Why Industrial Boards Can’t Delay CEO Succession Planning

Few CEO transitions carry as much operational risk as those in large industrial companies, where a single leadership misstep can derail long-term capital commitments.  

In sectors like energy, mining, and heavy manufacturing, incoming leaders often inherit high-stakes strategic plans locked down years in advance.  

“Big decisions like new plant builds or drilling programs often involve multibillion-dollar capital commitments and play out over years. They can’t be quickly undone,” says Michael Lamb, senior client partner in Korn Ferry’s CEO Succession and Assessment practice.  

A new industrial CEO must be ready to do far more than just tweak tactics. They have to choose which programs to continue or end. Plus they need to decide where to make new bets, knowing those choices have the potential to shape the business long after they’ve left.  

Finding or grooming a capable leader with that kind of know-how isn’t easy. And that’s not the only succession planning challenge industrial boards must grapple with:
 

• CEO profiles are evolving
  As tech shifts and new business models change the industrial landscape, the traditional leadership model is losing relevance. Boards need to find leaders versed in automation, AI, and the energy transition.
  
• Stakeholders are diverse
  Industrial CEOs must bridge significant organizational gaps, uniting everyone from factory-floor workers to engineers, plus corporate investors, behind a single vision.
  
• Transformation initiatives are accelerating
  Industrial successors need the operational and financial experience to connect engineering and technology priorities. And they need to execute transformation strategy across complex global operations.

Choosing the wrong leader, or one with the wrong strategic direction, can lock an industrial organization into obsolete infrastructure or uncompetitive cost structures that become increasingly difficult to change.  

“Industrial boards often treat CEO succession as a core strategic risk management issue rather than a standard HR transition,” says Lamb.  

So how can industrial boards reduce the risk in CEO succession? Read our full guide below.

1. Make Succession Planning an Always-On Activity

Even the most loyal and committed CEOs will step down at some point. That’s why succession planning must be embedded in board directors’ responsibilities, not treated as an occasional or crisis-driven exercise.

In a recent Korn Ferry survey of board directors, most said they review succession plans only once or twice a year. Fewer than 40% discussed it quarterly or more often.  

CEO succession planning should be a standing item at every board meeting. Rather than wait for a crisis to create an emergency succession plan for CEO departure, smart boards are always grooming at least one potential successor, if not three or four, says Nels Olson, vice chairman and co-leader of Korn Ferry's Board & CEO Services practice.

It’s the board chair’s job to make sure succession stays on the agenda, says Olson. “That means continually assessing internal talent, giving potential successors opportunities to take on new challenges, and ensuring board members see them in action.” The goal is to build familiarity and confidence long before a transition is necessary.

That discipline can be uncomfortable, since many CEOs would rather avoid conversations about their own succession.  

“The chair needs to work with the CEO to say, ‘This is best practice, and this is what we're going to do, openly and transparently,’” says Olson.  

All of this, he says, is to avoid the situation you so often see when a CEO leaves and the business must scramble for a new one. That happens when boards or CEOs don't want to engage in this type of exercise together during a CEO’s term. But a strong CEO should want to secure a company’s long-term future and should be willing to help develop the pipeline.  

“It shows the security of a CEO and a board when they do this consistently, rather than only in a crisis,” says Olson.

2. Look Inside While You Look Outside

It's common for board members to assume that the best candidates will come from outside, but it's a mistake to overlook internal successors.

"Internal candidates tend to create more value for organizations," says Lucy McGee, senior client partner in Korn Ferry's Board practice.

They get the company’s culture, strategy, and issues in ways outsiders can’t.  

“If they understand where the business is, they also understand its challenges and have insight into the levers of success,” says McGee. That means less disruption and a faster start.  

Internal appointments send a powerful message throughout the organization. “It signals that the company values, nurtures, and invests in its own talent,” says McGee. That not only boosts morale but can also improve retention below the C-suite.  

Of course, internal succession isn't without challenges. For example, other contenders who don’t get the role may choose to leave. But compared with the disruption that can come with an external hire, the impact is usually less destabilizing.

3. Define the CEO of the Future

Every CEO transition is different. Sometimes boards are looking to build on success and need a leader who can accelerate momentum. Other times, they’re searching in the aftermath of a strategic misstep and need someone who can reset strategy and rebuild trust.

Either way, the core questions remain the same. Where does the business need to go, and what kind of leader can take it there?

“This is about defining what success looks like in the future and measuring candidates against that profile,” says Olson.  

He recommends that boards use rigorous assessments and realistic simulations that test leaders across scenarios—whether it’s handling a crisis, managing financial strategy, or navigating the boardroom. “That way, they gain a clear picture of both current readiness and future potential.”

The outcome of an assessment, says Olson, is a practical roadmap for succession. “It highlights what experiences candidates already have, what they still need to develop, and creates a plan for building that readiness.”  

4. Prepare for Both Continuity and Crisis

Succession planning for the CEO should start early and remain a standing board priority. But boards also need an emergency succession plan that allows them to act swiftly when an unexpected departure occurs.

Too often, when companies are forced to oust their CEO, they fall back on a former board member as a stopgap, says Olson. With little preparation, that leader can quickly struggle. “At some point, the credibility of the company is undermined,” he says.  

In some situations, extending the current CEO’s tenure, even briefly, may buy critical time for a more thoughtful CEO transition plan. In others, appointing a well-prepared interim CEO can give the board the breathing room to conduct a rigorous search rather than rush into a permanent appointment.

Of course, an interim CEO is no substitute for developing permanent successors well in advance.  

Real readiness takes time, says McGee. “Most potential successors need 12 to 24 months of targeted development before they can step into the top role with less risk,” she says.  

That means boards need to manage expectations carefully and plan well in advance. When an unexpected transition hits, time is the one resource they won’t have.

5. Be Transparent About Leadership Planning

Employees don’t need to know every detail of who will step in if the CEO departs. But they, along with the board and other stakeholders, do need confidence that succession planning for the CEO is part of the long-term strategy.  

Few things erode trust faster than a leadership vacuum. Giving employees visibility into the broader top team, including potential successors, can ease transitions and sustain confidence when the baton eventually passes.

Transparency also strengthens the leadership pipeline. “Clear, long-term planning shows senior leaders that they are seen and taken seriously,” says McGee. “That recognition is critical, especially in a market where retention is such a challenge.”

McGee notes that the rising generation of workers makes authenticity even more essential. “They’re used to deciding who they follow and who they don’t. They make constant judgments about whether leaders are credible,” she says.  

“CEOs have to recognize that they’re being observed at all times, and that authenticity is the only sustainable approach—because pretending to be someone else is exhausting.”

Failing to strike that balance can damage short-term morale and undermine the entire talent pipeline.  

People need to see multiple, authentic models of leadership that help them believe the job can be done on their own terms, not in a set style or playbook. Otherwise, they may not aspire to step into those roles at all.

Building the Industrial CEO Succession Pipeline You’ll Need

Defining the leader your company needs and developing a pipeline of potential successors can help your board avoid settling for the safest choice. The payoff? A lower-risk transition that gives your industrial or manufacturing organization the leadership it needs to thrive in the years ahead.

Find out how Korn Ferry’s Industrial and Manufacturing teams can help you with CEO succession planning.  

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