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Executive Succession Series: Failing to plan is planning to fail - Part 1
Debbie Morrison • February 8, 2022

There has been much fanfare about the impending ‘great resignation’ expected this year. How much this impacts Australian organisations, especially the c-suite remains to be seen. It’s not unrealistic, however, to think many executives, burnt out from the unprecedented difficulties faced as a result of the pandemic may consider calling time on their reign this year, potentially leaving many organisations exposed at the top. 


The impact of CEO performance and organisational success has long been observed and there is no denying there is a direct correlation. Since the 1980s, researchers have found that CEOs could influence changes to a company’s stock price. By the 2000s, a study by
John Wiley & Sons, Ltd among others, found the effect of CEOs on profitability was as much as 15%. More recently, research has focused on firm value (using Tobin’s Q), estimating that CEOs are responsible for at least 25% of a company’s market value. 


There’s no doubt succession planning should be a priority for any organisation. Yet, research has found that most organisations are unprepared and have little understanding of how to approach succession planning properly. It’s not surprising that organisations who fail to prepare and plan accordingly risk excessive turnover at the top and can destroy a significant amount of company value. 


Perhaps the biggest cost is underperformance. Poorly suited external hires can result in the loss of intellectual capital but the dangers run deeper and have far broader implications. According to
MicKinsey 46% of leaders underperform during their transition to a new role. Furthermore, 50% of leaders reported that it took them six months to become effective in their new roles. 20% of C-Suite Executives stated it took more than nine months to become effective according to a survey by Egon Zehnder.


Poor preparations and a lack of support for new executive appointments can have a negative impact on overall company performance but the impact is also felt among teams and employees. Direct reports perform 15% worse under a struggling leader and are significantly more likely to become disengaged, a study by
McKinsey found. These harrowing statistics highlight the importance of succession planning. For business success in 2022, organisations must do better. The solution is simple; companies must start succession planning well before they think they need to. 

 

Where are organisations getting succession planning wrong?

According to a CEO succession study by Stanford University, one of the reasons organisations fail at succession planning is because they don't devote sufficient time to it. The study found boards of directors spend on average 1.14 hours discussing it. This lack of preparation and forward planning puts companies on the back foot, often leaving them with little choice but to rely on those external hires or internal candidates available at the time. This band-aid approach is hardly conducive to business success especially considering the direct cost of replacing a failed executive is close to 10x his or her salary according to a study by Heidrick & Struggles.


As Australia is plunged back into uncertainty with record levels of infections of the Omicron variant, the importance of resilient leadership cannot be overstated. It’s unsurprising that 74% of Boards are making emergency plans in case of a sudden CEO departure according to the
Governance Challenges 2019: CEO Succession report.



CEO succession planning is crucial to company stability, empowering employee trust and investment in the long-term but success requires a shift in thinking and approach. Succession planning needs to be an ongoing process rather than a contingency plan. Even then, it can often be as much art as science. Talent pools and internal candidates earmarked and groomed for succession can often be headhunted or resign unexpectedly, leaving gaping holes in the hopes of boards. Research by McKinsey in recent years highlights that
nearly half of all leadership transitions fail.


Whilst this statistic may sound concerning, it is not always a reflection of a poor transition. Changes in strategic direction or aggressive innovation can lead to a reshuffle. Succession planning can be complex, delicate and subject to any number of variables. Even the most extensive succession planning processes, invested CHROs and skilled executive search firms could struggle to find a high-calibre replacement. As such, it’s important to give thought to the pitfalls that can arise when succession planning is not treated as an ongoing initiative. 

Here are 8 of the potential dangers to avoid:



Lack of reliable succession-plan

Surprisingly, whilst 86% of leaders believe leadership succession planning is of the utmost importance, only 14% think their organisation does it well according to Deloitte. Many organisations still lack the tools and necessary processes to conduct worthwhile succession planning, according to a 2018 Deloitte study. Alarmingly, only 35% of organisations have a formalised succession planning process according to ATD’s research report Succession Planning: Ensuring Continued Excellence with SMBs and scale-up businesses not yet considering succession planning as a necessity yet.


