CEO succession: Avoiding the unanticipated Domino Effect

Discover strategies to prevent the Domino Effect during CEO transitions, where unprepared leadership changes can cause disruptions.
April 26, 2024
5
min read
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A large financial services company promoted a key leader into the position of CEO. Two of their peers were also vying for the top job. Almost immediately, the other two executives left the company. This created an unexpected leadership vacuum that cascaded within their respective departments, where no one on either team was able to step up into the suddenly vacant leadership spots. The lack of “ready now” successors required the company to look outside to replace those executive leadership roles, significantly disrupting their critical strategic transformation effort and creating additional chaos at the top of the company at a time when they could ill afford to slow momentum.

Similarly, a global manufacturing company promoted a key leader into the CEO role who lacked sales and marketing experience – an area where his predecessor had deep expertise. This expertise was a critical driver in the company’s success to date, and the gap at the top was stalling revenue growth and impeding the new CEO’s ability to deliver on the Board’s expectations. In order to fill the CEO’s knowledge gap, the company reorganized the head of sales and marketing role so that it was led by two executives instead of one. This unanticipated restructuring created confusion across the C-Suite and the rest of the sales and marketing organization regarding roles and responsibilities, which compounded their challenges in driving growth. The unexpected increased salary costs accompanying the additional executive role further impacted the bottom line, as well.

What these two examples illustrate is the Domino Effect. The Domino Effect occurs when a star performer is promoted, and there is no “ready now” successor to fill the role they are vacating. With so much attention placed on getting a new CEO into the role, the Domino Effect can cascade down through the organization and is an often hidden and unanticipated outcome that can hinder even the most capable chief executive from successfully taking the reins.

Assessing the impact of the Domino Effect

Conventional wisdom and the literature suggest that CEOs sourced internally outperform CEOs that are sourced externally. For example, in Harvard Business Review’s “Best CEOs of the World” top 100 list, 84% came from internal promotions1. The majority of leaders who ascend to the CEO role are COOs, CFOs, divisional CEOs, and some are “leapfrog” leaders identified below the C-Suite2. A question that has not been addressed is: what happens to the performance of the company when there are no internal candidates for the new CEO’s previous role? In other words, what is the impact of the Domino Effect on company performance?  

To answer this question, we compared the S&P 500 twenty best performing companies3 with the twenty worst performing companies4 based upon percentage change in stock price.  

What happened at the Best Performing companies?

Within the top 20 best performing companies, 75% of the CEOs were internal with 5 of the CEOs being founders of the company and 10 being promoted into the role. For their former positions, from which they were promoted, four were filled by internal candidates, and two were replaced with external candidates. Examining the leadership teams on the company’s websites, it appears that in three incidences, the role that the CEO vacated no longer exists. In one case the role was restructured and split into two different positions.

What happened at the Worst Performing companies?

70% of the CEOs at the worst performing companies came through promotions or being founder led (12 and 2 respectively), which is nearly identical to the best performing companies. All things being equal, one would expect a similar trend regarding the number of internal vs. external replacements for the CEOs’ previous roles from which they were promoted. However, we found that there were differences. Only three of the backfilled positions were placed by internal candidates and four were placed by external hires. In three of the companies, the position no longer exists, and two of the companies restructured the position.

Understanding the impact: disruption and worsening performance

The research shows little difference between the best and worst performing companies in relation to internal promotions and external hires for the CEO position. However, we do see more organizational disruptions in the replacement of the previous roles held by the CEO. A disruption is defined here as either the company was required to hire from the outside, restructure the role, or eliminate the role altogether. All of these create added turmoil and challenge for the new CEO as they try to move quickly to onboard and start delivering impact.

We found that disruptions were present in 60% of the top-performing companies, compared to 75% of the poorest performing companies. While more research is needed to uncover the nuances, our research suggests that companies with a stronger bench for newly promoted CEOs’ previous positions have less organizational disruption and outperform those who do not have a strong bench.

Tackling the Domino Effect before it falls

While CEO succession garners the greatest amount of the spotlight in the press, among board members, and in public sentiment of the health of a company, our research underscores the need for CEOs, CHROs, and Boards to focus on the Domino Effect as part of their C-Suite succession process. That is, creating a bench of potential successors targeted specifically for the CEO’s previous role, and the roles deeper within the organization that could replace those who are being elevated in the company at the time of the new CEO transition.  

