The Governance Blind Spot: Part Two: How Boards Should Structure and Oversee CEO Succession

Building a Future-Ready Pipeline

Succession planning begins with emergency readiness but must evolve into an integrated board process spanning talent mapping, development, exposure, and capability assessment. Australian boards often understand the principle but fail to apply systematic governance structures.

AICD, Korn Ferry and PwC all reinforce that boards must treat succession as a continuous cycle, not a periodic project triggered by resignation. This requires visibility, discipline and explicit accountability.

To illustrate, several real-world cases demonstrate how structured governance prevents organisational disruption.

Real-World Example: Commonwealth Bank of Australia (CBA) – Strong Internal Pipeline Development

Problem

Major banks face regulatory pressure, scrutiny from investors, and high operational complexity. Weak succession planning would pose a significant risk.

Success Factor

Under leaders such as Sir Ralph Norris, CBA embedded constant leadership development, ensured direct exposure between internal candidates and the board, and used external coaching to map capability gaps.

Fix

By creating a multi-candidate, ready-now pipeline, CBA repeatedly achieved clean internal CEO transitions which has resulted in a benchmark often referenced in Australian governance circles.

Real-World Example: Ford Motor Company – Succession Stalled by Lack of Internal Development

Problem

In 2014, Ford appointed an internal successor (Mark Fields), but development gaps became evident when the organisation struggled with slow innovation and competitive lag. The board lacked confidence in the internal pipeline.

Fix

The board replaced the CEO with an external candidate, Jim Hackett, and introduced a comprehensive leadership capability framework, focusing on digital, mobility and cultural transformation. Internal pipelines were rebuilt to align with the company’s future strategy.

This case reinforces the importance of benchmarking internal talent against external capability, a principle supported by NACD research and increasingly recommended for Australian boards.

Real-World Example: Qantas – Gaps in Visible Pipeline Exposed Under Pressure

Problem

Although Qantas had a long-planned transition from Alan Joyce to Vanessa Hudson, the timing and external perception of the succession were criticised due to intensifying regulatory and customer concerns.

Governance Issue

While the successor was known internally, analysts and stakeholders argued that the board had not communicated succession readiness early enough, raising concerns about transparency and timing.

Fix

Qantas commenced a broader transformation program, enhanced communication with investors around leadership stability, and refreshed several senior roles to reinforce executive capability depth.

For Australian boards, the lesson is that visibility on pathways; not merely internal nomination; is central to stakeholder confidence.