A board announces that it has a succession plan. Pressed on what that means, it produces a name, a slide, sometimes an envelope to be opened if the chief executive is hit by a bus. The name has never run a crisis, sat with the biggest customers, or been told, in plain terms, that the job is theirs. The plan exists as a document. It has never once behaved like a capability.
That gap between the document and the capability is where succession quietly fails. Boards treat naming a successor as the work, when naming is the easy part. The work is the years of exposure, the staged handoffs of real authority, the honest reckoning with whether the person can carry weight the incumbent has been carrying invisibly for a decade.
A change is a cost before it is anything else
The most sober finding in the succession literature is deflating for anyone who believes the right hire fixes everything. A meta-analysis by Schepker and colleagues, pooling 60 samples and 13,578 CEO successions, found that a change of chief executive hurts performance in the short term and has no significant direct effect on the long term. The transition itself is a shock the organization has to absorb. It does not, on its own, bend the future up or down.
That should change what a board optimizes for. If the act of switching is a guaranteed cost and an uncertain benefit, then the case for the change has to be strong, and the preparation has to be strong enough to shrink the cost. A plan that only names a person has done nothing about the shock. It has scheduled the shock and called the scheduling a solution.
What actually protects the long run
The same body of work points to what does matter: not the naming but the readiness, and the fit between the successor and the situation. Schepker's meta-analysis found that internal successors tend to give continuity while external hires bring more strategic change, and that the long-run effect runs through that change, not through the swap itself. An older study by Zhang and Rajagopalan, covering 204 successions, is more pointed still: relay successions, where an heir is designated and genuinely prepared before taking over, produced better post-succession performance, and the advantage was largest exactly when it mattered most, when prior performance was weak and the road ahead was unstable.
Preparation is the variable a board controls. It cannot control the market the new leader inherits. It can control whether that leader has already made hard decisions with real consequences, has relationships that predate the title, and has been tested against dissent rather than applause.
There is a second variable hiding inside the same finding. Because the swap itself is a cost, boards should be slow to force one they do not need. Schepker's meta-analysis found no reliable link between whether a departure was forced or voluntary and subsequent performance, which cuts against the idea that a dramatic ouster is inherently corrective. The value is in the fit of who comes next and how ready they are, not in the theater of pushing someone out.
The certification reflex
Boards reach for theater because theater is legible. It can be shown to shareholders, auditors, the press. Ricardo Semler tells of serving as a judge for a best-employer prize, the kind of award that comes with a plaque. The winner was a bank where the tellers were not allowed to sit down, and where a vice-president served kombucha to the visiting jury. The plaque said one thing; the tellers' chairs said another. Culture certifications, as he tells it, are bought: the company pays the fee, runs its own survey, and hangs the result on the wall.
Succession planning invites the same reflex. The named successor, the binder, the tabletop exercise once a year, all of it can be produced on demand to prove the box is ticked. None of it proves the successor can lead. A board serious about succession would spend less energy on the artifact and more on the uncomfortable questions: has this person owned a decision that could have cost us dearly, and lived with the result? Have we let them be wrong in public and recover? Have we told them the truth about the ones who did not make the cut, and why?
A succession plan that has never transferred real authority is a rehearsal where nobody has learned their lines. The performance looks complete right up until the night it is needed.
Sources
- Schepker, Kim, Patel, Thatcher & Campion (2017). CEO Succession, Strategic Change, and Post-Succession Performance: A Meta-Analysis. Across 60 samples and 13,578 successions, a change of CEO hurts short-term performance and has no significant direct long-term effect; internal successors give continuity, external ones bring more strategic change. https://doi.org/10.1016/j.leaqua.2017.03.001
- Zhang & Rajagopalan (2004). When the Known Devil Is Better Than an Unknown God: Relay CEO Successions. In 204 successions, relay (a designated, prepared heir) produced better post-succession performance, especially when prior performance was weak and later instability high. https://journals.aom.org/doi/10.5465/20159598
- Meindl, Ehrlich & Dukerich (1985). The Romance of Leadership. People over-attribute organizational outcomes to the leader; the same executive is judged more charismatic when the firm does well. https://doi.org/10.2307/2392813