The Vital Role of the Outgoing CEO

This article is featured in the July-August 2024 Harvard Business Review magazine.

All boards aspire to a drama-free CEO succession—to one that not only is proactive and strategic but also positions the organization for future success. The best practices for handling this process are well understood: start early, identify and develop multiple internal candidates, assess their fit with organizational needs, choose the right person, and then thoughtfully onboard the chosen successor.

The clinical emphasis on those steps is useful, which is probably why the majority of the research on succession focuses on the “how.” What that research typically neglects, however, are the actions and emotions (particularly late in the process) of one central protagonist: the outgoing CEO.

Most CEOs spent years striving to get to the top. During their time in office, they work long hours nurturing the firm’s culture, setting the strategic vision, and improving operations. For many CEOs the role is less a job and more an all-encompassing identity. So leaving it can be emotional, and that’s something directors need to pay attention to. What outgoing CEOs feel influences how they think and act during successions, which can have significant consequences.

Our research shows that when CEOs begin the succession process with a strong relationship with the board, are actively engaged in helping choose a successor, and have positive views of the process, the transition to a new CEO is more successful, as measured by such variables as the tenure of their replacement and turnover among the top team. However, when outgoing CEOs experience ambivalence or regret or feel excluded from the succession process, transitions can become tumultuous. Incumbents and boards often underestimate how delicate these transitions can be.

Even impeccably orchestrated CEO successions give rise to strong emotions. In July 2009, Xerox CEO Anne Mulcahy passed the baton to Ursula Burns, a handpicked successor whom Mulcahy had spent years grooming for the role. Mulcahy later described the transition in HBR. (See “Xerox’s Former CEO on Why Succession Shouldn’t Be a Horse Race,” October 2010.) “People don’t realize how hard succession is on the incumbent CEO,” she wrote. “It’s designed to make you able to go away without causing a big impact, and that doesn’t come naturally.”

In this article we elaborate on each crossroad and share the stories of the CEOs with whom we spoke. We also provide advice for boards and outgoing CEOs that are navigating CEO transitions.

Author

Rebecca Slan Jerusalim is a senior member of Russell Reynolds Associates’ Leadership Advisory group. She is based in Toronto.
Navio Kwok is a member of Russell Reynolds Associates’ Center for Leadership Insight. He is based in Toronto.