Departing leaders plant contractual problems, sabotage projects, and break informal networks during the handover, so the successor struggles and the predecessor's record looks better by comparison.
An example
January brought the new chief executive of a hotel management company a handover binder that was thin and partly wrong. In the outgoing chief's last six weeks, the company had signed a ten-year laundry contract at above-market rates, renewed a technology vendor for seven years with no exit clause, and committed to a renovation program whose costs fell due in years two and three. Four of the outgoing chief's lieutenants had resigned in December, taking the relationships with several hotel owners with them. By the second quarter margins were down, and two directors were saying the old chief had made it look easy. The new chief hired a forensic accountant in month two, traced every late commitment to its signature date, and gave the board a calm, numbered diagnosis in May. The board adopted a transition rule that summer.
Why it works
By contrast with a struggling successor, the predecessor's record looks better. The successor's own work looks worse: without the networks, headline projects underdeliver and successes look like luck. The successor's tenure grows costlier, with firefighting, disputes, and cleanup absorbing the capital they would have spent on their own agenda. Long-dated commitments cost the departing leader almost nothing, because the consequences arrive after their accountability ends. Latitude during the handover makes it possible, and it lands hardest on a successor without the memory to tell sabotage from structure, judged by an audience that rates leaders by comparison.
The thinking behind it
Daniel Kahneman Kahneman and Tversky's Prospect Theory: An Analysis of Decision under Risk (1979) shows that outcomes are judged relative to a reference point. The successor's results are judged against the predecessor's era, so inherited damage makes them look worse and the old era look better. A forensic diagnosis presented early resets the reference point to what was actually handed over.
Oliver E. Williamson Williamson's Markets and Hierarchies: Analysis and Antitrust Implications (1975) assumes some people act opportunistically, seeking self-interest with guile, and that organizations exist partly to guard transactions against that hazard. A departing leader whose accountability has ended faces few guards, which is why boards that impose transition rules, contract caps, and dual signatures close the gap.
Jonathan Baron Baron and Hershey's Outcome Bias in Decision Evaluation (1988) found that the same decision is judged better, and its maker more competent, when the outcome is good. A successor who inherits bad outcomes is judged less competent for results they did not cause. Tracing each problem to its signature date separates the decisions from the outcomes.
Warning signs
Contracts, budget commitments, and long-term obligations cluster in the predecessor's final weeks or final year, each plausible alone, with costs falling due in the successor's first years. Loyal lieutenants leave in the last weeks. Handover documents turn out thin or wrong. Early stumbles get pinned on the new leader, often with nostalgia for the old one.
How to defend yourself
If you are the successor, move fast.
- Run a forensic review of the handover in your first sixty days: every commitment signed in the final weeks, its terms, and who signed it.
- Trace inherited decisions to their authors, and renegotiate or repudiate doomed contracts early, while they are still plainly inherited.
- Give the board a calm, factual diagnosis that ties early problems to specific exit-period decisions. Dispassion makes it credible.
- Use retained advisors and a review of communications to separate sabotage from problems that were structural.
Done well, this turns the tactic around: the exit conduct becomes the predecessor's legacy.
How a leader shuts it down
Boards should govern the window between an announced exit and the departure itself: no material commitments, caps on contract length, dual signatures, and multi-period justification for large commitments in a leader's final stretch. Brief successors on every in-flight commitment before they start. Clawback or extended-vesting terms keep a departing leader accountable for what they sign.