Consider these best practices to get ahead of the Domino Effect:

  • Build the backfill into the identification process. When identifying potential candidates for the CEO, simultaneously consider who may replace that candidate for their current role.
  • Focus on the role rather than the person. You may not be able to replace the next CEO’s position with one individual, but you may be able to replicate their skills with people who can excel in the role with complimentary skills.
  • Expand the purview of success profiles. Create success profiles for the CEO and those roles that are likely feeder pools for CEO. Ensure that the success profiles are future focused rather than focused on what is important today. Business realities change over time. What makes someone successful today may be different than what is required in the next 3 to 5 years.
  • Leverage the power of data for determining future success. As you look at your bench, use structured assessment processes to assess individuals against the success profile, reduce the risk of biases towards individuals, and determine their readiness to address the future business challenges that the organization will face.
  • Comprehensively build the right bench. Look broad and deep within the organization when identifying potential successors. You may find those “leapfrog” leaders who would otherwise be overlooked.
  • Continually refresh your succession slate. Given the cascading impacts of the Domino Effect, it is more important than ever to ensure your slate is up to date with viable candidates for higher level positions. Consider doing so on at least an annual basis.
  • Ensure that succession is seen as a strategic imperative across the leadership of the organization rather than a single event of placing a new CEO. The CEO and the CHRO should own the succession process, the Board should be involved, and the focus should stay equally on the CEO role and the successor leadership roles throughout the organization.

Finding, placing, and ramping up a new CEO is a momentous decision with big outcomes at play – for the CEO’s own success and the viability of the organization. If you embrace the opportunity to turn the Domino Effect into a strategic gameplan, you will be positioned both for accelerated success and impact.

References

1 Harrell, E. Succession Planning: What the Research Says. Harvard Business Review December 2016

2 Harvard Business Review Staff. November 2009. The Best Performing CEOs in the World. Harvard Business Review 41-57.

3 https://www.fool.com/investing/2023/10/10/invest-sp-500-stocks-market-portfolio/

4  https://finance.yahoo.com/news/20-worst-performing-p-500-200036146.html

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July 31, 2025
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Why executive transitions go wrong - and what to do about it
Many executive transitions fail, not because of the wrong hire, but due to lack of support. Discover why it happens and how organizations can fix it.

Day 42: A newly hired Group Strategy Director is still at her desk at 9:00 p.m. She was brought in to lead a major transformation - one that’s been discussed for months but never clearly defined. She was hired because she’s capable, and there’s often an unspoken belief that capable leaders should just “get it” and move.

Her inbox is overflowing. Priorities keep shifting. Her peers are polite but distant - unclear on her mandate, protective of their turf, and too busy to engage deeply. Conversations stay surface-level.

She’s been invited in - but not set up to succeed.

It’s a common story: a strong leader, dropped into a high-stakes role without the clarity, structure, or support to land well.

Whether new to the company or stepping into a bigger role, many executives spend their critical first months navigating complexity alone - while being expected to deliver from day one.

Research has held steady for years: around 40% of leadership transitions fail within 18 months when the right support isn’t in place.

Too often, companies focus on choosing the right person - then overlook what it takes to truly integrate them. Without structured, human-centered support, even the most capable leaders struggle to succeed.

Why this matters more now

Transitions have always been high-stakes moments. But in today’s climate, the pressure is rising and the timelines are shrinking.

Leaders are stepping in during disruption - not stability.

Most aren’t inheriting status quo - they’re hired to fix or accelerate something.

Hybrid work delays trust-building and blurs cultural cues.

Visibility is high. Expectations form early and often.

In short: less room for error. More risk when it goes wrong.

Different paths. Same risks.

It’s tempting to think internal promotions are easier. But each path comes with invisible traps:

External hires lack historical context and relationships yet are expected to drive change.

Internal promotions bring familiarity but struggle to reset relationships and lead differently.

In both cases, leaders are often left navigating ambiguity alone once onboarding ends.

What’s missing

Most organizations do onboarding. Few do transitions. And that’s where things break down.

