SYDNEY--(BUSINESS WIRE)--May 14, 2015--
Commencing the process of CEO succession, without first agreeing on the
strategy and market factors that impact the role, is the highest risk to
successful CEO succession, according to a survey of prominent business
leaders in Australia and New Zealand. Korn Ferry (NYSE:KFY), the
preeminent authority on leadership and talent, interviewed and surveyed
key players in CEO succession to identify the greatest risks when
replacing a CEO.
The survey also indicated that starting the process too late was the
second highest risk and involving the current CEO in choosing their
successor was the third highest risk.
Korn Ferry’s Executive Chairman, Australasia, Katie Lahey, said:
“Securing a smooth CEO succession is more than good governance; it makes
sound business sense, for news of a departing CEO often impacts a
The report revealed that many chairmen keep two lists of names: one with
potential CEO successors and the second of people who could be an
interim CEO or a ‘safe pair of hands.’ Being identified as the ‘safe
pair of hands’ is not necessarily a passport to the top job, as that
person may be someone who can maintain the status quo but no more. When
boards want a change agent, they are just as likely to look outside the
company for their next CEO.
“This was an interesting development which those who are in the CEO
succession pipeline need to consider. Are they contenders for the top
job, or seat warmers for the next CEO?” said Ms. Lahey.
The relationship between the chairman and the CEO was identified as both
the strongest or weakest link in CEO succession planning. “It is a
highly nuanced undertaking where the personalities of two key
individuals – the chairman and the incumbent CEO – may determine whether
this risky business has a smooth path to transition,” Ms. Lahey added.
Korn Ferry advises companies to start a search for a CEO by first
assessing the risk that surrounds the process. “An experienced board
will identify risks in CEO succession early, and use their risk
assessment to guide and anchor the process. Risk can derail a
succession. However, CEO succession viewed and managed through a risk
framework will be stronger,” said Ms. Lahey.
The key success factor of a smooth CEO succession is alignment between
all parties involved in the process. In particular, the board must be
aligned on the future strategy of the company. With every slippage in
alignment, risk increases.
An unplanned or poorly executed CEO exit coupled with a clumsy
replacement process may result in further loss of executive talent,
diminished shareholder value, a drop in market confidence and lasting
Note to editors
Korn Ferry conducted interviews with: Yasmin Allen, Gordon Cairns,
Antony Carter, John Durie, Dr. Robert Every, Ahmed Fahour, David Gonski,
Belinda Hutchinson, Brian Jamieson, John Judge, Dr. Helen Nugent,
Michael Wilkins, Joan Withers.
In this report, The Risky Business of CEO Succession, Korn Ferry spoke
to 13 business leaders at the front line of CEO succession in Australia
and New Zealand, and others who influence the process. Interviewees
selected their top risks from a list of 14 nominated by Korn Ferry, or
they identified other risks, discussing the issues, challenges and
opportunities inherent in each. We also asked another 15 key players,
most who attended a boardroom discussion on CEO succession in Korn
Ferry’s Sydney office, to nominate their top risks. Long form interviews
with 13 business leaders are included in the report.
About Korn Ferry
Korn Ferry is the preeminent authority on leadership and talent. For
nearly half a century, clients have trusted us to recruit world-class
leaders. Today, we are their partner in designing organizational
strategy and developing their people to achieve unimaginable success.
For more information, visit www.kornferry.com.
Source: Korn Ferry
Kerry Little, +61 2 9006 3432
+61(0) 402 013 224