CEO Succession: Why Most Companies Wait Too Long

CEO Succession: Why Most Companies Wait Too Long

I recently had an enlightening discussion with a client board about the challenges of CEO succession.

After 20 years in executive search, here's a truth I've learned: Most companies wait too long. By the time they call us, they need someone "right now"—and that's when mistakes happen. And they often overlook internal talent, rushing to look outside.

Most companies wait too long. By the time they call us, they need someone "right now"—and that's when mistakes happen.

Here's what I tell boards when they engage us for a search:

• Map your internal talent now. Don't wait until your CEO hints at retirement.

• Map external talent now. Stay informed about what's happening in the market.

• Have a strong talent strategy. If you don't, create or update one.

• Give rising stars real board exposure and real challenges. Let them handle tough questions, new markets, turnarounds, and crisis management.

• Run an external search, but approach it with an open mind. Use it to benchmark, not just to replace.

• Then – and only then - gather all the data and make the right decision.

And yes, even as a headhunter, I'm saying "look inside first." We've seen what works. We actually prefer working with boards who have a long-term view, an open mind, and strong internal candidates. It leads to better decisions, smoother transitions, and lasting placements.

Our most successful projects? When clients reach out 2 years ahead of time. Our toughest? "Our CEO just quit. We need someone next month."

For some hard data, I recommend reading the HBR article, "The High Cost of Poor Succession Planning" (May-June 2021). It makes a compelling case for internal candidates in CEO succession processes. I'm not saying they're always the answer—but in some cases, they are.

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ABOUT THE AUTHOR

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