Succession Planning Challenges
Getting succession planning right can be difficult, as evident from the experiences of two companies, Diageo and GSK.
In one instance, a CEO was ousted after a two-year tenure and a 43% decline in share price, leading to an interim appointment. The board chair stated that the focus was on
“securing the best candidate… to take the company forward”.
In contrast, another company announced the COO's transition to the top job three months in advance, ensuring a smooth transition with the current CEO staying on until September 2026. This move led to a 3.6% rise in shares, with investors noting the business was benefiting from
“succession success”.
These two firms offer distinct examples of succession planning, highlighting the challenges and importance of getting it right.
Author's summary: Succession planning is a challenging process.