount when it comes to succession planning. Their direct involvement signals the importance of this strategic initiative to the entire organization. Some of the responsibilities of the CEO for succession planning include:
CEOs need to communicate the importance of succession planning to the entire organization and make it a visible priority. By setting an example and actively championing succession planning, a CEO can encourage other leaders to do the same. This involves integrating succession discussions into regular leadership meetings and performance reviews, ensuring it is not treated as a peripheral task but a core component of organizational health and future growth.
In addition to leading by example, a CEO can play an active role in identifying and developing potential successors. They possess a unique, top-down perspective on the organization and can identify individuals with the right skills, experience, and potential to lead. This requires a deep understanding of current talent capabilities, future strategic needs, and a proactive approach to mentorship and development for high-potential employees.
As a CEO, you are the figurehead of your company – and you generate excitement for your business. Just as you sell your product to investors or clients, you must get comfortable selling remarkable hires on the opportunity to work for your company. Based on 0+ technical hires we've made since 2019, top candidates, especially those commanding an average salary of ~$252K in Engineering and AI/ML roles, remain in high demand and have multiple options. To attract and retain the best successors, you need to constantly share the impact of your employees' work, express appreciation for their contributions, and articulate your vision for the company's future growth. This continuous engagement builds loyalty and strengthens the long-term talent pipeline.
Thinking about succession planning can be intimidating, especially when it seems like there are many pressing tasks that require your immediate attention. However, there are several steps we recommend startups consider when developing a succession plan that works for their business, including:
Start by identifying critical roles within your startup that require succession planning. This typically includes executive and leadership positions such as CTO, VP of Engineering, Head of Product, or Head of AI/ML, which are essential for steering the company's direction. It can also encompass other roles that are vital to your business's day-to-day operations or direct interface with customers and clients. Focusing on these roles ensures that core competencies and strategic direction are preserved even amidst unexpected personnel changes.
Clearly define the roles for which you need succession planning and outline the specific skills, experience, and leadership qualities required to succeed in these positions. These might include skills already present in your current hires, but also consider additional competencies that would benefit your business in the future. For example, if you plan on expanding into a new industry or market within the next year, ensure your succession plan accounts for talent with relevant expertise. This foresight ensures that your talent pipeline is aligned with your strategic roadmap.
Meet with other founders or business leaders whenever possible and share insights about what you are seeing on the candidate market. What are top candidates asking for right now in terms of salary or equity? Based on Recruiting from Scratch data, the average salary for placed engineers is ~$252K, and this figure can fluctuate based on specialization and market demand. Are some areas of expertise, such as specific AI/ML subfields, being more heavily recruited right now? Knowing what to expect regarding compensation, candidate availability, and competition can help you set realistic expectations on time to fill and cost. While Recruiting from Scratch averages 29 days to fill a technical role, a leadership role in a competitive market can take significantly longer.
Keep comprehensive records of your succession plan, including development plans for internal candidates, performance evaluations of existing employees, and any notes on compensation or discussions. This structured approach helps you stay organized, ensures consistency, and allows you to reference conversations that may have occurred months ago. For instance, at Recruiting from Scratch, we use Coda to track notes and candidate pipelines, which can be easily organized into tables or other formats and shared transparently across our team, ensuring everyone has access to critical information.
This is often an informal process you may already be doing without realizing it. Whenever you accept a networking call, respond to an email from an old friend or colleague, or attend an industry event, you are potentially engaging with future leaders. The next time you are impressed with someone in one of these scenarios – even if you do not have an immediate role for them – take the time to connect with the person afterward and integrate them into your network. Even if they are not the right fit for an open role, they may know someone who is when it is time for you to start looking, which can greatly reduce the average 29-day time to fill, or the even longer duration for leadership roles. Building a robust network is a proactive succession strategy.
Recruiting from Scratch has been exclusively specializing in Engineering and AI/ML roles for seed through Series C startups since our founding in New York City in 2019. We have made 300+ technical placements and work with 549+ active startup clients. This deep focus has given us a unique data-driven perspective on the hiring challenges and strategies crucial for high-growth startups, including the critical need for effective succession planning. Our average time to fill for technical roles is 29 days, with an average salary of ~$252K for placed engineers, and we maintain an NPS of 90+. This real-world experience and comprehensive data set inform our insights on how talent acquisition and leadership development impact startup growth and stability.
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