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On paper a succession plan looks fine: a role, a name next to it, a period for the handover. What it rarely contains is a line for knowledge. Yet knowledge is the most expensive item in the whole handover; it just never gets booked.
One preliminary note: only 21% of companies have a formal succession plan at all (SHRM). At the same time, 72% have at least one person whose departure would significantly impair operations (SHRM, 2023). The following calculation therefore also applies to companies without a plan; there it simply happens unplanned.
The upper bound: what a change can cost
Replacing a key employee costs 100 to 300% of the annual salary (NAIC). The range is wide because it includes everything: search, onboarding, lost productivity, errors. For a role with a salary of 90,000 euros, that means 90,000 to 270,000 euros.
A succession plan reduces part of this. It shortens the search because the person is already known, often an internal candidate. That saves real money, since external hires are paid 18 to 20% more than internal moves (University of Pennsylvania).
The routes that usually get costed
In practice we see three variants.
Onboarding through overlap: predecessor and successor work in parallel for a few weeks or months. What gets costed is the double salary for that period. That is the visible item.
Onboarding without overlap: the successor takes over after the departure and learns from documentation and colleagues. Nothing gets costed, because no extra salary is incurred.
Bringing them back: when things get stuck, the experienced person returns as a consultant. That typically costs two to three times the former day rate (HBR).
The items that are missing
What appears in none of the three variants:
- The time colleagues spend answering the successor’s questions, for months, often without anyone measuring it.
- Errors and rework because exceptions are unknown that the predecessor handled intuitively.
- Decisions that get postponed because nobody is sure how it used to be done.
- Customer relationships that lose trust because the new contact does not know the background.
These items are real; they just show up in other cost centres. And they are why a three-month overlap so often falls short: the critical cases do not even come up in three months.
Where the calculation tips
Knowledge transfer planned before the change alters exactly these hidden items. When the exceptions, rules of thumb and connections of a role are captured before the person leaves, the successor does not start from zero. In Omnora projects we measure 15 to 30% shorter onboarding, 20 to 40% fewer questions to knowledge holders and 10 to 25% less rework. These are our own measurements, not external research, and they are ranges, not averages.
We do not want to hide that the calculation does not pay off for every role. For well-documented, highly standardised work, an overlap is often enough. The investment pays where a person makes decisions that are in no manual.
How to plan this concretely for phased retirement is described in Phased retirement. How to identify critical roles across the board is covered in the piece on the retirement wave.
Add a single line to your next succession plan: “Which three decisions does this person make that nobody else can?” If the line stays empty, the plan is not finished yet.