Short term, reactive thinking

For many organisations, succession planning is often only a priority when an executive is exiting or planning to exit the business. Effective succession planning is a continuous process, requiring ongoing focus and review. The development of internal candidates requires long-term planning and investment. The alternative is a band-aid solution or external hire, neither of which helps to retain commercial IP.


Poorly handled discussions

Succession planning, by its very nature, can be a destabilising process if poorly managed. Executive transitions are typically high-stakes, high-tension events. Naturally, leaders that are under pressure or even those performing well might be hesitant about having succession planning discussions for obvious reasons. However, succession planning is exactly that; planning. It’s about safeguarding the future of an organisation and an important part of board responsibility. This can only come from ongoing discussions, development and planning to ensure that whatever decisions boards make regarding future executive leadership comes as a surprise to nobody.



Insufficient information or access to internal candidates

Impartial screening and selection of potential candidates cannot be conducted without the proper structure and processes in place. Naturally, executives will be reluctant to concede their position. Heavy reliance on the opinion and thoughts of the incumbent executive when planning for succession invites bias into the process, which may lead to poor decision making and negative outcomes. Boards can ensure they receive the right information and access to the best possible potential successors by actively talent pooling the market or engaging a specialist executive search firm to conduct a thorough executive assessment and talent mapping process



Managing internal candidates

Every organisation wants a promising pool of talented internal candidates for c-suite roles. Good succession planning is as much about the retention of high-calibre talent as it is about executive assessment. Organisations need to focus on retaining potential candidates through well-considered financial incentives, career planning and professional development. Ambitious leaders seeking executive roles will find them elsewhere if structured career paths are not created and presented.



Transparent, competitive selection processes

Boards risk making poor executive appointments if they approach the selection process with a closed mind and biased outlook. Quality succession planning goes beyond skill matching and assessment for cultural fit. Clear and open dialogue around leadership potential, the quality of thinking and objective assessment enables organisations to make informed decisions.


Using the right resources

Whilst the use of executive search firms can be costly, organisations need to consider the costs associated with making a poor hire. Good executive appointments are the result of adequate investment in time and resources to what can be a lengthy, complicated process. Given the immense significance of executive selection on business performance, extensive review of internal and external candidates, independent advice and a wider search of domestic and international candidates are important steps in securing the right leadership.


Internal vs External Candidates

Given the opportunity, it stands to reason that most organisations would prefer to source prominent executive appointments through internal candidates rather than external hires. Whilst both have pros and cons, it is difficult to arrive at an informed decision without conducting a proper selection and assessment process. The merits of new perspectives or differing skills versus organisational IP cannot be properly ascertained without first engaging in the appropriate success planning discussions and processes.


How ELR Can Help

Decades of expertise and insights derived from the assessment of countless executive candidates enable us to craft flexible, forward-thinking succession plans that identify the most suitable talent for a myriad of executive positions in the FMCG sector.


We help organisations identify, assess and screen the talent best suited to future leadership positions based on your business’s unique requirements. Their skills and expertise are also benchmarked against the FMCG leadership talent pool, ensuring you have a structured succession plan and career development program to cultivate the best performers.


If you’re interested in understanding how we can help develop a talent pool of future leaders, you can arrange a confidential discussion with one of our experts today by clicking this link '
chat'.

