Succession Failure: CEO Departures Should Alarm Investors

Forbes

6 days ago

Empty CEO Chair
We are living through a silent crisis in corporate leadership—one that is accelerating. CEO exits reached record highs in 2024, and early 2025 is trending even higher. While headlines cite burnout and compensation disputes, the deeper story is more troubling: fewer qualified leaders want the job.
This isn't just a talent pipeline issue. It's a governance liability, a financial risk, and a failure of leadership strategy that sits squarely at the intersection of HR, finance, and board oversight.
In an era of relentless volatility, the CEO role has become a high-risk, low-reward proposition. The traditional leadership model—built on hyper-availability, political stamina, and solo decision-making—is increasingly out of step with what today's top talent is willing to accept.
According to data from Challenger, Gray & Christmas, CEO turnover in the U.S. hit 2,221 exits in 2024—an all-time high—and the first quarter of 2025 is trending even higher.
For women and underrepresented leaders, the risk calculus is even more complex. In my Harvard Business Review article, 'Why Men Have More Help Getting to the C-Suite,' I documented how many women opt out not due to a lack of ambition but due to isolation, scrutiny, and lack of support at the top.
Boards should see this not just as a 'DEI' challenge, but as a material governance risk. Talent opting out of top jobs is a canary in the coal mine.
Another underappreciated factor behind rising CEO attrition? Policy volatility.
From fluctuating tariffs and trade wars to reversals on immigration and climate-related disclosures, this administration's seesawing approach to governance is creating strategic whiplash. As I wrote in April, 'Project 2025 Tariffs Threaten U.S. Business And Workers' sweeping proposals like Project 2025 call for abrupt shifts in trade policy and domestic sourcing mandates—without the infrastructure to absorb those changes.
For CEOs, that means more time firefighting and less time leading. They are asked to navigate geopolitical uncertainty, inflationary pressures, and legal exposure tied to executive decisions made in reactive policy environments.
When public policy becomes erratic and ideologically driven, it adds a layer of risk that even the most experienced executives struggle to manage. The CEO seat, already under pressure, becomes unmanageable—less a leadership position than a liability magnet. It's no surprise many are choosing to step down before being forced out.
In my recent Forbes column, 'AI Is Reshaping Work—It's Time for CHROs to Lead the Change,' I warn that entry-level jobs are disappearing as AI automates early-career tasks. Internships and junior roles—once the foundation of talent development—are being quietly phased out in the name of efficiency.
Now, as seasoned leaders exit the C-suite in record numbers, organizations are facing a dual collapse: the top and the bottom of the talent pipeline are both in crisis.
The result is a hollowing out of organizational resilience. With fewer early-career employees learning the business and fewer seasoned executives willing to lead it, the leadership bench grows dangerously thin. Succession planning becomes guesswork, institutional knowledge fades, and enterprise value is left exposed.
This isn't just an HR challenge. It's a structural threat to continuity, culture, and shareholder trust.
Treating CEO transitions as episodic 'search events' misses the point. True succession readiness requires long-cycle planning, embedded risk management, and proactive development of internal successors.
A PwC study found that companies with formal succession plans significantly outperform those without them in long-term total shareholder return (TSR).
Boards and CHROs must:
The SEC's enhanced human capital disclosure rules under Reg S-K Item 101(c) make clear: leadership continuity is a governance issue, not an HR footnote.
CHROs must treat leadership development like a balance sheet item. It requires investment, tracking, and return analysis. Just as CFOs manage financial capital, CHROs must measure and protect leadership capital.
My peer-reviewed research in IUP Journal of Soft Skills called Sponsorship: An Intervention to Accelerate Women's Career Velocity demonstrated that women are over-mentored and under-sponsored—receiving guidance, but not the advocacy that leads to stretch roles and P&L responsibility.
Institutionalizing sponsorship—with metrics and governance oversight—is essential for long-term succession viability, not just for women leaders, but for any leader being groomed for the C-Suite.
Many recent CEO departures are not performance-based. They're values-based. Executives are increasingly walking away because the demands of the role no longer align with how they want to live, lead, or grow.
According to The Wall Street Journal, several prominent CEOs who stepped down in 2024 cited burnout, political tension, and the erosion of joy in leadership as key reasons for exit.
When your top-tier leaders voluntarily abandon roles they've prepared for over decades, your culture is no longer a competitive asset—it's a liability. Boards must collaborate with CHROs to make executive roles more sustainable—structurally and emotionally.
Succession in today's business landscape requires leaders equipped for AI integration, ESG scrutiny, and stakeholder capitalism. A recent Deloitte report underscores that next-gen CEOs will need systems thinking, digital fluency, and inclusive leadership to navigate complexity and drive value. That requires:
The CEO succession crisis isn't about a lack of ambition. It's about the misalignment between job design and what today's best leaders value. And when you pair that with the collapse of early-career development pathways and a policy environment in disarray, you expose the organization to systemic risk from both ends.
The companies that treat leadership capital as renewable—investing in it, protecting it, and evolving it—will outperform.
Those that don't? They won't just face an empty C-suite. They'll face institutional amnesia, disengaged talent, and a slow erosion of enterprise value.