Q&A: Navigating the CEO Succession Crisis

Mary (00:01.454)
Hello friends and welcome back to Confessions of a Terrible Leader. I'm your friendly neighborhood podcast producer, Mary Schop, back here today with our founder and CEO, Lacey Nelson of Transcend Leadership Collective. Lacey, welcome back.

Layci Nelson (00:16.944)
Yes, I know it like we haven't done one of these all summer and all transparency. Like we took the summer off of Q &A's for the most part. And I feel like I'm like getting back on the bike. You know, it's I know how to do this, but it's a little wobbly. So yeah, welcome to the ride, everyone.

Mary (00:21.198)
Yeah.

Pretty much. Yeah.

Mary (00:35.702)
Yes. man. It absolutely, it does feel like that. I, we were talking like, do we still know how to do this? it was a good and necessary break. It's been a very, how shall we say that we are now calling it the summer of, in which nothing went to plan. but that's okay. Cause we're here now. And as of today, all of our kids are back in school. So the brain power is slowly returning.

Layci Nelson (00:53.15)
Yeah. Mm-hmm. Mm-hmm. Mm-hmm. Yep.

Layci Nelson (01:03.647)
Mm-hmm.

Mary (01:03.779)
And we are going to find our way back to normal.

Layci Nelson (01:09.19)
Yes we are. Yes we are.

Mary (01:11.937)
So Lacey, I was looking up, what are some of the red hot leadership issues of 2025? It's no surprise to me that the first one that pops up is AI, but that's a really massive topic and we're not going to tackle that today. Not today, but probably in another Q and A. But what we are going to talk about today is right now.

Layci Nelson (01:27.25)
Yeah. Not today.

Absolutely.

Mary (01:39.288)
There is a mounting CEO succession crisis and leadership pipeline erosion. That's a mouthful. So it's, that's a little scary and kind of just the gist of it is there, there's a disconnect. there's a lack of preparation of up and coming leaders. And from, I'm going to cite my sources here, but from business.

Layci Nelson (01:43.616)
Mm-hmm.

Layci Nelson (01:47.188)
Yep. Yep.

Layci Nelson (01:51.54)
Mm-hmm.

Layci Nelson (02:01.928)
Mm-hmm.

Layci Nelson (02:06.377)
Of course.

Mary (02:08.238)
insider. I just want to read this short statistic here that right now there's like a record executive turnover and very thin pipelines. In early 2025, 14.8 % of S &P 500 companies saw their CEOs exit. And that is a rate far above the historical average of 11.3%. That is 646 CEOs stepping down in a single

quarter, but wait, right, right. It's like literally fortune 500 and that should really make us pause, but wait kids, it gets worse. Uh, meanwhile, internal leadership pipelines are increasingly fragile as structural changes in job hopping by emerging talent leave companies scrambling for qualified successors. And as a result, 44 % of new CEOs in 2024 were poached externally.

Layci Nelson (02:39.176)
Right, of Fortune 500s, right? Like that's not even, that's not even of everybody.

Layci Nelson (02:49.354)
Ha ha ha.

Layci Nelson (03:07.072)
Mm-hmm. Yes, yes. I mean, the 44 poached externally, people may think, well, what's the problem with that? They're finding them. They're getting people in the seats. I want us all to recognize that, first of all, how long it takes to get someone up to speed that comes in from the outside with the culture, with understanding how things work.

Mary (03:07.31)
Lacey, help. What's going on? What's going on?

Layci Nelson (03:35.156)
developing all of the required relationships internally. I mean, we haven't even talked about externally that are required to function at that high level. If you have a board you're reporting to, there's also that relationship and trust building that has to happen that takes time. And when you are bringing somebody in from the outside, you're losing years of historical knowledge of

understanding how things function, of knowing where the gaps are. That's all gone when you bring somebody new in, no matter how talented they are. There is a steep learning curve and you lose a lot of continuity. And it's not unusual when you bring someone in from the outside existing talent that may report to that new boss, you usually lose somebody.

Mary (04:15.918)
Mm-hmm.

Layci Nelson (04:35.132)
in that transition period as well. It's not uncommon. New leader comes in, there's somebody on the executive team that just does not work well with that new leader for a myriad of reasons and you lose them. And that's more historical institutional knowledge that just walked out your door. So there is a lot to be said for putting in the work of developing your successor internally.