What’s often overlooked:

     
  • A clear and aligned mandate
  •  
  • Shared definitions of success across key stakeholders
  •  
  • Insight into unspoken cultural and political dynamics
  •  
  • Active sponsorship from the manager
  •  
  • A longer runway to build trust and momentum
  •  
  • Board-level clarity and engagement for senior roles

The result? Leaders are under pressure to perform - while still finding their footing.

The quiet rejection

Leaders are often hired to shift the system. But once inside, they encounter subtle resistance:

  • Their pace feels too fast.
  •  
  • Their questions challenge norms.
  •  
  • Their style doesn’t match unspoken rules.

Suddenly, trust is withheld. Expectations shift. Peers disengage - but don’t say why. The very qualities that got them hired now work against them. Confidence erodes. Performance stalls. And promising transitions quietly derail.

This isn’t just an onboarding issue. It’s a readiness issue - on both sides.

The cost of getting it wrong

A failed executive transition doesn’t just impact the individual - it ripples across the organization. It stalls momentum, fractures teams, delays results, and undermines trust in leadership.

It’s also expensive. Between lost productivity, re-recruitment, and missed goals, the cost can easily reach several times the leader’s salary.

When transitions go off course, it’s not just a talent issue - it’s a business one.

What needs to change

Organizations that get transitions right do five things well:

  1. Treat transitions as enterprise critical. Ask: What’s at stake beyond this one role?
  2.  
  3. Define success together. Ask: Are expectations aligned across leader, manager, and stakeholders?
  4.  
  5. Equip the manager to lead the transition. Ask: Are they prepared to sponsor - not just evaluate?
  6.  
  7. Provide real support - not just warm welcomes. Ask: Have we created space for the leader to reflect, adapt, and build capability?
  8.  
  9. Extend support beyond day 90. Ask: What happens after the honeymoon ends?

The gray zone

Most leadership transitions don’t fail during onboarding - they stall in the murky middle. That stretch between onboarding and full performance. Too late for checklists, too early for formal reviews, and too often overlooked.

This is when the leader is highly visible but still gaining footing. The system assumes they’re up and running. But what they actually need is time to reflect, context to navigate, and support to show up differently.

Without that space, small misalignments become big ones. First impressions stick. And promising transitions quietly derail - not because the leader isn’t capable, but because they’re left to navigate complexity alone.

This “gray zone” isn’t anyone’s job to manage - and that’s the problem.

The role of transition coaching

Transition coaching provides a confidential, strategic space to:

  • Navigate unspoken dynamics
  •  
  • Build confidence and clarity
  •  
  • Reflect and recalibrate in real time

As Greg Smith, CEO of Teradyne, put it:

“We’re investing in executive coaching because we want our senior leaders to lead with confidence from day one—not figure it out by month six.”

And the research backs it up. Coaching accelerates traction, strengthens alignment, and improves long-term performance.

But it only works when paired with system-level readiness: aligned stakeholders, engaged managers, and a clear plan for integration.

Final thought

Transitions aren’t just about setting a leader up to succeed. They’re a mirror for whether your organization is ready to evolve.

Because every new leader brings change - and every transition is a test of how well your system absorbs it.

If you’re hiring or promoting this year, the question isn’t just “is this the right person?”

It’s “are we ready to change with them?”

BTS helps leaders - and the systems around them - thrive through transition. Let’s talk.

Sources

     
  1. McKinsey & Company (2023), Leadership Transitions: Making the Move from Operational to Strategic
  2.  
  3. Harvard Business Review (Ciampa & Watkins, 1999), Right From the Start
  4.  
  5. CEB/Gartner Executive Research (2016), Why Successful Executives Fail
  6.  
  7. DDI Global Leadership Forecast (2021), Assessing the Risks in Leadership Transitions
  8.  
  9. McGill, P., Clarke, P., & Sheffield, D. (2019). From “blind elation” to “oh my goodness, what have I gotten into”: Exploring the experience of executive coaching during leadership transitions into C-suite roles. International Journal of Evidence Based Coaching and Mentoring. Oxford Brookes University.
  10.  
  11. Greg Smith, CEO of Teradyne, as quoted in BTS webinar (2025)
  12.  
  13. International Coaching Federation (ICF, 2021), The Value of Coaching in Leadership Transitions
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Discover how BTS Spark and Tostan are building grassroots leadership in Senegal, empowering communities to drive sustainable change through local capacity and collaboration.

