In Episode 1 of PBO Advisory’s succession planning series, Francesca San Diego (CEO), Jennifer Rebis (CFO), and Nicole Devine (CPO) introduced the framework PBO uses with clients. In Episode 2, they went deeper into the work of execution. Episode 3 answers the questions most leaders want answered before they begin.
Host Joey McCoy guides the team through what sophisticated boards now expect beyond an org chart, why governance of risk is the lens boards bring to the conversation, how succession applies to clients and referral relationships, why single point of failure risk is especially dangerous for founder-led businesses, and the simplest, most practical first steps any business owner can take to move from intention to action.
Ready to build your succession plan for long-term success? To learn more about how PBO helps businesses create sustainable succession strategies that align finance and human capital, visit our website or contact us today.
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Joey: Welcome back to another conversation about succession planning. I’m Joey McCoy, here with Fran San Diego, Jennifer Rebis, and Nicole Devine. Welcome back, everyone.
Fran: Hi Joey, good to be back.
Jennifer: Glad to be here.
Nicole: Thanks for having us.
Chapter 1: What Sophisticated Boards Expect
Joey: For a lot of organizations PBO advises, succession planning is not just an internal exercise. There are owners, investors, boards, and clients who have a stake in this. Jennifer, what do sophisticated boards expect when it comes to succession planning?
Jennifer: Boards are becoming increasingly more sophisticated, and they don’t want to just see an org chart with names in boxes. They want the plan continuously updated. They want to see various scenarios, not just the best case scenario. They want to know how the organization is actively developing this plan, and they want to understand how the culture and the client relationships are being protected during the process.
Chapter 2: Where to Start at the Board Level
Joey: For an organization that has never presented succession planning to the board, where would you recommend they start?
Jennifer: Get started early with the board, and treat it as a continuous conversation. An organization should be having this discussion whether or not they’re actively planning an exit, because you never know when one of your leaders may decide to leave or suddenly decide to retire. So this needs to be part of the framework and part of the ongoing discussions.
Jennifer: On the financial modeling side, look at the cost and how it can be spread out, especially for small and mid sized businesses, because there is potentially a high cost to this. The organization will need to spread that cost out over several years. Then give the board confidence that the executive team is looking at this on an ongoing basis, that they’re stress testing scenarios, and that this is part of an ongoing conversation. That alone is really valuable.
Chapter 3: From Risk to Confidence and Governance
Joey: Fran, what would you say about organizations that are just now getting started and haven’t talked to their board about succession planning? What recommendations do you have for them?
Fran: We really want to move the conversation from being a risk conversation to a confidence and governance conversation. For example, we have a significant number of nonprofit clients, and we would advise the board to set up a succession planning committee, because the funders are asking the question, ‘what is your succession plan?’ If the board’s answer is, ‘we are working on it,’ but there is no real deliverable, that is a problem.
Fran: We like to see, from a leadership and governance point of view, a continuing conversation about succession planning, with a living framework. In nonprofits, that often means a separate committee, so the framework is being actively developed and the investment is being discussed. There is an investment to succession planning, and we have to incorporate that into our financial modeling for the various transition scenarios. At the nonprofit board level it is critical from a governance standpoint, and at the for profit level it is critical to the continuity and legacy of the organization. Once we start to talk about this in an ongoing way, with a plan and an allocation of investment, we move from ‘oh my gosh, we don’t know what we’re doing if so and so leaves’ to a much stronger, more agile organization.
Chapter 4: Succession at the Client Relationship Level
Joey: What about an organization’s clients? You need to plan for them as well. How would you say an organization should go about doing that?
Fran: That’s a great question. We should all be having those conversations with our customers and clients, because if we have critical clients and they are not clear on their own succession plan, it’s good for us to ask the question. We should be developing relationships with all the key individuals in a client organization so that we have coverage on our side, and so that we can support our clients in their succession planning and the vision for the future of their organizations.
Joey: Nicole, how should a conversation around succession planning incorporate the client relationship level?
Nicole: From a board perspective and even at the organizational level, there are a few things that are important to note. One is which roles are mission critical and why. One of the whys can be that someone owns really solid client relationships that are critical to revenue or to growth. The risk component of that is the conversation, and then the governance and the build around it: how do we insulate from risk and how do we set the organization up for success?