Mary (04:36.27)
Sure. Yeah.

Layci Nelson (05:04.359)
and identifying successors internally, but understanding it doesn't just organically magically happen as much as we want it to. So, it wouldn't it though, but it doesn't. And I think the crisis, the erosion that they talk about is a lot of people think, I know who the next person's going to be, but they...

Mary (05:14.798)
Yes. Yes. That would be nice, but it doesn't. Yeah. Yeah.

Mm-hmm.

Layci Nelson (05:31.016)
sometimes don't even have conversation with that person. They operate off of assumption or they wait way too long to have the conversation. So that person is out because they're like, I'm to look for opportunities somewhere else. And they had no idea they were being eyed for succession. And by the time that they've moved on to another company, even if you tell them when they're going to walk out the door, oftentimes they've already made that emotional and mental disconnect and they're moving on.

Mary (05:37.326)
Mm-hmm.

Mary (05:44.322)
Right.

Hmm. Yeah.

Layci Nelson (06:01.204)
Like they're done. You gotta catch them way before, way before that.

Mary (06:05.388)
Yeah. Yeah.

Layci Nelson (06:10.016)
problem, besides just lack of communication, is no formal leadership, intense leadership development. No obvious pathways either. I work with we, all at the collective, not just myself, but we work with a lot of organizations that are operating at the nine plus figure. So these are not, these are not, you know, a mom and pop.

down the street. They might have started that way, which is cool. But these really large organizations that they have not put in the work to identify even a rubric for what do we look for in leaders here? What are we looking for in the next group of leaders that we want to bring up?

Mary (06:44.088)
Right, yeah.

Layci Nelson (07:07.718)
And have we communicated it to them? Is there an obvious on-ramp and pathway to development so that people can know, I want X and this is how I get there. And this is what it takes to get there. If I want to be in this seat of leadership, this is the pathway. So often we either never thought through the pathway or we haven't effectively communicated the pathway. So.

Mary (07:12.622)
You

Mary (07:26.562)
Mm-hmm.

Mary (07:34.382)
Yeah. Yeah.

Layci Nelson (07:37.566)
That is what we're seeing all over the place. I would say a million percent echoes at multiple levels of business, not just the Fortune 500s. It's happening at all levels of business.

Mary (07:50.06)
Yeah. Mm-hmm. Yeah. And that's so sad to think about. There could be so many young, capable leaders in these companies, well, in any company where perhaps they were being considered for leadership, but because of, again, that weak pipeline, lack of communication, lack of a rubric or protocol, they had no idea.

Layci Nelson (08:09.662)
Mm-hmm.

Mary (08:16.354)
that they were being considered or at least being viewed as a possibility. you know, so eventually they leave because a better opportunity elsewhere, you know, awaits them. And if that could have just been communicated, you you strengthen the pipeline, happier workers, you know, better succession and continuity. Yeah.

Layci Nelson (08:16.404)
Mm-hmm.

Layci Nelson (08:29.663)
Right.

Layci Nelson (08:37.726)
Right, right. People that do participate in established leadership pipelines, leadership trainings in organizations where it's functioning well, people are, it's pride. There's like a big amount of pride to be selected to be part of this leadership training process when it is obvious that it's leading somewhere, right? That this actually is an on-ramp to possibility for you.

Mary (08:51.63)
Mm-hmm.

Mary (08:55.022)
Mm-hmm.

Layci Nelson (09:07.432)
not just an exercise in futility of a box to check where we send you away to this thing or we have the speaker come in. When it's disconnected from a higher purpose, it's not nearly as powerful. So when you can actually say this is our leadership program and the very best ones start identifying people on the frontline, like you start your development of people.

Mary (09:14.904)
Mm-hmm.

Layci Nelson (09:36.82)
The frontline are not an afterthought. They are part of your intentionality of seeking people out. And some of the most amazing leaders that take companies to new heights are the ones that started on the frontline and then they're sitting in the boardroom in those executive C-suite chairs making decisions with this depth of knowledge and historical understanding of the life of the institution that spans like 15,

Mary (10:00.174)
Mm-hmm.

