CEO succession is becoming one of the defining governance tests of the moment. As boards confront faster-moving markets, geopolitical uncertainty and relentless technological change, leadership changes are arriving more often and with less room for error. Russell Reynolds Associates said global CEO departures at the largest listed companies hit a record in 2025, while the average tenure of outgoing chiefs has continued to fall.

That shift is not simply a sign of burnout at the top. Russell Reynolds said the first half of 2025 brought the lowest level of CEO appointments in eight years, suggesting caution among boards as they weighed regulation, trade policy and wider uncertainty. In the FTSE 100, the firm noted that all new chiefs were first-time internal appointments, underscoring how heavily boards are leaning on succession pipelines they already control.

The shrinking runway for CEOs has sharpened the stakes of choosing the right successor. IESE professor Guido Stein argues that turnover often reflects a company’s culture as much as the demands of the job, warning that a focus on short-term results tends to produce shorter-lived leaders. Jordi Canals, who heads IESE’s Centre for Corporate Governance, says shorter mandates reflect mounting technological and geopolitical disruption, while Josep Tàpies says the aim of a handover should be continuity of purpose alongside renewal.

The risks of getting it wrong are substantial. McKinsey research cited by IESE suggests that between 27% and 46% of CEO changes are judged failures or disappointments within two years. That helps explain why boards are being urged to treat succession as a long-term discipline rather than a last-minute decision. A poor appointment can unsettle earnings, weaken morale and damage reputation, while the right one can reposition a company for its next phase.

Spencer Stuart partner Arturo Llopis says adaptation is among the hardest parts of any senior appointment, and that boards should support new leaders through their first months in office. His advice is to define the role clearly, identify internal contenders early, build their capabilities, compare them with outside options and then give the chosen chief a structured acceleration period. BCG has similarly found that most large companies still prefer internal candidates, even as external appointments have risen, suggesting a market that is balancing continuity against the need for change.

The broader message is that succession planning is no longer just a boardroom housekeeping task. It is a strategic capability that affects executives throughout the organisation. Companies that invest early in leadership development and governance readiness are likely to be better placed to navigate disruption, preserve institutional knowledge and avoid being caught flat-footed when the next transition arrives.

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Source: Noah Wire Services