Nicole: From a board perspective, they’re focused on risk insulation and governance. They have direct visibility into and governance over the CEO succession, for example. That conversation looks like, what is the success profile, what does the timeline need to be, what is the break the glass scenario if something tragic happened? It’s about planning for those things, having transparency around the plans, and making sure the board is informed with whatever KPIs we’re using, like a talent readiness index.
Nicole: The client relationship component is part of that, and it does not always sit at the executive level. Sometimes it sits at a program manager or grant manager level. It depends on the organization. I’ve worked with a lot of clients who have had directors or chiefs with long standing curated relationships. If you’re in a partnership model, what do you do with partners who’ve had books of business for a very long time? What does that look like in terms of cohesiveness with the team, and how do we make sure we can transition appropriately? There are a variety of frameworks we use, but at a board level, what they want to know is that we have our arms wrapped around it, that we have a strategic plan in place, that we understand the risks, and that we can deploy a range of scenarios if needed.
Chapter 5: M&A, Due Diligence, and Single Point of Failure Risk
Fran: We see this when we’re doing due diligence and M&A work all the time in our client organizations. In due diligence, some of the questions are: who has the relationship with the client, and what does that relationship look like? We should be asking those questions not just in preparation for an exit, but in preparation for being good stewards of our organization and our resources. To Nicole’s point, we need a plan B if something goes wrong. We all need to secure our client relationships to be successful.
Nicole: Sometimes it goes beyond the client relationship. Sometimes it’s referral business partners. There may be a partner who has been a solid friend to the organization, but the connection is really to one particular person. If that person leaves, that lead generation funnel can really impact revenue. So being intentional and mindful, even about how you deploy and design talent and a role, what is the risk if we have a single point of failure? That circles back to organizational design for me as a CPO, and to the installation of risk insulation, so we don’t have single point failure systems that would highly impact revenue.
Fran: From an operational point of view, cross training, cross training, cross training. We never want to be solely dependent on one individual. We should be spreading that responsibility across multiple levels and making sure people understand it, so that we are prepared.
Chapter 6: Where to Start, Three Practical Lenses
Joey: We may have people listening right now who are business owners and executives who know they need to start succession planning, but they haven’t yet for whatever reason. Can each of you give your most practical starting point? Fran, I’ll start with you.
Fran: The most important thing is to have really honest conversations about critical role risk. Sit down with your leadership team to understand where that risk is, or if you’re a solo founder, sit down with a trusted advisor. Answer the question: if I were gone tomorrow, what is going to break? Be specific. Not ‘everything would be hard,’ but specifically which decisions cannot be made, which client relationships would be at risk, which financial functions would go dark. As simple as, if you can’t get billing out and you can’t collect money, you have trouble. Look at each of those pieces in your organization, inventory the specific dependencies, and start to address them step by step. PBO starts every client engagement on this topic by helping clients identify those dependencies and build a work plan to be the most resilient they can be.
Joey: Jennifer, what is your most practical starting point from the financial side?
Jennifer: The financial side can be overwhelming, so I would recommend starting small. Pick the most critical role in the organization and think about all the things that can go wrong, then associate a cost with each. Recruiting cost for a replacement. Lost productivity, because employees may not be productive while there is chaos in the organization. The cost to transfer knowledge. The cost of relationships, including business referral partners that may go away when that leader leaves. There is a true cost to replacing a key person, and it is often much more than an organization assumes. Start small with one role, then move down the list. That gives you a real number to anchor the conversation.
Joey: Nicole, from the people standpoint, what is your most practical starting point?
Nicole: It’s a loaded topic on the people side. I would agree with Fran and Jennifer, and add that the work has to start with designing the framework of how we define mission critical. I have a process I take our clients through, and roughly 90 percent of clients come back surprised by what their answers are when we go through the rubric. It is a simple form, but it identifies mission critical roles and why. Going through that exercise together is helpful, because it sets the executive team’s mindset around what we consider mission critical. That alignment matters, because not all roles are equal. In small to mid sized organizations, you have to invest in the pivotal roles that have multiplier effects.