Layci Nelson (10:06.394)
to 20 years by the time they're in those seats. You're not gonna get that with somebody coming in from the outside. It's gonna take 15 years to get there. You don't have 15 years for them to catch up, to be able to maintain the continuity of the company, of the success, to be able to see where you, and also be able to cast vision as to where we need to go next.

Mary (10:13.72)
right?

Mary (10:29.358)
Sure. Yeah. That makes perfect sense. to have that experience and depth of knowledge. And that is why so often, and I've experienced this in other workplaces where you have new people coming in all the time. There's no knowledge base of protocol, how things are done. And it's just a constant starting over. And that is so, it's exhausting. It's frustrating.

Layci Nelson (10:47.092)
Mm-hmm.

Layci Nelson (10:54.558)
Yes, it's exhausting.

Mary (10:58.578)
And of course turnover is insanely high in situations like that. So what you're speaking to leads me directly to kind of like the next point of, as you said, the growing leadership gap. Recognizing there is a systemic failure to nurture future leaders, leaving things to chance.

Layci Nelson (11:15.018)
Mm-hmm.

Mary (11:24.814)
And another statistic that I wanted to read was that boards are now under pressure to identify visionary leaders quickly or risk decisions that lack continuity and fail to preserve organizational culture. Whoa, would you speak to that a bit more, Lacy?

Layci Nelson (11:36.661)
Mm-hmm.

Layci Nelson (11:47.888)
Yes. Vision casting is a skill and it also, oftentimes those that we have identified without the intentionality of a process in place and just like, well, they're really good at the job. There are people like them, which is important. That's important. Like by the time you're climbing that level though, you've got to at least have

Mary (12:11.374)
Sure.

Layci Nelson (12:16.134)
some respect established of your teams. I speak so confidently. I guess not always. That doesn't always happen, but let's assume the best. often though, the strongest skillset those people have, the muscle that is the strongest is that muscle of operator, maintenance, keeping the train on the tracks, which keeping the trains running on time, all hyper valuable skills.

Mary (12:24.642)
Yes, yes.

Layci Nelson (12:44.54)
absolutely necessary for the functioning of an organization. However, it is a completely different muscle than vision casting and a completely different.

Mary (12:54.296)
Hmm.

Layci Nelson (12:59.398)
embrace of even the way that they communicate and share what's going on. The tone is often, there's often in strong operators, there's often a like, well, change is necessary, but we got to figure this out. There's not an embracing of it as this is exciting. It's like, this is tall. We have to tolerate it. It comes with the territory, right? And it.

Mary (13:20.099)
Yeah.

Layci Nelson (13:26.698)
There's something to be said, like strong operators are amazing. We need them. And we need to recognize at the same time that that is not the same skill as vision casting. And the strongest vision casters are able to inspire operators to then carry it out, right? And do that work.

Mary (13:37.528)
Mm-hmm.

Mary (13:46.339)
Mm-hmm.

Layci Nelson (13:50.026)
but often we're not helping people understand even what it takes to cast vision. Because like it's a muscle and you can develop it and operators can develop it as well. Now you're gonna have one way you lean harder than the other, but it also may make you pause and go, have I identified?

Mary (13:56.195)
Mm-hmm.

Yeah.

Layci Nelson (14:15.186)
identified the right person? Because I am thinking this super strong operator is going to be my successor. But can they carry the vision? Can they motivate, engage and inspire at that top level? The answer to that might be no. And you might have that person, you just have been looking in the wrong place.

Mary (14:17.102)
Mm-hmm.

Mm-hmm.

Mm-hmm.

Mary (14:31.395)
Mm-hmm.

Yeah.

Mary (14:40.206)
That makes sense. Yeah. And that's, that's, that would be very tricky. a strong operator, like you said, so necessary. We need operators to keep things on the rails and, you know, keep that muscle, you know, moving forward. and so often it could be considered, well, really inconvenient like to

Layci Nelson (14:42.046)
Mm-hmm.

Layci Nelson (14:56.586)
Mm-hmm.

Mary (15:08.46)
think of having to kind of split this idea of operator visionary. Cause we just love it's like everything in one, know, an all in one and that's just, know, humans with all of their brilliant skill sets and everything. It's just like, we can't do it all. And that's just not always what you get.

Layci Nelson (15:16.52)
Right, right, right.

Layci Nelson (15:26.068)
No.

