CEO succession can make or break a company’s future. Yet a new governance study ranks it as the weakest board capability. So what separates boards that plan well from those that don’t?
Few business leaders have had as much experience with CEO succession planning as Sir Ralph Norris. In CEO roles with CBA, Air New Zealand and ASB Bank, Norris was followed by an internal candidate who took the organisation forward. Under Norris, succession planning was central to the CEO role and the board had strong visibility of an orderly process.
“I always sought to develop at least two successors who would do a better job than me when I left,” says Norris. “My job was to ensure the board had a good feel for internal CEO candidates and was comfortable with the process used to identify, assess and develop them.”
Norris’ approach to succession planning can be rare. Some boards struggle with CEO succession planning even though it is integral to organisation risk management, value creation and corporate reputation.
Data on succession planning is damning. Less than one in five boards were confident in their organisation’s internal CEO candidates, according to BoardOutlook’s Q2 2025 Board Performance Market Insights report. The findings are based on responses from more than 1000 directors globally. Only 20 per cent of directors said board oversight of succession planning was a strength. Only 18 per cent said their board had strong visibility of their organisation’s talent pipeline or internal CEO candidates. Tellingly, the highest-rated governance capability in the data was linking remuneration to strategy. The lowest? Talent and succession.
BoardOutlook CEO Steve Pell describes board visibility of emerging talent in organisations as a “governance blind spot hiding in plain sight”.
“Succession planning just isn’t embedded as a strategic priority in many organisations, despite CEO selection being one of the most consequential decisions a board ever makes,” he says.
Role of the CEO
For some boards, succession planning can be hindered by defensive CEOs who do not develop potential replacements or sufficiently expose them to directors. For others, CEO succession planning can be limited by poor governance processes or directors afraid to put uncomfortable questions to the CEO.
Norris has seen this issue from both sides. As a chair or director of both listed and philanthropic organisations, he has long experience in board oversight of succession planning — and the director-CEO interaction around it.
He currently chairs software firm Pushpay Holdings and Craigs Investment Partners, in addition to his philanthropic governance roles.
“CEO succession planning starts with the chair,” says Norris. “The board must choose a CEO who understands the importance of succession planning, make it part of the CEO’s KPIs and appropriately incentivise them on it. The CEO must drive the process and keep the board informed.”
The CEO is not doing their job, he says, if the board has low confidence in the organisation’s talent pipeline or internal CEO candidates. “The CEO must provide the board with at least a few high-quality internal CEO options, discuss succession planning early in their tenure and work with the board on succession in an open and interactive manner.”
At the Commonwealth Bank, Norris asked key direct reports to present at board meetings.
“I’d get one of my team to present their part of the bank’s strategic review to the board. That helped with their development and gave the board a chance to see them in action.”
He also encouraged key reports to interact with the investment community. “I ensured the people who ran the bank’s business units could meet analysts, so the market had a sense of potential CEO successors and the talent in our organisation.”
Norris used an external coach at CBA to work with internal CEO candidates on leadership development, helping to identify and address skill gaps.
“We had a very good sense of how our internal CEO candidates were progressing and if we could help them develop through executive courses.”
Talent mapping
Cathy Kovacs FAICD says the starting point for boards with CEO succession planning is understanding their organisation’s leadership capabilities in an emergency.
“If something unexpectedly happens to the CEO, the board must be confident in the caretaker CEO. They might not be in the role for the long term, but the board must be satisfied that the person, who is often the CFO, is capable of running the firm and making quick decisions. You need to get that right before you can even start to think about CEO succession planning.”
Kovacs is a non-executive director of ASX-listed financial services platforms OFX and HUB24, and Magellan Financial Group, as well as emerging fintech Grapple and the Universities Admissions Centre (UAC).
She says directors should also monitor their organisation’s talent-mapping processes and leadership-development strategy as part of the board’s oversight of CEO succession planning.
“The board must understand what the organisation’s talent looks like and how it changes over time. From there, it can focus on potential internal CEO candidates and [deciding] who can grow into the CEO role.”
Boards should spend more time with internal CEO candidates, says Kovacs.
“I really like it when a CEO’s direct report presents to the board. It gives directors a chance to see how a potential CEO successor thinks and communicates. It’s also an opportunity for that person to get a sense of the board’s thinking on issues and to become more familiar with executive-board interaction.”
Organisations can plan more opportunities for boards and CEO candidates to interact, according to Kovacs.
“Every board is different. For boards seeking greater visibility on internal CEO candidates, the interaction could be at a board meeting, board lunch, dinner, strategy off-site, or site visit. The point is that there are ways for boards to increase time spent with internal CEO candidates to get to know them better.”
Boards should also seek qualitative data on CEO candidates, she says.
“Directors can use staff surveys to corroborate views on high-performing areas and the influence of particular managers, and also to identify potential issues in leadership styles. More data points are important, but boards are ultimately most influenced on succession planning by the CEO’s opinion of internal candidates. By understanding and monitoring the organisation’s leadership succession processes, directors can better assess the CEO’s view.”
Data-driven approach
John Barrington AM FAICD believes CEO succession planning is an issue many boards struggle with. “I’m not surprised by data showing four out of five boards believe they have low visibility of their organisation’s talent pipeline or lack confidence in internal CEO candidates,” he says. “That matches governance reality for many boards.”
Barrington, deputy chair of the National Portrait Gallery of Australia, has served on many NFP and medical technology boards. He is a previous recipient of the AICD Director Award for Excellence in the NFP Sector.
He experienced a difficult CEO transition event on a previous board. “There was active resistance to succession planning. It can be difficult for boards when the CEO is not engaged in identifying and developing internal CEO candidates. It’s too important an issue for boards to tolerate CEO complacency or defensiveness.”
Like other directors interviewed, Barrington believes boards should use meetings and other events to assess CEO candidates. But he cautions against putting too much weight on brief interactions with the executive team, instead preferring a data-driven approach to forming opinions over a longer period. “The key is a structured succession-planning process,” he says. “As chair, I always put CEO succession planning on the agenda, believing it was a key responsibility for the full board, not only the nominations committee. Oversight of CEO succession planning became a regular part of the board’s activity.”
Plan ahead
Barrington believes in sooner, not later. “It sounds early, but preliminary discussions between the board and CEO should begin six months into the tenure. It’s never too early to talk about CEO succession planning.”
He advocates in-camera sessions where board discussion is closed to the executive team. “I made succession planning a regular part of in-camera sessions for boards I chaired and ensured the CEO knew that was being discussed. It became business as usual for the board.”
He says boards should seek multiple data points on CEO candidates and monitor them over time. Leadership coaches can also be used to help develop internal CEO candidates and provide independent advice to the board.
The biggest governance trap with CEO succession planning is a lack of strategic foresight, says Barrington. “Too few boards consider the organisation’s long-term leadership needs. They focus on skills needed today, rather than those required in five or 10 years.”
Boards should also understand how changing labour markets might affect CEO succession.
“As people live longer, executives will have multiple careers,” says Barrington. “Succession planning will become an even bigger governance issue over the coming decade. It is something boards should be well-prepared for now.”
This article first appeared as 'Line of succession' in the December 2025/January 2026 Issue of Company Director Magazine.
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