Most directors in our survey are well versed in CEO succession: Almost 60% have been through two or more CEO selection processes; only 13% have never been involved in one. Despite this experience, many boards still encounter challenges with succession, suggesting that familiarity with the process does not necessarily translate into a smoother experience.
Many respondents pointed to the high stakes involved in CEO succession: Get it wrong, and you could be setting the company back years. It’s a major decision, and the impact — positive or negative — will be felt for a long time to come.
“You have to get it 100% right the first time,” one respondent wrote. “It’s the board’s most important job by far. You have to be organized well for it, use the proper tools and experts, and invest board and individual member time as required.”
And through all of this, the “right” leader will also depend on the company’s unique context — not just the internal state of affairs today, but also present-day market forces along with future uncertainty. The goal, one survey respondent wrote, is “having CEO succession align strongly with future goals, strategies and marketplace conditions. In other words, not hiring a CEO for what was, but instead a CEO for what needs to be.”
Directors are concerned about having ready internal candidates
A little more than 20% of respondents anticipate a CEO transition within 18 months; another 30% expect a CEO change within three years. Yet nearly the same percentage (45%) are concerned they won’t have at least one internal candidate ready when the time comes for that transition. That jumps to 66% when asked if they thought they would have two or more candidates ready. Their concerns may stem from past experience: 37% of respondents said they have delayed CEO transitions due to a lack of internal candidates. This data points to the importance of not just starting internal succession planning early, but regularly reviewing and adjusting the plan over time.
How confident are you that you will have ONE internal succession candidate ready to take the role when the current CEO transitions?
Percentages may not total 100% due to rounding.
According to the survey, the most common succession planning step taken by boards in the past 12 months was providing the board with direct exposure to potential internal successors, cited by 66% of respondents. Sixty percent (60%) have discussed the profile and criteria for the next CEO, and 58% have developed plans for possible successors across different timelines. Interestingly, only 49% of respondents say they have discussed emergency CEO succession planning — perhaps a reflection of the 12-month time frame, but also a possible indication that many boards are not regularly reviewing their plans.
In the last 12 months, what has your board and/or the relevant board committee done to address CEO succession planning?
| Had direct exposure to the possible internal successors |
66% |
| Discussed the profile and criteria for the next CEO |
59% |
| Developed succession plans for possible internal successors across multiple timelines (e.g., ready now, ready in 1–2 years, ready in 3–4 years) |
58% |
| Reviewed development plans for possible internal successors |
49% |
| Aligned on an emergency CEO succession plan |
49% |
| Discussed succession scenarios for different potential business conditions |
41% |
| Discussed ways to accelerate the development of possible internal successors |
39% |
| Reviewed information about possible external talent options (e.g, bench-marking, mapping, etc.) |
32% |
| Reviewed insights from formal analysis or assessments of possible internal successors |
27% |
| Delayed or extended the timeline for a CEO transition due to a challenging business context |
13% |
| None of the above |
8% |
| Other |
2% |
Percentages may not total 100% due to rounding.
Boards are struggling with how to effectively develop internal CEO candidates
What steps are you taking to accelerate the readiness of your possible internal successors?
| Executive coaching |
50% |
| Promotion to new roles to build capabilities or experiences |
46% |
| Mentorship by a board member |
38% |
| Targeted internal rotations to build capabilities or experiences |
32% |
| Executive training and development by an external firm or institution |
28% |
| Introductions to expand their external networks |
22% |
| Placements on external boards |
15% |
| Peer-to-peer networking groups |
14% |
| None of the above |
14% |
| Other |
2% |
Percentages may not total 100% due to rounding.
Despite the concerns about candidate readiness noted above, the survey yielded no strong consensus on how boards are developing and maturing internal candidates. Half of respondents say their companies provide executive coaching to possible successors; 46% promote top talent to new roles that broaden their experience base and build capabilities, and less than one-third (32%) are put on targeted internal rotations. About one in seven respondents (14%) of directors selected “none of the above.”