Nicole: It can feel overwhelming, but succession has to sit on a foundation of reality and good HR basics: well drafted job descriptions with role clarity, business outcomes, and a clear return on investment for the role. You have to have those very basic things in place to understand what is critical about a role and how it fits in the organization. Often when I get into client organizations, we don’t even have solid job descriptions drafted, which makes it very difficult to talk about who we’re designing around or what we expect them to be doing. Talent readiness for the next role depends on having clarity about the current one. So on the people side, I would start at the very basics. As mundane as a job description might feel, it is actually the architectural byproduct of how we design a role and how we measure performance and readiness.
Chapter 7: Final Thoughts
Joey: As we wrap up today, I want to give each of you a chance to share any final thoughts or important things you would like the listeners to take away. Fran, I’ll start with you.
Fran: Jennifer’s advice is really wise. Don’t be overwhelmed by it. Take it one step at a time, and really start with: if I were gone tomorrow, what are the critical roles that need to be addressed, and do we have a plan to fulfill those roles if they were to become vacant?
Joey: Jennifer?
Jennifer: My recommendation is to be proactive, because we know that a proactive transition will cost less and produce better outcomes. Even if you think you can’t afford to implement a succession plan, it’s actually going to be much more expensive if you don’t start thinking about it, because you’ll be reactive. You’ll be spending the money all at once to replace these leaders. If you have a good plan in place, you can implement it over several years and spread the cost. Proactive is the key for me.
Joey: Nicole?
Nicole: Just start. Whatever your team can handle in the conversation, and to Jennifer’s point, the proactive piece. We deal with a lot of clients who have analysis paralysis. You’re trying to run a business in real time, and succession planning feels like it’s off in the sunset. Just starting the conversation is incredibly helpful. Start by having honest conversations with yourself and where you want this to go, and have honest conversations with your team about what role they want to play now and in the future. Those types of conversations begin to socialize the work. My main advice to any of my clients is just start. One foot in front of the other. That is the hardest part. I promise it gets easier as you go. It’s like getting into the gym. You just have to get there.
Closing
Joey: The hardest part with anything is always just getting it started. Great pieces of advice and recommendations from everyone. Thank you all for being here today. For listeners who would like more information about PBO Advisory Group, you can visit pboadvisory.com. We will see you next time.
Jennifer: Thanks, Joey.
Nicole: Thanks, Joey.
Fran: Thanks, Joey.
Click to View Key Questions and Answers
Q: What do sophisticated boards expect to see in a succession plan today?
Boards have moved well beyond the old expectation of an org chart with names in boxes, and the reason is governance. Boards are accountable for governance of risk, and succession planning is central to that conversation. What sophisticated boards now expect is a continuously updated plan, multiple scenarios rather than just a best case, evidence that the organization is actively developing leaders, and a clear view of how the culture and client relationships are being protected through any potential transition. They want to see that the executive team is stress testing scenarios on an ongoing basis. The cost of succession planning, particularly in small and mid-sized organizations, can be significant, and the financial model should show how that cost is being spread responsibly over several years. Done well, succession planning becomes part of the ongoing strategic conversation with the board rather than a deliverable produced under pressure.
Q: For organizations that have never presented succession planning at the board level, where should they start?
The starting point is moving the conversation from risk to confidence and governance. For nonprofits, the practical recommendation is to set up a dedicated succession planning committee. Funders are increasingly asking pointed questions about succession, and “we are working on it” is no longer a satisfactory answer. A succession committee shows the board and the funders a living framework, an active investment, and a structure for ongoing financial modeling of transition scenarios. The same logic applies to for-profit organizations. Treating succession as an ongoing strategic conversation, with allocated investment and probability-weighted scenarios, makes the organization stronger and more agile, and removes the rush that comes with reactive transitions.
Q: How should succession planning incorporate clients and referral relationships?
Client and referral relationships are part of the succession plan, and treating them otherwise is one of the most common organizational risks. The work starts with identifying which roles are mission critical, and one of the reasons a role is mission critical is often because someone in that seat owns relationships that drive revenue or growth. From there, organizations need to insulate against single point of failure risk by deliberately building institutional client relationships rather than relying on individual ones.
