How the Best Boards Approach CEO Succession Planning | Harvard Law School Forum on Corporate Governance

With the profound changes in the workplace and business environment, boards are likely to focus more on CEO succession in a post-pandemic environment. A few reasons driving this renewed focus include 1) In 2020, 56 S&P 500 CEOs resigned— with 20% doing so under pressure, up from 13% the year before. 2) The average CEO tenure continues to fall, 3) The skills required for a CEO in a post-pandemic environment have changed and will continue to evolve. This article identifies seven leading practices in CEO succession planning. One practice speaks to the importance of having a strong internal pipeline of CEO-level candidates. And while this practice isn’t new, firms appear to fall short as the number of S&P 500 firms that have replaced their CEOs with an external hire has continued to rise for the last five years. The authors suggest having a formal internal succession program that provides first-hand experiences in the CEO’s function, including board interaction. Whether for CEO or C-suite role succession, a few questions for those responsible for succession planning in their firms: What percentage of these roles could TRULY be filled with internal talent in your company? In what timeframe could they be ready to assume these roles? What are the vital few development activities that would accelerate their readiness? If internal succession is lacking, what is your strategy for external succession?