Bad Succession Planning Is a Board-Level Risk

Bad Succession Planning Is A Board-Level Risk

I just came across McKinsey's HR Monitor 2025.

Lots of interesting insights, but one thing absolutely jumped out at me – a governance blind spot that should be keeping supervisory board chairs awake at night.

Only 32% of roles reporting directly to CEOs have succession plans. For other critical positions, it's even worse at 28%. 

Wow - this isn't just an HR problem. This is a board-level risk that could sink companies.

German Corporate Governance Code explicitly requires boards to ensure "long-term succession planning." Similar requirements exist across Europe. Yet many boards treat succession as a tick-box exercise rather than strategic imperative.

Many boards treat succession as a tick-box exercise rather than strategic imperative. This is a board-level risk that could sink companies.

Imagine the Following Scenarios

• Imagine your CTO has an accident. No succession plan. A large-scale digital transformation is stalling. Competitors are gaining ground. Stock price? You can imagine.

• Or your CEO gets poached during a major acquisition. No Plan B. The deal collapses. 

• Or your CFO suddenly departs amid an audit.

And the list goes on an on.

The reality check every board needs

Think about your top 10 roles right now. If any of them walked out tomorrow, how screwed would you be? And whom would you call in? And I don't mean just having a resume pile – but whom do you have on hand who actually knows your culture, understands your strategy, and can hit the ground running?

Think about your top 10 roles right now. If any of them walked out tomorrow, how screwed would you be? And whom would you call in?

Three questions every supervisory board should ask themselves

• Emergency mode: Who takes over if your CEO has a heart attack next week?

• Planned transition: When your CFO retires in 18 months, who's ready?

• Future skills: Who leads your AI transformation when current leadership can't spell "algorithm"?

The McKinsey data also shows only 12% of companies plan beyond 3 years – again something I find a dangerous gap – we are talking about the people who will shape your company’s future.

Investors are watching this stuff now. Poor succession planning = weak governance = lower valuations.

My strong recommendation?

• Stop treating succession like an annual PowerPoint exercise. Start thinking like a talent scout.

• Do an in-depth annual succession review – not just the CEO, but at least the top 15 roles.

• Don’t just fill roles – build pipelines.

• Keep a live map of external candidates (not just when you need them) and maintain relationships.

• Give your internal high-potentials real stretch assignments, coaching, clear development paths.

• Know what skills you'll need in 5 years, not just today.

• Test your emergency protocols before you need them.

You wouldn't run a company without insurance. Why run one without succession readiness?

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ABOUT THE AUTHOR

• Marion Heil is the founder and managing director of Board+CEO Advisors. She is based in Vienna.