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 June 6, 2025
On paper, they were fully resourced. No complaints logged. No formal red flags. Delivery metrics holding steady. But behind closed doors, the signs were there. Delays. Fatigue. Silence in meetings where pushback used to live. And a growing sense that key people were leaning out, emotionally, if not yet physically. When the cracks finally showed, the conclusion was predictable: “We need more people.” But that wasn’t the real problem. The problem was trust. And most organisations never see it until it’s too late. The Hidden Cost of Disengagement In Gallup’s 2023 global workplace report , only 23% of employees worldwide reported being actively engaged at work. A staggering 59% identified as “quiet quitting”, psychologically detached, going through the motions, doing only what their job description demands. Source: Gallup Global Workplace Report 2023 Disengagement is expensive. But it’s also quiet. It doesn’t show up on a balance sheet. It doesn’t send a Slack message. Disengagement isn’t new, just silenced. And in executive teams, it looks different. It looks like polite agreement in strategy meetings. It looks like leaders shielding their teams from unrealistic demands, instead of confronting the system causing them. It looks like performance metrics still being met… while people emotionally check out. The issue isn’t always capability. It’s safety. Psychological, political, and professional. Many senior leaders don’t raise concerns, not because the problem isn’t real, but because they don’t believe they’ll be heard, supported, or protected if they do. And this is where the failure begins. The Leadership Lie No One Talks About We talk a lot about leadership capability. About experience, commercial acumen, execution strength. But we don’t talk enough about context. Every leadership hire walks into a culture they didn’t create. They inherit unwritten rules, quiet alliances, and legacy power structures. If those dynamics are broken, or if trust is fractured at the top, no amount of capability will compensate. According to a 2022 Deloitte mid-market survey, 64% of executives said culture was their top strategic priority. But only 27% said they actually measured it in a meaningful way. We say culture matters. But we rarely structure around it. And so new leaders walk in with pressure to perform, but little real insight into what the role will cost them emotionally, politically, or personally. We Don’t Hire for Trust. And It Shows. In executive search, the conversation is often dominated by pedigree and “fit.” But fit is often a euphemism for sameness. And sameness doesn't build trust, it maintains comfort. We rarely ask: Does this leader know how to build trust vertically and horizontally? Can they operate in a low-trust environment without becoming complicit? Will they challenge inherited silence, or unconsciously uphold it? Instead, we hire for confidence and clarity, traits that often mask what’s broken, rather than reveal it. And when those hires fail? We call it a mismatch. Or we cite the usual: “lack of alignment,” “wasn’t the right time,” “they didn’t land well with the team.” But the truth is often uglier: They were never set up to succeed. And no one told them until it was too late. The Cultural Infrastructure Is Missing One of the most damaging myths in leadership hiring is that great leaders will “make it work.” That if they’re tough enough, experienced enough, skilled enough, they’ll overcome any organisational dysfunction. But high-performance isn’t just personal. It’s systemic. It requires psychological safety. A clear mandate. The backing to make hard decisions. The freedom to speak the truth before it becomes a PR problem. When that infrastructure isn’t there, when the real power dynamics are unspoken, good leaders stop speaking too. And the silence spreads. What Trust Breakdown Really Looks Like Often, the signs of a trust breakdown don’t show up in dramatic ways. They surface subtly in patterns of underperformance that are easy to misread or excuse. You start to notice project delays, but no one flags the root cause. Teams keep things moving, quietly compensating for the bottlenecks rather than surfacing them. Not because they’re careless, but because they’ve learned that early honesty doesn’t always earn support. New leaders hesitate to make bold calls. Not because they lack conviction, but because the last time they did, they were left exposed. Board reports look flawless. Metrics track nicely. But spend five minutes on the floor, and the energy tells a different story. These are not resource issues. They’re relationship issues. And the data backs it. According to Gallup’s 2023 State of the Global Workplace report , just 23% of employees worldwide are actively engaged. Worse, around 60% are “quiet quitting.” That’s not just disengagement. It’s people doing only what’s safe, only what’s required, because trust has quietly eroded. Gallup also found that managers account for 70% of the variance in team engagement, a staggering figure that reinforces just how pivotal leadership trust is. When people don’t feel psychologically safe, they shut down. Not dramatically. Quietly. Invisibly. What’s breaking isn’t the org chart. It’s the ability to speak plainly and be heard. And by the time it’s visible? The damage is already done, and someone calls for a restructure. “Low engagement is estimated to cost the global economy $8.8 trillion, 9% of global GDP.” Gallup, State of the Global Workplace 2023 So What’s the Real Takeaway? If you’re seeing performance issues, before you jump to headcount, ask a different question: Do the leaders in this business feel safe enough to tell the truth? Because if they don’t, the data you’re reading isn’t real. And if they do, but you’re not acting on it, then they’ll stop telling you. Leadership doesn’t fail in obvious ways anymore. It fails in the gap between what people know and what they’re allowed to say. And the price of that silence? Missed opportunity. Reputational damage. Cultural decay. Sometimes, the problem isn’t who you hired. It’s what you’ve made it unsafe to say.
