CEO succession planning: Where internal candidates go wrong—and how CEOs and boards can get them right

In 2025, 63% of CEOs appointed at public companies in major markets globally were internal candidates. This trend has held broadly steady for the past seven years, reflecting a strong and persistent preference for insiders when it comes to the top job. In uncertain times, boards often favor candidates who understand the business deeply and can provide continuity within an ever-changing operating environment.¹ It’s also a strong signal that the organization’s fundamentals, culture, and internal mobility are in good health.

Yet the process for securing those advantages can create risks when succession planning is mishandled. And the risks can destabilize organizations for long periods of time—through anxious leadership teams, executives more focused on winning the top job than performing their current roles, internal factions forming around favorites, questions about fairness, and overlooked leaders who disengage or leave altogether. In our experience, this kind of fallout is surprisingly common across organizations of all sizes and ownership types.

While there is no single right succession planning process, boards and incumbent CEOs can dramatically improve outcomes by focusing on three interdependent dimensions: timing, transparency, and communication.

Getting the timing right: Quiet and hot phases

The board’s appointment of the next CEO should be a top priority, yet timing—when to plan, talk, and decide—receives too little attention. It’s helpful to think of effective internal succession as a multi-year journey that spans two broad stages: a quiet phase and a hot phase.

The quiet phase, led by the current CEO at many companies, can begin years before their departure. Typically, we believe it should start on their first day. During this period, the CEO keeps the board informed, provides occasional high-level updates to stakeholders and regulators, and seeks the advice of trusted advisors. The focus here is on systematically identifying and developing internal candidates, and sometimes intermittent external benchmarking—but no explicit discussions or searches.

The hot phase is more akin to active recruitment, typically beginning when the CEO’s departure is roughly two years out. At this stage, boards should begin to be more directly involved in—and ideally drive—the succession process. The current CEO and board have active discussions with internal and external candidates,² and formal evaluation, referencing, and interview processes become more visible. The transition between these phases is especially delicate and often determines the effectiveness of the process. Naming internal candidates too early, for example, can trigger a multi-year race among critical team members. At its worst, this can distract leaders and even weaken financial performance. Wait too long, however, and the board risks compressing the hot phase into a rushed exercise, limiting its ability to explore all the alternatives thoroughly.

Calibrating transparency: Enough, but not too much

Many CEOs and boards assume that transparency eases succession—and in general, transparency with shareholders, regulators (when relevant), candidates, and employees is crucial. For public companies, transparency is a legal obligation with disclosure regulations dictating what information must be shared and when.

However, in the quiet phase, too much transparency can backfire. Announcing candidates during the quiet phase can complicate their authority, invite unhelpful scrutiny, and fuel gossip. It can also inadvertently signal to others that they are not in the running, harming morale and even retention.

Through our work, we’ve seen prolonged succession contests damage organizations. For example, in one case, two long-known internal contenders—announced too early in the process—turned the process into a race that deeply polarized the organization and left the new CEO with a divided leadership bench. The challenge for boards and CEOs is to maintain an honest, ongoing conversation about future leadership without letting the discussion become a destabilizing force.

One effective way to strike this balance is to fold assessments, coaching, and stretch assignments under the umbrella of ongoing leadership development rather than explicitly branding them as succession-related.³ This allows candidates to be primed for the top job without the distractions associated with a CEO race.

Disclosure regulations should provide the starting point for board conversations around transparency wherever they are relevant; they set out the legal minimum requirements. But for all boards, thoughtful navigation on how transparent to be, with whom and at what point in the journey, is essential for maintaining trust within the organization.