No, it is the rare unicorn, right? And I will say there are, everyone thinks they're a unicorn. I'm not a unicorn, ask my team. So like a strong visionary, I need people that bring structure and keep the trains running on time, right? Like the...

Mary (15:31.918)
Mm-hmm.

Layci Nelson (15:49.426)
I'd looking for that next person to be that visionary and be able to bring that fire and see what's coming next and be operator and visionaries should be holding hands all the time, right? Like they need to be holding hands. If you thrust an operator into a visionary position and then all of sudden expect them to be a visionary, but you haven't...

Mary (16:05.718)
Mm-hmm.

Layci Nelson (16:17.606)
effectively communicated even what it means. Let's talk about what it means to be a visionary. Because I think sometimes we use that word and we're like, I don't think that word means what you think it means. So a visionary is the person that sees where the company, the organization, the services that you, the core, the heartbeat, they hold the heart of the culture.

Mary (16:27.34)
Right, yes. Yeah, yeah, let's go there.

Layci Nelson (16:45.524)
They own the essence of who are we and where are we going? And why do we exist and what do we do in this? Why do we do what we do in this world? Not so much in the how. And the nuts and bolts of execution is what operators excel at. But those visionaries are really good at saying this is what we do what we do. This is why it matters. This is...

Mary (16:49.858)
Mm-hmm.

Mary (16:57.966)
Sure. Yeah. Yeah.

Layci Nelson (17:12.446)
and they get others engaged and excited to be part of this thing that is bigger than themselves and they can see the future and they have a high risk tolerance. It's one of the biggest differentiators. Operators usually typically have a much lower risk tolerance. By risk tolerance, mean, a visionary can say, this could be a really expensive mistake.

Mary (17:18.572)
Mm-hmm.

Mary (17:24.366)
Mm-hmm.

Mary (17:30.445)
Mm-hmm.

Mary (17:38.252)
Right. Yeah.

Layci Nelson (17:39.112)
but we're gonna go for it and see what happens. You need to do it with wisdom, right? But they're willing. Yeah, it's not recklessness, but it's a willingness to try things. And it also is an ability to develop and nurture big key relationships. Visionaries are going out and bringing others in.

Mary (17:44.92)
Like not reckless, but yeah.

Layci Nelson (18:08.766)
to as customers, as collaborators, as they're sitting around the tables, they're oftentimes doing a lot of the things that feel like to a lot of people from the outside, like, well, that must be nice, but they're going to the networking, so they're going to the parties. And I'm gonna tell you, after a certain amount, the gloriousness of that wears off real quick. So.

Mary (18:24.408)
Yeah.

Mary (18:33.23)
I'm sure. Sounds like a nightmare to me.

Layci Nelson (18:37.67)
You do it, man. You go out there and you do it and you stay engaged and it's like working out. Once you're there, it's great. Just getting yourself there sometimes can be like, here we go again. But that is where visionaries just thrive. They dazzle in that area and it can be taught. Some of it is innate in how you see the world.

Mary (18:38.826)
Yes.

Mary (18:47.171)
Right.

Right, sure.

Mary (19:03.544)
Mm-hmm.

Layci Nelson (19:07.648)
But there are things to look for in your potential successors. And I just want to encourage like, oftentimes it's not the operators that are, it's not the super strong operators. You're going to ask them to go into that role and they are going to struggle.

Mary (19:11.278)
Mm-hmm.

Mary (19:23.842)
Mm-hmm.

Mary (19:28.553)
Mm, mm-hmm, mm-hmm.

Layci Nelson (19:31.07)
because all of sudden everything they did that helped them win as an operator is not what's going to help them win as the person who carries the vision and the culture of the company.

Mary (19:40.92)
Sure. Very different skill set. Yeah. Yeah.

Layci Nelson (19:43.496)
Yep, yep. And also a visionary has to be able to confidently stand in front of their team and say, this is where we're going. I don't know exactly how we're going to get there, but this, you're going to help me figure that out together. But this is the journey that we're going to be on. And this is a direction. This is the destination and cast that beautiful picture for them.

Mary (19:58.296)
Right.

Mary (20:02.914)
Mm-hmm.

Mary (20:12.066)
Mm-hmm.

