With all eyeballs on Marissa Mayer at Yahoo and Tim Cook at Apple, CEO succession is a hot topic these days – and rightly so. Few things adversely impact corporate culture, shareholder value, or brand equity like a failed CEO. In today’s column, I’ll share the most common reason for failed CEO successions.

Given the obvious importance of leadership from the top, what always amazes me is the ever-increasing turnover rate for chief executives. With the average tenure of Fortune 500 CEOs being less than five years, a company’s board must always be thinking of succession. While departures are often unexpected, they should never be unplanned.

There is no arguing the fact failed chief executives can send a brand spiraling into decline, which can take years, or even decades, to recover from – if it recovers at all. In fact, the only thing I can think of worse than a failed CEO is a successive string of failed CEOs (e.g. HP six CEOs since 1999 & Yahoo six CEOs since 2007). Contrast this with the fact that well-planned and properly executed CEO transitions can boost stakeholder confidence and drive an increase in stock price. It’s a wonder more companies don’t get this right.

Let me be clear – successions fail for one reason, and one reason only: a lack of leadership. Companies, boards, and their advisors who fail to successfully transition the CEO focus more on silly processes than the people and the culture. Put simply, these otherwise savvy business people don’t understand succession as well as they would have you believe. They focus on optics, politics, and convenience more than delivering the right outcome.

As a result of my practice area emphasis, I normally find myself commencing work on six to 10 new Fortune 500 CEO succession engagements each year. This means at any given point in time I’m dealing with close to 20 companies in various stages of transitioning the chief executive. I’ve witnessed the best and worst of succession philosophies and practices, and I can assure you more companies get it wrong than right.

While most organizations have dealt with succession planning at some level, they rarely touch all the necessary constituencies with appropriate timing and care.  Succession needs to be part of the values, vision, strategy, and culture of an organization. It must be embraced by leadership, communicated to the workforce, and understood by external stakeholders. It must be viewed as a step forward and not a regression.  While many will overcomplicate succession, others tend to trivialize it. The truth is succession is a blending of the art and science of leadership, people, positions, philosophies, relationships, culture, and certainty of execution.

The complexity associated with succession is largely a result of the number of constituencies that must be addressed as a result of the process. Successful transitions become even more difficult when they are forced to occur in a short time frame because the proper planning failed to occur. Successful efforts address a minimum of the following ten constituencies (in no particular order):

  1. The board
  2. The incoming CEO
  3. The outgoing CEO
  4. The executive leadership team
  5. Internal candidates who didn’t get the job
  6. The workforce
  7. The capital markets
  8. Public policy
  9. Customers, partners, vendors/suppliers
  10. The media

The simple truth is most companies can avoid the chaos and calamity associated with CEO succession failures by doing one thing well — hiring the right CEO, to begin with. That said, selection must be followed by assimilation and then finally succession — three different phases with three different requirements.

Too many organizations simply botch the recruitment, selection, assimilation, and succession phases only to have to endure the entire cycle again. A failed CEO not only halts the momentum of the organization, but it sends a strong signal to the market that the board has been asleep at the wheel.

When succession fails, many will point the finger at the incoming or outgoing CEO, some will blame the HR team that failed to develop suitable internal candidates, and others will cast dispersions on the search firm that failed to deliver the right external candidate pool. While there’s plenty of culpabilities to go around in any failed succession, people will often overlook the reality that the board of directors owns a great deal of the responsibility as well.

Having the right type of board composition and engagement will often be the key difference between a successful passing of the baton and a failed handoff. A disengaged board simply won’t provide the proper amount of oversight and governance necessary to ensure succession becomes a cultural priority. Likewise, an over-engaged board that crosses over the governance line into the management arena can do just as much damage to the process.

The board, as well as the subcommittees that oversee succession planning and selection, are the key to ensuring a successful CEO transition. If the board hasn’t held the existing leadership team accountable for talent development and succession planning they have simply failed in their oversight obligations.

While some would say if you have to go outside the enterprise to find a successor CEO then succession has failed. This is utter rubbish — a myth, and a harmful one at that. The goal isn’t to produce an internal candidate in a vacuum; the goal is to produce the right candidate at a given point in time — internal or external doesn’t matter, it’s finding the right candidate that matters. Successful transitions compete with internal candidates against external candidates to achieve the right outcome.

Let me leave you with these thoughts: succession is not an HR problem — it’s a leadership problem.  At its essence, the succession of a CEO is a complex collaboration between diverse constituencies. Succession is more than planning as plans don’t develop people — experiences do. Succession is more than recruiting — hiring a successor candidate is not the solution, it’s the beginning of the journey. Succession must be a cultural imperative aligned with the core values of the enterprise, or you’ll be engaging in little more than a rolling of the dice.