Chapter 2: Forgetting to create sufficient optionality when determining the talent universe


While boards naturally devote energy to defining and aligning on what is needed in the next CEO—the demand side of the equation—it is also important for boards to ensure they have a strong understanding of the talent market—the supply side—to set selective, yet realistic, expectations.

When boards unwittingly lock onto a single candidate or a type of profile before the process has even begun, it can negatively affect the succession process. Cognitive dissonance then kicks in, and it becomes difficult for decision-makers to change their perspective in light of new information.



Trap 1: Having a skewed perception of internal candidates

Boards are often at risk of developing skewed perceptions of internal candidates, either due to gatekeeping from the incumbent CEO or CHRO, or as a result of pigeon-holed interactions.

Gatekeeping can be both to the candidates’ benefit or their detriment. In one instance, the incumbent CEO or CHRO could be enthusiastic about the process, consciously creating opportunities for internal candidates to grow, but unintentionally presenting them to the board with a positive bias. When the board meets these chosen successors, it becomes obvious that, in reality, they are not yet equipped for the role. On the flip side, the incumbent CEO might stay in their seat longer to actualize their organizational vision, by extension, derailing internal development conversations.

Internal candidates are also more likely to be pigeonholed in their day-to-day responsibilities, such as routine updates on a function or business line, which makes it difficult to properly present their enterprise vision for the organization to the board. The board then develops a narrow view of the individual as a functional leader, which can cause them to undervalue these candidates’ full capabilities and potential, and struggle to see them as CEO material.

On the other hand, because internal candidates are more knowable quantities, hold institutional knowledge, and may also have internal power brokers advocating for them, boards can also incorrectly overvalue internal candidates.




Trap 2: Making assumptions about the external talent landscape

Having a data-driven understanding of how to measure success can help boards better calibrate their view of internal talent. Our Global Leadership Monitor survey found that 47% of board directors and CHROs who have been involved in a CEO transition in the past three years did not engage in external benchmarking.


Our survey of board directors and CHROs found that 47% of CEO transitions in the last three years did not engage in external benchmarking.



In a world experiencing uncertainty and high fluctuation, boards that do not cast a wide net risk selecting only from their known networks, and may miss out on candidates who bring diversified perspectives or thought leadership in nuanced fields (such as disruptive technology, political risk, or the climate challenge).

Boards that only run internal succession processes are at risk of not only limiting their options, but also doing their internal talent a disservice. When internal candidates are developed in a vacuum—not measured against current talent trends, cross-industry dynamics, or functional peers—organizations may fail to identify and craft the interventions needed to best develop their internal succession options.




Trap 3: Overvaluing the job proposition

Talent markets are not unidirectional; they are matching markets, which means that both the organization and potential candidates are simultaneously offering and acquiring something of value. While it’s critical that boards create a very clear definition of what they want to acquire (e.g., certain skills, experience), this should be calibrated to the reality of how the corresponding offer will be perceived by candidates, both internally and externally.

Organizations may have an established and capable pipeline of internal candidates, some of whom are uninterested in becoming CEOs due to personal reasons or different career aspirations. To avoid this, boards should also consider internal candidates’ personal priorities and motivations as they build out the internal pipeline.

More likely, boards will experience this value imbalance in the external marketplace. Part of the endowment effect speaks to the psychological dynamics in which people tend to overvalue items that they are already associated with or in possession of, compared to items that they have no ties to. When this occurs, boards may fail to critically appraise organizational reputation, strategic direction, or senior leadership team culture and values, leading them to expect a higher volume or a higher caliber of interested external candidates.



How can boards overcome these CEO succession decision-making complexities?

  • Ensure broader board exposure for internal candidates.
    Equalize the playing field for internal candidates and present them to the board in the same way as external candidates. Ensure that internal candidates have the opportunity to build their own relationships with the board and engage in meaningful interactions, outside of the dynamics of their day job. This will allow the board to confirm or push back on the incumbent CEO or CHRO’s perspective of development progress, and form an independent view on the quality of the internal pipeline.
  • Broaden understanding of the talent landscape.
    Engaging in strategic sourcing and board recruitment, as needed, will allow the board to stay connected to emerging talent trends. Particularly in the face of uncertainty, boards can create a culture of continuous learning and adaptability by reviewing benchmarking studies, networking with cross-industry leaders, or connecting with academic institutions and experts.
  • Access external perspectives on organizational reputation and the market.
    Board directors should leverage their networks and have conversations that will help them understand how the market perceives their organization’s CEO role, prospective candidates' desires, passions, and motivations, and what potential alternatives are available for candidates in the marketplace. This allows stakeholders to set the right expectations around internal candidate investment, as well as which external candidate archetypes are reasonable to target.






Data sourced from Russell Reynolds Associates’ H1 2023 Global Leadership Monitor, which surveyed 500 CEOs, board directors, and CHROs on the state of CEO succession and stakeholder perspectives, and interviews with 14 of our Board and CEO Advisory Partners consultants.





Joy Tan and Tom Handcock of RRA’s Center for Leadership Insight conducted the research and authored this report.

Learn more about the authors and The Center for Leadership Insight

Justus O’Brien is a senior member of Russell Reynolds Associates’ Board and CEO Advisory Partners in the Americas. He is based in New York.
Dean Stamoulis is a senior member of Russell Reynolds Associates’ Board and CEO Advisory Partners in the Americas. He is based in Atlanta.



The authors would like to thank contributors from Russell Reynolds Associates’ Board and CEO Advisory Partners who participated for their time and their valuable perspective:


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