This shows up in due diligence and M&A activity all the time, and it is especially true for founders. When the founder owns the client relationships, buyers need confidence that the transaction will be successful without that founder after the earn-out period. Buyers want to know who owns the client relationship and what that relationship looks like, and the answer should not depend on a single person. The same logic applies to referral partners. A long-term referral partner whose connection is to one specific person inside your organization is a single point of failure for your lead generation funnel. The remedy is intentional organizational design and consistent cross-training, so that responsibility for any critical relationship is spread across multiple levels.
Q: For business owners who know they need to start this work but haven’t yet, what is the most practical first step?
Three concrete starting points, depending on which lens fits your situation best.
From a leadership perspective, start with honest conversations about critical role risk. Sit down with your leadership team or a trusted advisor and ask: if I were gone tomorrow, what is going to break? Be specific. Which decisions cannot be made, which client relationships would be at risk, which financial functions would go dark. The simple example: if billing cannot go out, money cannot come in, and you have a real problem. Inventory the specific dependencies in your organization. You cannot solve a problem you have not identified.
From the financial side, start small. Pick the most critical role in the organization and put a real number on what would go wrong if it became vacant. Recruiting cost, lost productivity, knowledge transfer, the loss of business referral relationships if those leave with the person. Once you have that number for one role, move down the list. Most organizations are surprised by how large that number is, and that surprise creates the urgency to act.
From the people side, the basics matter more than most leaders realize. Mission critical role identification has to sit on a foundation of clear job architecture, real role definitions with measurable outcomes, and a process for assessing readiness. Roughly 90 percent of clients are surprised by what surfaces when they go through the rubric of identifying their mission critical roles. That alignment exercise alone changes the conversation, because not all roles are equal. Small to mid-sized organizations have to invest in the pivotal roles that have multiplier effects, and that investment depends on the basics being in place.
Q: Why does proactive succession planning cost less than reactive succession?
The financial case for starting now is simple. A proactive transition can be planned, budgeted, and spread across several years, which makes the investment manageable. A reactive transition has to absorb the same costs all at once, often during a period of disruption, when the organization is least equipped to handle them. Beyond the dollar number, proactive transitions consistently produce better outcomes, including better retention through the change, better continuity of client service, and a faster ramp to full effectiveness for the incoming leader. Whatever you think you cannot afford about starting now is less than what you cannot afford about not starting.
Q: What is the single most important thing a leader can do to move from intention to action?
Start with the end in mind. For founders especially, how you plan to exit the business informs every succession planning decision that follows. Have an honest conversation with yourself about where you want this to go, then have an honest conversation with your team about what role they want to play in the future of the organization. Those early conversations socialize the work and break the inertia.
The most common reason succession planning gets deferred is analysis paralysis and the fact that the plan often lives in the leader’s head. Leaders are running the business in real time, succession feels like something on the horizon, and the perfect plan never arrives. Begin with whatever your team can handle. The first step is the hardest. Once it is taken, the next one becomes easier.
PBO Advisory partners with organizations to integrate finance, people, and operations into a single leadership advisory practice. The succession planning approach featured across this three-episode series is built into how PBO supports clients on every dimension of transition, from board governance to client continuity to the day-to-day work of building bench strength.
If succession planning is something your organization has been putting off, this episode and the framework behind it can give you the language, the financial case, and the starting point you need.
Visit pboadvisory.com to learn more or to start a conversation with the team.
If succession planning is something your organization has been putting off, this episode and the framework behind it can give you the language, the financial case, and the starting point you need. Visit our website or contact us today.
Articles on Succession Planning
Francesca San Diego, CEO | Succession Planning as Strategic Renewal | Why I’m Planning My Own Transition
Nicole Devine, CPO | Succession Planning as Culture Continuity | Why Technical Excellence Isn’t Enough
Jennifer Rebis, CFO | The Financial Architecture of Succession Planning | Why Most Organizations Underestimate the True Cost
PBO Leadership Team | Succession Planning That Actually Works | Integrating Finance, Operations, and People Strategy
PBO Leadership Team | Beyond the C-Suite | Why Succession Planning Isn’t Just for Executives
