By Tony Featherstone
Few business leaders have had as much experience with CEO succession planning as Sir Ralph Norris FAICD.
In his three CEO roles, Norris was succeeded by an internal candidate who took the organisation to new heights. Under Norris, succession planning was central to the CEO role and the board had strong visibility of an orderly process.
As CEO of Commonwealth Bank of Australia (2005-2011), Norris was succeeded by Ian Narev, who was succeeded by Matt Comyn, another internal candidate who has led a new growth phase for CBA.
“I always sought to develop at least two successors who would do a better job than me when I left, and take the organisation forward,” 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 is rare. Many boards struggle with CEO succession planning even though it is integral to organisation risk management, value creation and corporate reputation.
A lack of reporting standards and shareholder engagement has made CEO succession planning an afterthought for some boards. Too few boards approach this issue with the same rigour and transparency as executive pay.
Data on succession planning is damning. Less than one in five boards were confident in their organisation’s internal CEO candidates, found BoardOutlook’s Q2 2025 Board Performance Market Insights report. The findings are based on responses from more than 1,000 directors globally.
Only 20% of directors said board oversight of succession planning was a strength. Only 18% 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 says board visibility of emerging talent in organisations is alarmingly low, describing it 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.”
For some boards, succession planning is hindered by defensive CEOs who do not develop potential replacements or sufficiently expose them to directors. For others, CEO succession planning is 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 former CEO of CBA, Air New Zealand and ASB Bank, he developed several internal CEO candidates. As a chairman and director of listed companies and philanthropic organisations, he has long experience in board oversight of succession planning and director/CEO interaction on this issue.
Norris currently chairs Pushpay Holdings, an NZ-founded software firm that builds digital tools for faith-based organisations, and Craigs Investment Partners, a leading NZ investment bank, 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 Key Performance Indicators and appropriately incentivise them on it. The CEO must drive the process and keep the board informed.”
The CEO is not doing their job, says Norris, 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 CBA, Norris asked key direct reports to present at board meetings and attend lunch with directors before the meeting. “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.”
Norris 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 that 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.”
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 long term, but the board must be satisfied that the person, often the Chief Financial Officer, is capable of running the firm and making quick decisions. You need to get that right before you can even think about CEO succession planning.”
Kovacs, an in-demand director, is a non-executive director of ASX-listed companies OFX, HUB24 and Magellan Financial Group, as well as Grapple, an emerging fintech, 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 board oversight of CEO succession planning. “The board must understand what the organisation’s talent looks like and how it changes over time. From there, directors can focus on potential internal CEO candidates and 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, says 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, there are ways for boards to increase time spent with internal CEO candidates to get to know them better.”
Kovacs says directors can spend time directly with CEO candidates in the workplace, on an individual basis. “Obviously, this must be in consultation with the CEO and Chair. There have been times when a CEO has been happy for me to share information with one of their reports and liaise with them directly on an issue. Directors can be proactive on this issue, provided they go through the correct channels.”
Boards should also seek qualitative data on CEO candidates, says Kovacs. “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.”
John Barrington, FAICD, AM, believes CEO succession planning is a “huge issue for boards” and one many 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 11 not-for-profit and medical-technology boards during a distinguished governance career. He is a previous recipient of the AICD NFP Director Award for Excellence.
Barrington 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 on succession planning.”
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.”
Barrington believes boards should begin discussing CEO succession planning in the first year of a CEO’s tenure. “It sounds early, but by about six months into the tenure, preliminary discussions between the Board and the CEO should begin. It’s never too early to talk about CEO succession planning.”
In-camera sessions, where a board discussion is closed to the executive team, should be held on the issue, says Barrington. “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. Given the sensitivity of this issue, boards sometimes need to discuss this issue without the CEO.”
Barrington says boards should also seek multiple data points on CEO candidates and monitor them over time. “360-degree feedback is valuable here. In addition to understanding what the CEO’s direct reports say about them, boards should understand 360-degree feedback for the next level of management, and what their direct reports say about them. As directors view and track this information, they get a sense of where the talent gaps exist and whether they are being addressed.”
Barrington favours using leadership coaches to help develop internal CEO candidates and provide independent advice to the board. “It’s beneficial for boards to use an experienced coach who has strong commercial acumen and understands organisation psychology. A good coach works with the next level of leadership, becomes a sounding board for them, and understands their professional-development needs. Within the bounds of confidentiality, the coach provides independent data to help the board assess candidates.”
Perhaps the biggest governance trap with CEO succession planning is a lack of strategic foresight, says Barrington, a former strategy consultant. “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, which might be very different. Boards should consider if CEO candidates have skills the organisation will need in the future, or are capable of acquiring them.”
Boards, says Barrington, should also understand how changing labour markets will affect CEO succession. “As people live longer, executives will have multiple careers. They won’t just move from one firm to another in their industry, but increasingly across industries. This will make it harder for organisations to retain key talent, but also present opportunities to recruit CEOs from other fields. CEO succession planning will become an even bigger governance issue over the coming decade, and something boards should be well prepared for now.”