Layci Nelson (20:12.564)
I mean, for us, it's like, we wanna influence 25 % of the most influential businesses in America. We want them to be using heart first leadership skills. Like, that's a big, that's the vision. Like we really want this out there because we so believe in the impact it makes. Why? Well, because everyone deserves the opportunity to go to work and be motivated, engaged and inspired.

Mary (20:26.54)
Yeah, that's the vision. Yes.

Layci Nelson (20:41.82)
And we focus on how does this affect the least influential because everyone matters. And if we start with the frontline and thinking about, even though oftentimes we're working with the mid-level and above, we keep in mind everything we design, everything we do, how is this impacting the frontline? And then also encourage everyone that we're working with.

Mary (21:01.421)
Mm-hmm.

Layci Nelson (21:06.448)
lay, we don't just encourage, we lay it out, we give them, you know, and we go in and we design leadership academies for organizations so they can do all these things we're talking about. We include the frontline in that development and in that, in, and they are included in the arc of how do we get this throughout the company. A lot of times leadership development gets trapped in the top and it's

Mary (21:08.866)
Yeah.

Mary (21:14.37)
Mm-hmm.

Mary (21:34.232)
Sure, right, right. And that makes zero sense.

Layci Nelson (21:34.994)
and it's only given to the top.

Right, and then they're expected to like, well go share what you learned with your team.

Mary (21:45.076)
Yeah, no, no, zero implementation. Yeah, yeah, right. No, no, right.

Layci Nelson (21:47.998)
Right, right. Like that's not a fair ask of them, honestly. It's not like they failed. It's like, that's not a fair ask. First of all, top tier facilitation and trainers are a skill in and of themselves. We have some of the best, so. Yes. That is, that's not a fair ask. So all of that to say like, all this stuff, like the things I'm talking about, the way I'm talking, like that is the essence of vision casting.

Mary (22:02.84)
think so, absolutely.

Mary (22:12.492)
Yeah.

Layci Nelson (22:18.472)
And that is where the conversations, like when you understand that's what you're looking for in your successor, you're gonna have a different lens with which you are understanding conversations that happen, the things that you're picking up on in those that are surrounding you that are your right hand, your left hand, know, those executives on your team, the people that you think might be next.

Mary (22:27.79)
Mm-hmm.

Layci Nelson (22:48.702)
when you can understand what vision casting actually is and then the ability to take it and communicate it in a way that is not chaotic.

Mary (22:58.262)
Yes. Yes.

Layci Nelson (23:00.798)
that doesn't overwhelm. There's a lot of nuances to being that kind of a leader that does it, because we overwhelm our people if we're not careful, if we're not skilled. That's probably a different discussion. the...

Mary (23:02.51)
Mm-hmm.

Mary (23:12.259)
Yeah, yeah.

Layci Nelson (23:16.35)
That is what you're looking for in your potential successor. And that is what the boards are talking about that they want. They want that. If you think of the leaders that have come back into company, if you look at Apple, you look at Starbucks, you look at who did they have to bring back in? Their vision, their strongest vision casters.

Mary (23:19.8)
Mm-hmm.

Mary (23:23.948)
Mm-hmm.

Mary (23:35.116)
Yeah. Yep. Yep. That makes perfect sense. And, and as you're saying that it just reminds me when I was just researching, reading through all of this, what struck me the most is how all of these very real problems, like this is a crisis right now in leadership. And as I was reading this, I just kind of wanted to close with saying I was

Layci Nelson (23:54.395)
Yeah

Mary (24:02.434)
Well, it can be discouraging on one way of looking at it, but recognizing how much transcend does to help with that. And help isn't even the right word. It's like, this is the mission. This is the vision of like recognizing the crisis and recognizing like, so everything we do right now is deeply aligned with addressing this crisis.

Layci Nelson (24:16.009)
Yeah.

Yeah, yes.

Layci Nelson (24:31.666)
A million percent, yes.

Mary (24:32.43)
So, so it's, you know, it reminds me that like, and I know I've mentioned this before, but, know, again, when we do these Q and A's, we are looking at like very, very current research trends. So we can bring like that latest research to you, dear listener and viewer. So, um, but yeah, it's, a very real problem, but I was glad to see, wow, everything that we're doing.

Layci Nelson (24:46.164)
Mm-hmm.

Layci Nelson (24:51.508)
Right, right.

Layci Nelson (25:02.581)
Mm-hmm.

