Strategy & Corporate Finance Practice

How to transition out of

the CEO role
Making an effective exit from leadership is critical to both the
organization’s future and the CEO’s legacy. Here is how the world’s
best CEOs approach that transition.

January 2024
How do you know when it’s the right time to go, and
how do you set up the next generation of leaders
for success? In this episode of the Inside the
Strategy Room podcast—the final in a series on the
CEO journey—three experts discuss the key
elements of a successful CEO transition. Carolyn
Dewar, coauthor of our recent bestseller CEO
Excellence, founded and coleads McKinsey’s CEO
Excellence practice. Blair Epstein, a key contributor
to that book, is a leader in the CEO Excellence
practice, and Kurt Strovink leads our Global CEO
Initiative. This is an edited transcript of their
conversation. For more discussions on the strategy
issues that matter, follow the series on your
preferred podcast platform.
Sean Brown: In this last stage of the CEO tenure,
what unique challenges do leaders face?
Kurt Strovink: In this phase, people are settled.
They’ve achieved a lot and it’s a time to think about
the next era of growth and development for the
company. Great CEOs tend to intuitively know that
how they set up the next generation will be vital
for their own legacy and the company institutionally.
But the actual transition is complicated for
several reasons.
One is that, oftentimes, this a first-in-a-career event.
Even legendary CEOs may not have been through
‘There’s life after being a CEO, but
leaders often stay put because they’re
not sure what they will do next.’
–Kurt Strovink
such a transition. Also, timing is not so easy to
determine and commit to. As Lloyd Blankfein, former
CEO of Goldman Sachs, told us, when things are
tough you can’t leave and when things are great you
don’t want to leave. You need to think about what’s
right not just for you but for your successor. Lastly,
you have to consider what you will do afterward.
There’s life after being a CEO, but leaders often stay
put because they’re not sure what they will do next.
Sean Brown: How do you know when it’s time to
start preparing a graceful exit?
Kurt Strovink: It’s natural to hesitate on the timing
when you haven’t fully thought through the markers
for the right time to leave. One signal is when you
feel that the world around you is changing at a rate
that will tee up a different S-curve, or phase of
growth, for which you don’t think you are a natural
leader. Another is if you think the next generation
is ready to take over and the company can benefit
from that new energy. A companion consideration
may be that if you don’t get out of the chair, those
potential successors will leave. CEOs may think about
the development investment in the next generation,
and they want to make that generation successful.
The feeling that you’ve given all you can to the
organization is another marker. If you know what
people will say before they say it, that’s an indication
that you’re not learning as much.
How to transition out of the CEO role 2
Sean Brown: If you’re not sure whether the next
generation is ready, is it better to err on the side of
leaving too early or leaving too late?
Kurt Strovink: Our counsel would be to prepare
to leave early. It’s not only a question of successors’
readiness but the maturity of the succession
conversation with the board and, sometimes, the
impact of external events. When people see that
you left at the top of your game, they are impressed
that you made this choice. One CEO talked about
people in his broader network who he felt left too
late and then he himself realized how difficult it
is to plan an early departure.
Sean Brown: What role does outside input play in
helping CEOs make the call on timing?
Kurt Strovink: Outside influences play a big role.
External factors can include an activist pushing
for a different CEO or an evolution in the market and
the industry for which you believe somebody else
would be a better fit. Gail Kelly did an amazing job
on strengthening customer focus at Australia’s
Westpac, but when the bank started pivoting to
a digital future, she concluded that it was time for a
leader who was stronger than she in that area.
Carolyn Dewar: External factors can tip the
decision the other way, too. When the pandemic
happened, we saw many CEOs who may have
been ready to leave decide to stay for the sake of
continuity. Now, there is almost a pent-up run
of departures. Kurt and I were with a CEO in Asia
recently who had wanted to leave and the board
asked him to stay. We hear that often; boards
sometimes don’t like leadership change any more
than CEOs do.
Sean Brown: How would you suggest a CEO
bring up the topic of transition with the board and
the organization so they don’t question his or her
commitment to the role?
Kurt Strovink: For the board, the topic of
succession is open from day one. Thinking about
the development of a successor pipeline doesn’t
suggest a lack of commitment but is a sign of good
leadership. To avoid misunderstanding, emphasize
to the board from the beginning that you want to
focus on succession not because you plan to leave
anytime soon—they will be the judges of that—but
because you are serious about developing multiple
strong candidates. With respect to the senior team, I
recommend waiting until you are close to the time
of transition. You don’t want the distraction of people
speculating who will be the next CEO.
