Time for boards to step up on succession

Boards have made great strides on pay in recent years. Executive remuneration is now scrutinised, modelled, linked to strategy and - if we're honest - generally well-defended in the boardroom.

Succession planning? Not so much.

BoardOutlook's latest quarterly survey found fewer than one in five boards were confident in their pipeline of internal CEO candidates. The same number said board visibility of talent was a strength. Which is another way of saying most boards don't really know who's waiting in the wings - or if anyone is.

This isn't a small data set. These insights come from more than 100 organisations globally. It paints a clear picture: when it comes to future leaders, most boards are hoping for the best… and planning for lunch.

It's not that directors don't care. It's that they've been conditioned - by decades of proxy adviser fire drills and shareholder showdowns - to focus on pay. There are frameworks. There are standards. Pay governance has structure.

Succession planning? That's usually a PowerPoint in HR and a polite chat once a year about who "might be ready in a few years, if we stretch them." If pay is a spreadsheet, succession is a feeling.

But here's the kicker: 53% of directors said their board was strong at aligning remuneration with strategy and KPIs - the highest-rated strength. Only 18% said the same about visibility into talent and future CEOs. That's a yawning gap, and a dangerous one.

Three reasons explain it:

1. Pay has rules; people have mysteries. Governance standards and investor focus make pay hard to ignore. Succession, meanwhile, often disappears into HR, where it's shrouded in potential and promise - but rarely pulled into the harsh light of board scrutiny.
2. Remuneration gets investment. Boards spend time and money designing pay frameworks. They don't always do the same for leadership development. Because pay is public and succession feels… awkward.
3. All shareholders ask about pay. They don't ask as much about your next CEO - until you don't have one.

To be clear, this isn't a shot at directors. Succession planning is messy, emotional work. It requires judgment, time, and the courage to ask questions that don't come with easy answers. It's much easier to argue about TSR modifiers than to look someone in the eye and ask if they're really ready to lead.

But leadership development is not a luxury. It's a fiduciary duty. If your board can model out next year's STI down to the decimal, but can't name two credible internal successors to the CEO, there's a problem.

So here's the gentle provocation. Start with four questions:

• Are we actually developing leaders, or just handing out bonuses?
• Would we back any of our internal candidates if the CEO quit tomorrow?
• Are we applying the same succession standards to ourselves as we expect of management?
• Are we measuring the health of our talent pipeline with the same rigour we bring to finance and compensation?

If the answers are uncomfortable, that's good. That's the work.

Because in a decade defined by AI, geopolitical chaos and generational turnover, the organisations that win won't just be the best-paid. They'll be the best-led.