Mary (25:03.24)
in our work right now is completely aligned with helping to be part of the solution to this crisis.

Layci Nelson (25:13.022)
Yes, literally every, all of our core services work towards that. And we also, we don't talk about it as loudly as we should, we also actually do succession planning. And when people think about succession planning, they often think about contracts and lawyers and fiscal agreements, which are all critical.

Mary (25:19.714)
Yes. Yeah.

Mary (25:29.325)
Yes.

Mary (25:32.846)
Mm-hmm.

Mary (25:36.206)
Yep.

Layci Nelson (25:42.228)
Right? Like, it is very much an important part of it. What often gets, I will say, at the extreme, completely ignored, and at best, usually not given enough attention, is surfacing and smoking out all of the underlying sacred cows, elephants in the room.

Mary (25:42.478)
Sure, it's certainly part of it.

Mary (26:06.178)
Mm-hmm. Yeah. Yeah.

Layci Nelson (26:07.166)
the hard things that are getting in the way of having open, honest, heart, honest and healthy conflict and really having those conflicts and those conversations that are uncomfortable dealt with so that you can actually come up with contracts and financial agreements that aren't blanketed in resentment and have to be rewritten five times and end up in a nightmare later.

Mary (26:13.677)
Yeah.

Mary (26:23.512)
Mm-hmm.

Mary (26:36.406)
Right.

Layci Nelson (26:36.848)
So it's helping people understand how to be stubborn about the right things and get all those issues out so that you can actually develop a plan that is going to be adhered to and not because both or multiple party, whoever's required at the table for this succession, everyone's bought in because they helped create it.

Mary (26:42.903)
Yes.

Mary (26:51.47)
Mm-hmm.

Layci Nelson (27:04.68)
And it worked through some issues that sometimes for generations have not been worked through, especially in family business.

Mary (27:11.564)
was just about to say, especially in family businesses, and we do a lot of work with agriculture. There can be some heavy stuff there to work through. the, you know, the whole idea of succession is that things are able to keep going. The business is able to keep thriving or maybe even thrive for truly the first time. So it's, it's very, can, you know, we help work through

Layci Nelson (27:18.228)
Mm-hmm.

Layci Nelson (27:35.134)
Right, right.

Mary (27:40.856)
Well, what's the stuff that's keeping you from getting there? well, there's a lot good stuff. There's a lot of good stuff. I mean, that's something that we could talk about forever is succession planning and the, you know, where the crisis right now with the CEOs and the weakness of the, you know, pipeline, all those things. And, you know, we'll keep an eye on what the trends are looking like with that. And I'm sure we'll revisit this tab from time to time, but Lacey, is there anything else you'd like to add to this already quite

Layci Nelson (27:58.543)
Ooh, yeah.

Layci Nelson (28:06.74)
Yeah.

Layci Nelson (28:10.612)
my gosh, I know we were supposed to be short. That's what happens when we, we just aren't very good at short, but I love long form. But the, I think something that could be a really good deep dive, we don't have time this episode, but a deep dive for future episodes. Listeners, you know, let us know if you like this. Like what are, what are the top three to five things about succession that people get wrong?

Mary (28:11.094)
robust conversation. We, I know.

I know, we're trying.

Mary (28:37.742)
that's great. Yeah.

Layci Nelson (28:39.136)
Like, like even so, okay, we know we need to do it, but like, where does it fly off the rails? Where do we see it fly off the rails? And not, mean, maybe we'll do one for our family business, cause that's its own thing. And then one for businesses that are not family businesses.

Mary (28:54.348)
Yes.

Mary (28:59.212)
Yeah, that's no, that sounds, that sounds great. And I haven't actually toying with the idea of what we need to pull our listeners and viewers and ask some specific questions about, what, what would be helpful for you to see it, you know, and discuss, but that that's a big one. So, okay, we're going to write that down. We're that's going to be a future episode. We're going to revisit that in the future in greater details. So awesome. Well, Lacey.

Layci Nelson (29:16.158)
Yes.

Layci Nelson (29:23.22)
Yep. Beautiful.

Mary (29:27.032)
Thank you so much for your time. Thank you for being here, for joining me today and listeners and viewers, thank you for being here. And remember, go manage like a leader.

Layci Nelson (29:28.852)
Thank you.