Meanwhile, only 38% of survey respondents said that internal candidates are mentored by a board member. While the sitting CEO and CHRO own much of the process of developing internal successors, boards play a major role as well, and directors in particular could play a unique role in advising rising internal candidates as they ascend the ranks. For example, a large industrial supply company found that connecting internal candidates with board members who have expertise in specific areas not only provided valuable guidance but also enhanced the board’s visibility among these executives.
A large number of open responses touched on the delicacy of internal candidacy — from developing strong prospects to ensuring team dynamics aren’t disrupted before and after a move is made. “It takes a committed board and CEO to start the process years before the change to assess and groom internal candidates,” one respondent said.
One concern that appeared in a couple of open-field responses: how to navigate situations where strong internal candidates are hesitant to take on the CEO job. One respondent said they had talented internal candidates, but that those people “don’t want the responsibility.” Another said that the strongest internal option “wants to slow down rather than taking on more.”
Boards could do more to support the new CEO’s transition
In your most recent experience, after the board selected the CEO, what steps did the board take to support the new CEO’s onboarding and transition?
| Work with the incoming CEO to align on clear three-month, six-month and one-year goals and expectations |
54% |
| Develop a robust onboarding plan for the incoming CEO at the board level |
51% |
| Clearly define and communicate role/expectations for the outgoing CEO during the transition |
48% |
| Have the search committee fully brief the board on the finalist, his/her unique strengths/weaknesses, fit and gaps for the role, and the rationale for his/her selection |
41% |
| Conduct a robust evaluation at 1 year (including measures beyond financial targets or operating metrics) |
36% |
| Clearly define and communicate role/expectations during transition for the board chair (or key board leader) |
34% |
| Conduct an interim review/feedback session at 6 months |
29% |
| Develop strategies for each director to build a relationship with the incoming CEO |
24% |
| Update the emergency CEO succession plans |
22% |
| Within the first year, review the board matrix and adjust director succession planning to complement the profile of the new CEO |
16% |
| Restart oversight work on CEO succession planning and the development of internal candidates |
15% |
| None of the above |
11% |
| Other |
5% |
Percentages may not total 100% due to rounding.
A succession process does not end with the naming of a new CEO. The board has an important role to play in supporting the new CEO in the months leading up to their start date, as well as throughout their early tenure in the role.
Yet when we asked respondents about the board’s role in CEO onboarding and transition, the picture was muddled. Slightly more than half (54%) of respondents say they work with the incoming CEO on setting near- and medium-term goals and outlining expectations; 51% have developed a robust onboarding plan for the incoming CEO. Less than a quarter of respondents say they updated emergency succession plans after a new CEO was selected — which runs counter to typical best practices. Surprisingly, 11% of directors even responded their boards took no support actions during the onboarding and transition period.
One result worth calling out: Only 48% of respondents say their boards clearly define and communicate the outgoing CEO’s future role at the company. The exiting leader may be the current face of the company — especially in founder-led situations. Our work has shown how approaching this topic with transparency, empathy and delicacy can help boards navigate the politics. One pulse survey respondent summarized it well: “You have to make sure the exiting CEO is prepared to get out of the way and fully support the incoming CEO.”
Boards and CEO succession planning: 3 key principles
Boards need to think differently about CEO succession planning, one of the most important activities they undertake. Our work points to three things for boards to keep in mind:
- Treat succession as an “always-on” process. CEO succession should be seen as more than just a one-time, far-away event. Even if the board believes it is many years away from needing to make a change, circumstances could always change. Preparing for change, from an emergency plan to the identification of potential successors, are must-dos for any board.
- Prepare for many scenarios. A solid succession planning process will generate high-quality options for multiple time horizons and different strategic scenarios. Boards should be ready for a multitude of options for every turn, so there is always someone who can step in, be it in an emergency, in the near term or in the long term.
- Clarify the board’s partnership with the CEO and CHRO. Succession processes can be complex, and the board, CEO and CHRO each have critical roles to play, and these roles shift over time. We often see a lack of clarity among these stakeholders as they launch, manage and govern a CEO succession program. Taking the time to clarify roles and expectations is a critical step in launching the governance program.
