Boards unhappy with a leader can keep succession planning openly on the agenda, so the leader, the heirs, and investors all see that a change is possible without one being made.
Borderline: whether this move is justified depends on the situation, and only the person in it can judge.
An example
After two disappointing quarters, the chair of a listed specialty-chemicals company did not want to replace the chief executive mid-year, and did not want the board to look passive either. She told the chief executive directly that the nominating committee would review the succession plan each quarter for the next year and that the two internal candidates would present to the board. The committee did both. On a call with two large shareholders she said, accurately, that the board had strengthened its bench. The chief executive came to the next meeting with the cost program the board had asked for twice, and a plan to divest a low-margin business. By year end margins had recovered, and the committee returned the plan to its annual review.
Why it works
Treating the incumbent as temporary looks better as the named heirs gain visibility, sponsors, and the look of live options. Backing the incumbent looks worse, because part of a leader's authority rests on seeming irreplaceable and each named heir punctures that, and it gets riskier, since subordinates and counterparties are now betting their own standing on someone the institution is openly hedging against. It works when the plan can be surfaced through legitimate channels, the heirs are credible, and the incumbent lacks the votes or the time to stop the discussion. Because succession planning is ordinary governance, the incumbent cannot object to it the way they could to an open challenge.
The thinking behind it
Jeffrey Pfeffer The External Control of Organizations: A Resource Dependence Perspective (1978) argues that whoever controls a critical, scarce resource gains power over those who depend on it. Part of a sitting leader's power is that the company depends on them to run it. Each credible heir the board puts on view reduces that dependence, which is why visible succession planning shifts power toward the board before any decision is made.
A. Michael Spence Job Market Signaling (1973) explains how a costly action can communicate what words cannot, provided it is cheaper for those whose claim is true than for those who would be faking it. Quarterly succession reviews, heirs presenting to the board, and statements to shareholders take board time and carry reputational risk if nothing follows. That cost is why the leader, the heirs, and investors read them as a real signal that change is possible.
When it fits
Boards with a documented performance concern, no wish to force an exit yet, and credible internal heirs can use it. It needs a succession process that already exists, a chair with the standing to deliver the message directly, and a willingness to decide if the pressure does not work.
How to use it well
Speak to the leader first, plainly, about what the board is doing and why.
- Raise the cadence of the review you already run, and say what it is responding to.
- Give the internal heirs working exposure to the board, through presentations and site visits.
- Say only true things to investors: that the bench is deep, if it is.
- State what the board wants to see from the leader, and by when.
Set an end. Return the plan to its normal cycle once the issue is resolved, or make the change, since months of open hedging cost the company more than either.
What it costs and where it backfires
Subordinates and counterparties hedge, so decisions slow while the question hangs. The leader may leave on their own timing, possibly for a competitor, and heirs pushed into view can be damaged if no change comes. True signals delivered openly are the limit. Leaking memos, briefing investors on a change the board has not decided, or using the plan to humiliate the leader crosses into deception and harassment.
When it is used on you
Leaders facing it should ask the chair privately and directly whether the board is considering a change, and what it wants to see. Find out what changed in the cadence or audience of succession talk, deliver visibly on the board's priorities, and ask for the plan to return to its normal cycle by a stated date.