When news breaks of a CEO succession, much of the attention is given to the new leader and how they will change the company. But new research shows that the leave-taking process of the outgoing chief executive is often mishandled, with negative impacts on succession and the organization. Rebecca Slan Jerusalim, an executive director at Russell Reynolds Associates, and Navio Kwok, a leadership advisor at RRA, say that boards are often surprised when a CEO gives notice, and they often make that person feel excluded during the handoff process. The researchers share stories from the front lines about CEO psychology, best practices for outgoing leaders and their boards, and broader lessons for effective transitions. Jerusalim and Kwok wrote the HBR article “The Vital Role of the Outgoing CEO.”
Key episode topics include: leadership transitions, succession planning, leadership, managing uncertainty, corporate communications, boards
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When a CEO steps down, it can trigger a domino effect of chaos. Boards—often caught off guard—have to jumpstart the search for a successor. And in the process, they sometimes exclude the departing CEO from the search or transition—leading to a loss of institutional knowledge and broken trust. But it doesn’t have to be this way.
Leadership advisors Rebecca Slan Jerusalim and Navio Kwok say the relationship between a board and CEO can make or break the changing of the guard. They spoke to Curt Nickisch on HBR IdeaCast in 2024 about best practices for CEO transitions.
CURT NICKISCH: Rebecca and Navio, welcome.
REBECCA SLAN JERUSALIM: Thank you. We’re thrilled to be here.
NAVIO KWOK: Thank you. Thanks for having us.
CURT NICKISCH: Obviously, the CEO transition is super important to a company. Is that importance something that means that people really give it a lot of attention and do it right, or that there’s so much pressure to do it right that people kind of fumble it as they try to manage it well?
REBECCA SLAN JERUSALIM: Well, I would say there’s tons of work out there looking at the succession process, what parts of the succession process are really critical, and particularly even around CEO succession. What is the right step and cadence to this? What is the board’s involvement? What role does the incoming CEO play?
And what hasn’t been studied or looked at or really understood is the experience of that person who’s so pivotal to the organization; the person who has been at the helm of the organization, setting the strategy, managing the strategy, creating the organizational culture. How does that person’s experience in transitioning out of the role really impact the organization, the succession experience, as we are really very much focused on the incoming CEO?
NAVIO KWOK: I think we often also see that there’s a bit of this tension between how urgent something is and how important it needs to be. And so CEO succession for a board and possibly the top team as well is something that is extremely important, but not very urgent, because these decisions tend to happen well in advance unless there was an emergency situation. And so what a board will do is they’re going to focus on the day-to-day, and naturally, non-urgent important things are always going to get pushed off, and I would bucket succession in that category, and as a result, it’s not always top of mind.
CURT NICKISCH: And then it becomes top of mind very quickly often. In your research, you found that 83% of CEO successions were initiated by the CEO themselves, which kind of surprised me a little bit. You kind of feel like these people are supposed to be in the hot seat and if they’re not performing, they’re out and we need to get somebody else in. And really, it’s kind of mostly largely on their timelines.
NAVIO KWOK: Yeah. I had seen some research. I think they plotted the performance trajectories of CEOs, those that were performing well and those that weren’t, and then they kind of looked at whether or not they initiated succession or if they were forced out, and actually, that isn’t a strong predictor. So in recent years, the performance of the CEO doesn’t always have that direct contribution to when they step down. And so I think that plays into why mostly, we found in our sample, it’s CEO initiated and it aligns to what you can gather from public CEO data on at least why CEOs or why boards reference CEOs stepping down is it’s a retirement decision.
REBECCA SLAN JERUSALIM: I would say we were also quite surprised at the number of CEOs who self-initiated the succession. I mean, if you go through any kind of board governance training, you really know that succession is supposed to be really top of mind and not a last minute decision in and around who will be the next successor, but this should be a real process around identifying early, building up the capabilities of internal successors and running through different scenarios to be able to put the right person in the role. And very much a good portion of our sample, and you referenced 83%, many of them self-initiated, and what we found was also fascinating was that they really surprised the board.
CURT NICKISCH: Yeah. You had a story in the article of a board that met eight times to try to convince the CEO to stay when they needed to be spending that time on not trying to arm twist an unwilling executive to be unhappy longer, but go out and find the replacement.