In a world where transformation often feels complex and distant, real progress is often sparked at the community level, through leaders who create change from within.

In Senegal, a partnership between BTS Spark and Tostan, a nonprofit dedicated to community-led development across Africa, is bringing this idea to life. It’s a reminder that sustainable leadership isn’t built by imposing new systems. It grows when people are equipped to lead themselves.

A ground-up approach to lasting change

Since 1991, Tostan—whose name means "breakthrough" in Wolof—has partnered with rural African communities to advance human rights, health, literacy, and economic development. Its Community Empowerment Program (CEP) weaves together practical knowledge and human rights education, enabling communities to define and pursue their own visions of progress.

Across eight countries and more than five million lives, Tostan’s approach has led to deep-rooted changes, including the voluntary abandonment of harmful traditional practices. Not by directive, but by choice.

It’s an approach that shows leadership capacity isn’t something to be delivered from outside. It’s something to be nurtured from within.

Meeting communities where they are

In 2024, BTS Spark deepened its collaboration with Tostan through an in-person leadership workshop, led by a BTS Spark consultant, following a year of virtual engagement.

The visit coincided with a leadership transition at the executive level—a pivotal moment requiring clarity, continuity, and resilience. Through targeted coaching and workshops, BTS Spark worked alongside Tostan’s leaders to support the transition and strengthen leadership capacity at every level of the organization.

Tostan leadership workshop in Senegal

The focus wasn’t on delivering a model. It was on listening, amplifying existing strengths, and equipping leaders to navigate complexity with confidence.

Practical tools for complex challenges

As part of the ongoing collaboration, BTS Spark also provided custom-designed micro-simulations focused on sectors vital to community sustainability: climate resilience, microfinance, and agriculture.

These micro-sims offer leaders a chance to engage with real-world decision-making challenges in a safe, practical environment—an approach that mirrors how leadership development increasingly happens: not through theory alone, but through repeated, real-world application.

Leadership simulation in Senegal

Community workshop in Senegal

It’s a reminder that growth is rarely linear. It’s built through practice, reflection, and adaptation over time.

Building leadership that endures

The work between BTS Spark and Tostan reflects a broader truth:

Leadership isn’t confined to titles, industries, or regions. It emerges where people are given the tools, trust, and space to act.

Sustainable change, whether in communities or organizations, happens when leadership capacity is strengthened closest to where challenges are lived every day.

The partnership also highlights the power of investing in local capability: focusing on what’s already working, building resilience from within, and preparing leaders not just to meet today’s challenges, but to shape tomorrow’s opportunities.

Moving forward: Scaling with purpose

The work in Senegal is continuing to evolve. BTS Spark and Tostan are exploring ways to extend leadership development to more communities, deepen their impact, and continue supporting transformation through shared expertise and partnership.

It’s a model rooted in respect, collaboration, and the belief that leadership is most powerful when it reflects the realities and aspirations of the people closest to the work.

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Talent leaders must think differently about critical roles at their organization to build organizational resilience and stay competitive.

A talent leader’s guide to critical role planning

To thrive amid massive changes from economic upheavals to AI transformation, today’s organizations must be able to adapt, recover, and grow stronger in the face of adversity – they must build resilience.

What truly makes an organization resilient? It’s not just strategic plans or operational efficiency; fundamentally, it’s about people. Resilient organizations are those that recognize the critical roles within their teams, nurture talent, and create a culture where adaptability and innovation are the norms.

At the recent Society for Industrial and Organizational Psychology (SIOP) Annual Conference in Chicago, BTSers Lynn Collins, Maia Whelan, and their esteemed panelists led a compelling discussion: Critical role strategy for organizational resilience. The session focused on how identifying and nurturing critical roles can help organizations build resilience in today’s rapidly evolving business landscape. This blog explores actionable strategies from the panel discussion for talent leaders looking to redefine critical role planning and build organizational resilience.

What is a critical role?

A critical role isn’t confined to the executive level. Effective leadership and organizational success depend significantly on roles scattered throughout your organization.

