Inside the high-stakes transformation of CEO succession planning

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CEO churn has been accelerating and remains high as it becomes a defining feature of modern corporate life. Just last week, Walmart $WMT CEO Doug McMillon announced his retirement after more than a decade leading the retail giant.

Part of this churn is due to the old guard aging into retirement. Another part is investor activism triggering more resignations and firings. And then there’s “disruption fatigue” affecting everyone up and down the corporate and investment food chain. The pandemic reshaped how many companies operate, work teams are more geographically scattered than ever, the political landscape is as volatile and unpredictable as it has ever been, and emerging AI technology threatens to change almost everything in years ahead.

And while all of this is happening, corporate boards are trying to maximize stability and strengthen succession planning in uncertain times.

“Now more than ever, boards are recognizing the need for proactive CEO succession planning,” said Deb Rubin, senior partner and head of CEO and Board Services at the consulting firm RHR International.

According to new data from leadership advisory firm Russell Reynolds Associates (RRA), 174 global CEOs stepped down in the third quarter of 2025. The S&P 500 alone saw 50 departures, up from 45 the previous quarter.

While tenures are shortening, and with investor activism increasing, more companies are reaching outside their own organization to fill the top job. In the past year, the internal succession rate among S&P 500 companies dropped to 69%, down 10 points from last year. 

Globally, 88% of incoming CEOs are first timers. S&P 500 companies tend to appoint more experienced CEOs.

There’s a growing realization among boards that effective succession planning requires a more deliberate approach.

“Everything is more public now than it used to be,” said Dan Russell, a senior partner and global head of assessment at RHR International. “Boards are more involved with succession planning because there have been a handful of significant and somewhat embarrassing failures.”

In response, many companies are transforming succession planning from a periodic event in response to a CEO departure to a more continuous discipline powered by behavioral science, psychological assessment, and AI modeling.

“A poor succession plan can cause catastrophic and cascading damage across culture, finances, and strategy, transforming an inevitable transition into a destabilizing crisis,” Russell said.

Modern corporate governance now demands a strategic, proactive, ongoing approach. RHR’s experts say the most effective companies start planning the next CEO’s development the moment a new one takes the job.

Call it risk management, as critical to stability as legal compliance or cybersecurity.

A smarter way to choose leaders: Defining ‘what’ before looking for ‘who’ can deliver it

State-of-the-art succession planning starts with the “what” rather than the “who,” Russell said.

“It’s very tempting to structure succession planning around a person who seems to be the ‘heir

apparent,’” Russell said. “What’s actually most important is defining what the next CEO needs to accomplish within what context — rather than looking to the past or mirroring a prior CEO.” 

“Also important is being future-oriented and defining what’s required of the next CEO based on the strategy and market forces the company will be facing,” he added.

Modern assessments blend quantitative data with qualitative insights around leadership style, what motivates a CEO candidate, and their past decisions under pressure. Behavioral science is very informative in this context, Russell said.

“Succession planning is a very critical and costly investment,” he said. “You want to make the best decisions possible based on whatever data you can gather. The companies who are doing this best look at the leader’s abilities compared to the profile on what’s needed in the future, rather than a generic profile.

“The most successful companies are looking at a combination of demonstrated past performance, complemented by a deeper understanding of how the person thinks, why they behave in certain ways, and what motivates them,” he added.

It takes 8-10 years to ‘grow’ a leader

That’s longer than most boards think, and longer than the standard five-year time horizon many companies use for succession planning. This is a major driver of companies looking externally for new leadership, Russell said.

“Early identification and investment in future leaders is key to building an internal leadership pipeline,” he said.

An obstacle to early identification of potential internal candidates is visibility.

“The senior-most leaders and board members naturally have limited access to a few emerging leaders and anecdotal evidence (the “gut feeling”) coming out of those interactions, which gets over emphasized when making succession decisions,” Russell said. “Objective data on leadership style and capability are being used more often to compare potential successors on a common metric and to do a better job of identifying ‘hidden gems’ deeper within the company and earlier on in their careers.”

What does the next-generation CEO look like?

“The next-gen CEO will look different largely in terms of background and mindset,” Russell said. 

“We’ll begin seeing CEOs from a broader swath of geographies and backgrounds,” he said. “We are already seeing companies begin to recruit different profiles than they have previously. They are looking beyond the Ivy League for their future leaders and with increasing interest in those without traditional academic backgrounds.”

Great CEOs work with their human resources leaders “to create a robust and evergreen succession planning process to develop the next generation of leaders for all critical roles, including the CEO role,” Rubin said. “This is a proactive, intentional process which includes clarifying the type of leadership needed in the future, assessing executives against this profile, then systematically providing stretch assignments, development support, and feedback to maximize their growth. 

“Relying on the next internal CEO successors to just emerge is like riding on the highway in a go-cart,” Rubin said. “You might make it, but the odds are against you.”