By John Elliott March 24, 2025
Emotional intelligence is one of the most valued traits in executive leadership today.  It’s also one of the most misunderstood. In interviews, every candidate knows how to speak about empathy, collaboration, and “bringing people on the journey.” But when does that emotional intelligence start to look more like emotional avoidance? If you’re hiring into a senior role in consumer goods or food and beverage manufacturing, this distinction matters. Hiring someone who avoids hard conversations risks building a culture that performs around problems, not through them. The leaders delivering the best outcomes in 2025 understand how to build trust and rapport — without dodging the accountability that comes with real leadership. Emotional Intelligence: What It Gets Right In complex, fast-paced industries like FMCG and food production, leaders need more than technical expertise. They must influence, de-escalate tension, manage change, and build alignment across functions. That’s where emotional intelligence shines. High-EQ leaders are more likely to: Retain talent through strong, trust-based relationships Remain composed in high-stakes environments Reduce conflict through proactive, clear communication Drive psychological safety while still pushing for results The research backs this up. According to a 2024 EHL Insights report , emotionally intelligent leaders improve employee satisfaction, engagement, and collaboration — all essential in manufacturing settings where coordination between departments is critical. But there’s a fine line between emotional intelligence and emotional overcorrection. When Emotional Intelligence Becomes Emotional Avoidance The risk is subtle: leaders who over-index on empathy may begin to avoid the discomfort of conflict altogether. That looks like: Letting underperformance linger to “keep the peace” Over-relying on collaboration instead of making firm decisions Avoiding direct feedback Prioritising harmony at the expense of clarity A 2024 Forbes article described how emotionally avoidant leaders — despite good intentions — often undermine the very culture they’re trying to protect. Accountability erodes, decisions slow down, and high performers become disengaged. We’ve seen this play out in executive search mandates across the sector. On paper, a candidate may appear ideal: emotionally intelligent, highly personable, well-liked. But dig deeper, and a pattern emerges — reluctance to address performance issues, vague language around past team challenges, and a track record of avoiding direct confrontation. That’s not emotional intelligence. That’s fear, dressed as empathy. Emotional Intelligence Is a Must — But It’s Not the Full Picture More organisations are making emotional intelligence a key leadership trait in hiring — and for good reason. In high-change environments, emotionally intelligent leaders: Build trust across teams quickly Navigate transformation without losing people along the way Stay composed under pressure Handle interpersonal complexity with clarity But some of the most costly mis-hires we see come from leaders who present as highly empathetic, but struggle to lead through tension. Not because they lack EQ — but because they confuse it with keeping everyone comfortable. The difference? The leaders delivering the best outcomes in 2024 and 2025 are doing both: Holding people accountable while building engagement Delivering hard feedback without defensiveness Balancing calm with courage These are the leaders who retain high performers, protect standards, and still earn trust across the business. Hiring Outcomes Are Better When EQ Is Tested in Context The most effective hiring processes we’re seeing in the market today aren’t just asking, “Is this leader emotionally intelligent?” They’re asking: Can this person hold accountability and empathy at the same time? Have they delivered under pressure without letting performance slide? Do they create safe cultures that are also high-performing? The difference in outcomes is clear: More resilient leadership teams Better cultural fit Fewer surprises post-placement What to Look for in Executive Interviews Hiring emotionally intelligent leaders isn’t just about what they say — it’s about how they’ve acted in real moments of challenge. The most effective hiring panels are getting beyond rehearsed narratives by asking sharper questions: To probe real emotional intelligence: “Tell me about a time you had to lead a team through a change that wasn’t popular.” “How do you approach a conversation when someone on your team is underperforming?” “Describe a time you disagreed with your CEO or board. What did you do?” Watch for signals: Are they clear and specific, or vague and diplomatic? Do they show respect and resolve? Do they accept responsibility, or redirect it elsewhere? In reference checks, ask: “How did they manage pressure or uncertainty?” “Were they able to deliver difficult feedback directly?” “Did they avoid difficult decisions in the name of team cohesion?” When emotional intelligence is genuine, it shows up in results — not just relationships. Why This Matters Now Organisations in the consumer goods and food manufacturing sectors are undergoing constant disruption — from digitisation to regulatory shifts to cost pressures. In this environment, leadership soft skills aren’t optional. But it’s not enough to hire likeable leaders. The ones delivering real impact are those who bring empathy and edge. They’re able to sit with discomfort, hold the mirror up, and still bring people with them. That’s what true emotional intelligence looks like in 2025. So when you’re hiring your next senior leader, don’t just ask if they care. Ask if they can care and confront — with courage, with clarity, and with conviction. Because your culture doesn’t need more harmony. It needs more truth.
By John Elliott March 18, 2025
AI is Changing Business—So Must Its Leaders
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