SummaryTo avoid the pitfalls of failed succession planning, boards should:
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CEO succession is one of the board’s most important responsibilities – yet it’s often mishandled, leading to costly leadership gaps and erosion of performance. Despite its importance, many boards fall into reactive patterns that increase risk, rely on flawed assessment models and undermine internal readiness. Below are six key reasons why succession planning fails – and how boards can avoid them.
1. Poor timing undermines internal readiness
One of the most common reasons why succession planning fails is poor timing. Preparing a CEO isn’t just about identifying high performers – it requires years to deliberately cultivate leadership skills and experience. Unfortunately, boards frequently delay CEO succession efforts until a changeover is imminent, leaving little room for meaningful internal development or effective transitions.
The consequences: When boards start developing talent too late, internal candidates are disadvantaged and unable to improve their skills, leaving the board with no choice but to hire externally.
What to do instead: Initiate CEO succession planning at least two years in advance, but ideally three to five years, so you have time to cultivate the leadership skills and experience your organisation needs.
2. Succession is treated as a hiring event, not a development process
Many boards treat succession planning as one-off hiring decisions rather than deliberate, long-term investments in leadership development. In fact, CEO capabilities can be developed through stretch assignments, mentorship and targeted development programs. However, many boards lack the expertise to design these processes, turning to psychometric testing and generic leadership coaching instead. These tools provide limited insight into real-world CEO capability and typically fail to address candidate skill gaps or specific organisational needs.
The consequences: This reactive approach contributes to poor succession outcomes and limits the readiness of internal candidates.
What to do instead: Build a multi-year leadership development pipeline tailored to your strategic context. Avoid defaulting to simplistic or off-the-shelf solutions.
3. Challenges with assessing external candidates
Boards face many risks when hiring external candidates for the role of CEO, starting with the challenges involved in evaluating these candidates. Psychometric tests, which are commonly used in external selection, have low accuracy in predicting CEO success due to their generic nature and inability to capture nuanced, context-specific leadership demands. Additionally, reference checks are typically sourced from curated sources who lack objectivity and are unlikely to provide critical feedback.
The consequences: Limited visibility and flawed assessment methods may skew boards towards riskier external hires, despite difficulties in gauging the candidate’s leadership style, cultural fit or potential performance issues.
What to do instead: Invest in the development of internal successors. These candidates are lower risk due to the direct longitudinal data you have on their performance, cultural fit and growth potential.
4. Trusting the wrong partner
Boards frequently delegate CEO succession to executive search firms, assuming external expertise will lead to better outcomes. However, this approach introduces a significant risk: misaligned incentives. Search firms typically earn higher fees by placing external candidates, creating a financial bias against promoting internal talent. Additionally, some board members may favour these firms to maintain relationships that could benefit their own future board prospects, further compromising objectivity.
The consequences: Boards are swayed towards riskier external hires, overlooking internal candidates, despite research proving that internal candidates outperform external hires in more circumstances.
What to do instead: Engage neutral advisors, such as specialist CEO and leadership development experts, who prioritise developing internal talent pipelines over external placements. Use search firms to find external options but avoid trusting their assessment practices.
5. Misalignment with organisational strategy
CEO succession planning often fails when boards don’t align their selection criteria with the company’s long-term strategic direction. Whether it’s digital transformation, global expansion or market-disrupting technologies like AI, boards need to understand their organisation’s future challenges and ensure their next leader has the skills to navigate them.
The consequences: The board hires a CEO who excels on paper but lacks key skills to lead the company effectively.
What to do instead: Align success planning with strategy by creating a CEO success profile that defines the specific experiences, leadership capabilities, style and motivation that your organisation needs the ideal CEO of the future to have.
6. Insufficient board involvement
Even the most well-designed CEO succession plans can fail if the board isn’t actively engaged. Too often, boards delegate the process to committees or external partners, assuming that oversight alone will ensure a good outcome.
The consequences: Limited involvement means directors may miss critical insights into internal candidates’ potential or fail to challenge biased recommendations from search firms.
What to do instead: Effective succession planning requires active board participation through regular talent reviews, and direct interactions and development of potential successors.
By taking a proactive, strategic approach to succession planning, boards can reduce the risk of costly mis-hires and ensure leadership continuity and long-term organisational success.