Middle managers, for example, serve as essential bridges between strategy and operational execution: they ensure that the organization’s broader objectives are translated into actionable tasks that teams can understand and implement. Project leads are also at the helm of initiatives that can redefine the business landscape for a company. They deploy new technologies, spearhead market expansions, manage diverse teams, and maintain project coherence to drive transformation.

The challenge with critical role planning, therefore, lies in the fluid nature of what constitutes a ‘critical role’. Agility in reevaluating and recalibrating these roles allows organizations to respond dynamically to new challenges and opportunities. In the pharmaceutical industry, as companies increasingly shift their focus towards biologics, the roles responsible for managing these technologies become increasingly important. Similarly, in the financial sector, roles that steer digital transformations are pivotal.

Identifying and fortifying these critical roles is paramount. This involves not only recognizing the key positions, but nurturing the talent within through a thoughtfully crafted, future-focused talent development strategy.

Nurturing talent is the key for organizational resilience

Investing in talent goes beyond filling positions; it’s about preparing your organization to face future challenges while bolstering current capabilities. This investment significantly impacts turnover, retention, and promotion rates, contributing positively to both the individuals involved and the organizational culture at large.

At BTS, we see common themes with our clients across industries:  

  • Talent strategy is essential for safeguarding organizational resilience. This includes adopting a digital mindset, not just externally by hiring new talents, but also internally upskilling existing employees to meet new challenges.  
  • Enhancing emotional intelligence is equally vital in enabling the workforce to manage stress and adapt to changes effectively.
  • Strengthening business acumen across all levels of the organization is also crucial for fostering resilience. Employees are better equipped to make informed decisions that align with strategic goals when they develop a keen understanding of business operations and market dynamics.  

This comprehensive approach—combining technological proficiency, emotional intelligence, and business insight—ensures that teams are not only competent but also agile and strategic in the face of ongoing challenges.

6 ways talent leaders should think differently about critical roles  

Here’s what you can do to think outside the box to enhance both individual and organizational performance through critical role strategy:

  1. Broaden the definition of critical roles: Talent leaders should evaluate roles based on their actual impact on the organization, rather than focusing on organizational hierarchy.
  2. Foster role flexibility: Encourage a culture of adaptability by regularly reassessing and recalibrating critical roles. This ensures roles can be defined to align with evolving strategic needs and current business priorities, keeping the organization agile and responsive to change.
  3. Use data-driven role analysis: Use data to track the effectiveness of critical roles in real-time and adjust role criteria based on evidential data rather than intuition.  
  4. Create a proactive talent acquisition strategy: Talent leaders should engage in continuous talent scouting, not just when a role becomes vacant. This involves understanding the talent landscape and building relationships with potential candidates before the need arises.  
  5. Decentralize talent decisions: Empower local managers and teams to make critical talent decisions to ensure that those who are closest to the work have a say in who fills pivotal roles. This approach can lead to more informed and effective placement decisions. To maintain rigor and ensure consistency, establish clear guidelines and accountability frameworks. This helps maintain high standards across all decisions and strategically aligns talent management with broader organizational goals.
  6. Enhance diversity in critical roles: Actively work to increase diversity within critical roles. This involves not only recruiting a diverse workforce, but also creating pathways for diverse talent to advance into these roles. Diverse perspectives can lead to more innovative solutions and resilience against market disruptions. Comprehensive mentorship initiatives, equitable advancement opportunities, and ongoing diversity trainings ensure that all talented individuals have the chance to significantly contribute to the organization.

These strategies are designed to help talent leaders transform their organizations into agile entities capable of anticipating and responding to rapid changes. This fosters a culture that not only values but thrives on adaptability, proactive talent development, and strategic foresight.  

Invest in your people

As a talent leader, your influence is pivotal in steering your organization towards greater resilience. By redefining and enriching critical roles and the talent that fills them, you’re not just preparing your organization to face future challenges but to excel amidst them.  

This requires a commitment to pushing the boundaries of traditional talent management by:

  • Taking innovative approaches to career development
  • Using predictive analytics to better understand and deploy talent in critical roles
  • Embedding continuous growth and feedback into your culture

Such efforts ensure that critical roles are not only filled with competent individuals but are also continuously evolving to meet the demands of a dynamic business environment. By doing so, you transform resilience into a powerful competitive advantage, ensuring your organization remains agile, forward-thinking, and robust.

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