REBECCA SLAN JERUSALIM: And some of the reasons that CEOs were initiating the succession were reasons that the board could have and should have had better insight into long before the CEO made that declaration, so things like we talk about temporal reasons, age and tenure in role. Those are easy things that a board can have regular ongoing conversations with the CEO about.
A couple of the other reasons CEOs announced their readiness for succession were really around, they saw that there were future needs of the organization that they couldn’t necessarily or shouldn’t necessarily be the ones delivering on. And they also recognized that they could potentially be a blocker to succession and that there were people ready or really should be in the process of being ready for that CEO role, and they didn’t want to block their opportunity.
And so these are two things that really stood out to us because a lot of what has been written about CEO succession speaks to the ego that’s involved in being at the top of the house and not wanting to relinquish that seat for others. And in actual fact, there were some really important and different ideas that came through these conversations that boards should really be talking to the CEOs about and not worried to the same extent that it is purely ego-driven or a hold on power that is keeping these CEOs in place.
CURT NICKISCH: Yeah, no, I suppose stories of people being CEOs, being forced out, burning it all as they go, right, those are big things that scare boards and scare a lot of people, but it’s probably few and far between when it’s really somebody who just says, “It’s time. I’m getting tired,” right?
REBECCA SLAN JERUSALIM: They probably make the news more.
CURT NICKISCH: You’ve outlined the ways that they should be more proactive before this news comes. Once the news comes, what mistakes do you see boards make at that point?
NAVIO KWOK: One that comes out through that research is the level of CEOs’ involvement in their own succession process. So in our research, we identified five things that they did all the way from just canvassing for candidates all the way to onboarding. And so if we leave aside onboarding, which most CEOs did have some degree of involvement there, we found nearly one in four CEOs were excluded from that process entirely. You know, leave it to us.
We didn’t use this language in our paper, but it reminds me of the RACI framework when it comes to project management. You’ve got responsible, accountable, consulted and informed, and the board is accountable for succession because the board will be there when the old CEO steps down and new one comes in, but who’s responsible? I think we would say that it should be the outgoing CEO to some extent – more than one in four being excluded entirely. And there’s all these reasons we found why it’s very important actually for the organization.
CURT NICKISCH: Well, it just stands to reason for any job, right? We’ve all left jobs and known that ideally when you leave a job, it’s a place that’s better than it was before you arrived. And it’s not just the hours of your time doing something that can be replaced, that it’s actually a stronger organization after you leave, but I don’t know, if you overlap with the person who’s replacing you to help train them, that that’s a very positive thing for an organization and it’s almost the same idea for CEOs, it’s just that it’s a lot trickier when you can only have one person in charge, but you go from one person to the next, so how do you handle that transition? So what do you tell CEOs that are in this position? What’s your advice for them?
REBECCA SLAN JERUSALIM: Listen, ultimately, when done right, there is a role for them to play in the succession process, but that they do also have to recognize that they aren’t going to have full control. The control here will ebb and flow throughout the process. And for them, what the connection is that the control piece, we likened it to or we connected it to mattering, that they are so used to having such a tremendous impact on every decision that the organization makes, that not having the ability to have some control or impact here actually connects to their ability to feel like they matter, like they have value, like they have input. And when they’re not given that kind of opportunity to weigh in, there’s a deeper kind of psychological need in and around wanting to show that they still have some value here to add.
CURT NICKISCH: It’s kind of an interesting dance, right? Should they offer information? Should they wait until they’re asked? What is the protocol there?
REBECCA SLAN JERUSALIM: Much of that has to do with how they operate with the board in any other matter. One of the strongest findings that we found is the connection and the strength of relationships between the CEOs and boards were predictive, and I say predictive, predictive, air quotes, this was a qualitative study, not a causative exploration, but the strength of the relationship between the boards and the CEOs really impacted how the overall experience of the CEOs in the succession process.
NAVIO KWOK: It’s like when you want to ask for a favor from someone in your network, it’s much more helpful and productive if you’ve had an existing relationship with them and then the request comes. But sometimes we have friends in our network where they only come to us when they need something. And that to me, what might be akin to a CEO board relationship, which is there’s quite a bit of a chasm between it, and so they’re only comm