By John Elliott May 27, 2025
Why Culture Decay in FMCG Is a Silent Threat to Performance It doesn’t start with resignations. It starts with something much quieter. A head of operations stops raising small problems in weekly meetings. A sales lead no longer defends a risky new SKU. A team member who used to push ideas now just delivers what they’re asked. Nothing breaks. Nothing explodes. It just... slows. And from the outside, everything still looks fine. The illusion of stability In food and beverage manufacturing, where teams run lean and pressure is constant, performance often becomes the proxy for culture. If products are shipping, if margins are intact, if reviews are clean, the assumption is: we're good. But that assumption is dangerous. According to Gallup's 2023 global workplace report, only 23% of employees worldwide are actively engaged, while a staggering 59% are "quiet quitting ", doing just enough to get by, with no emotional investment. And in Australia? Engagement has declined three years in a row. In a mid-market FMCG business, those numbers rarely show up on dashboards. But they show up in other ways: New ideas stall at the concept phase Team members stop challenging assumptions Execution becomes rigid instead of agile Everyone is "aligned" but no one is energised And by the time the board sees a drop in revenue, the belief that once drove the business is already gone. The emotional cost of cultural silence One thing we don’t talk about enough is what this does to leadership. When energy drains, leaders often become isolated. Not because they want to be, but because the organisation has lost the instinct to challenge, question, or stretch. I’ve seen CEOs second-guessing themselves in rooms full of agreement. Seen GMs miss red flags because nobody wanted to be "the problem". Seen founders mistake quiet delivery for deep buy-in. The emotional toll of unspoken disengagement is real. You’re surrounded by people doing their jobs. But no one’s really in it with you. And eventually, leaders stop stretching too. We train people to disengage without realising it Here’s the contradiction that most organisations won’t admit: We say we want initiative, but we reward obedience. The safest people get promoted The optimists get extra work The truth-tellers get labelled difficult So people learn to conserve energy. They learn not to challenge ideas that won’t land. They learn not to flag risks that won’t be heard. And over time, they stop showing up with their full selves. This isn't resistance. It's protection. And it becomes the default when innovation is punished, risk isn't buffered, and "alignment" becomes code for silence. Boards rarely see it in time Boards don’t ask about belief. They ask about performance. But belief is what drives performance. When culture begins to fade, it doesn't look like chaos. It looks like calm. It looks like compliance. But underneath, the organisation is hollowing out. By the time a board notices the energy is gone, it’s often because the financials have turned, and by then, the people who could've helped reverse the trend have already left. In a 2022 Deloitte study on mid-market leadership, 64% of executives said culture was their top priority, yet only 27% said they measured it with any rigour . If you don’t track it, you won’t protect it. And if you don’t protect it, don’t be surprised when it disappears. The real risk: you might not get it back Here’s what no one likes to admit: Not all cultures recover. You can try rebrands. You can run engagement campaigns. You can roll out leadership frameworks and off-sites and feedback platforms. But if belief has been neglected for too long, the quiet ones you depended on, the culture carriers, the stretchers, the informal leaders, they’re already checked out. Some have left. Some are still there physically but not emotionally. And some have started coaching others to play it safe. Once that happens, you're not rebuilding. You're replacing. So what do you do? Don’t listen for noise. Listen for absence. Absence of challenge. Absence of stretch. Absence of belief. Ask yourself: When was the last time someone in the business pushed back? Not rudely, but bravely? When did someone offer an idea that made others uncomfortable? When did a leader admit they were unsure and ask for help? Those are your indicators. Because healthy culture isn’t silent. It’s alive. It vibrates with tension, disagreement, contribution and care. If everything looks fine, but no one’s really leaning in? That’s your problem. And by the time it shows up in the numbers,t might already be too late.