Blair Epstein: This is a question we often get from
clients. Succession planning should start on day
one of your role. In fact, Brad Smith of Intuit described
being coached on his first day as CEO that he
should start succession planning that day. He talked
about succession in his first board meeting, then
provided quarterly verbal briefings and formal ones
annually. Over 11 years as CEO, he discussed it with
his board 44 times.
It can feel strange to say, “Hello, I’m your new CEO.
Now let’s talk about replacing me.” But if you do
that, you avoid one of the dynamics that Kurt alluded
to. You cannot allow succession to become a
political horse race. That’s incredibly destructive
to the health of a senior team, and the politics
reverberate throughout the organization. Gail Kelly’s
approach was to be direct with possible candidates:
“We’re trying to develop you as a leader, here are
potential paths you could go down, and becoming
CEO may be one of them.” She was equally clear
that politicking was unacceptable.
It’s important, however, to think about succession
not just as replacing yourself but as leadership
development for your team. You need to make the
chess moves necessary to help potential
successors become CEO-ready. Piyush Gupta of
DBS Bank worked with his head of HR to first
assess an extensive candidate slate, then came up
with about 100 high-potential leaders whose
careers they would case manage. You give them
coaching, help them understand the role, but
also deliberately put them into situations in which
they can learn and excel. That could be rotations
where functional leaders can get operational
experience or time-bound but high-profile projects
where they can demonstrate enterprise leadership.
How to transition out of the CEO role 3
‘If you don’t have at least three internal
successor candidates—not all of
whom are perfect or may be ready at
the same time—you haven’t done
your job.’
–Blair Epstein
Sean Brown: What’s your take on appointing a
deputy CEO as the designated successor, to
ease the transition and eliminate the risk of that
political race?
Blair Epstein: There are different flavors of deputy
CEO-type roles, and the title doesn’t necessarily
mean the person will succeed you. Sometimes,
leaders create heir-apparent positions or president-
type roles to elevate an individual’s profile and
allow them to gain a broader set of experiences,
including with external stakeholders.
As to your question, I have to give the dreaded
consultant answer of “it depends.” It can seem like a
great idea because it gives the individual extra
seasoning: you are there to coach and support them,
and they can basically become CEOs with training
wheels. Here’s where it can go wrong: in terms of role
clarity, it can slow down the organization if people
don’t know who makes the ultimate call. If you and
the deputy CEO don’t present a united front,
people can play you off each other, intentionally
or unintentionally. This structure can also be
misinterpreted as a lack confidence in the deputy,
if the perception is that you’re giving them the
training wheels because they’re not ready.
Where it may make sense is when you have a clear
successor. You can live with other people who
wanted to be that successor leaving and you believe
that you can control for some of the downsides
I mentioned. And you genuinely believe, hand
to heart, that you are doing this to set up the
next generation.
Kurt Strovink: It’s easier to appoint a deputy CEO
six or 12 months before your departure rather
than two years or more, because the latter looks
like a deferment and requires thinking differently
about the leadership operating model. Another
point to consider is the title: “deputy CEO” invites
questions as to why not CEO. There are other
titles, such as president or COO, that may make
more sense for the organization, especially two
years out from succession.
Sean Brown: What should a CEO do when they
don’t have natural internal successors?
Blair Epstein: Some of the CEOs we spoke with
were direct in saying that if you don’t have at least
three internal successor candidates—not all of
whom are perfect, not all of whom may be ready at
the same time—you haven’t done your job. Because,
in most cases, if you have put the right individuals
into the right roles, the odds are that at least one of
them can eventually become CEO. Also, keep
in mind that succession planning can involve your
external network and building relationships with
individuals you think could succeed you.
How to transition out of the CEO role 4
Succession plans start with having a clear view of
what would make a great CEO for your organization.
Given the S-curve you imagine the company may
follow next, what combination of experience,
knowledge, and leadership attributes should the
next leader bring to the job? Use that as a North
Star for internal leadership development. Importantly,
this has to be done in partnership with your board.
Ultimately, succession is not your call.
Sean Brown: Once a new CEO is chosen, what’s the
best way to prepare the handover?
Blair Epstein: The first step is building a relationship
with your successor and having explicit, open
conversations about the form the handover will take.
Their job is not to be the next you, so think about
how to make that case. Help them understand what
it means to be their own CEO, particularly if it’s
an internal successor who admires you or whom
you have mentored.
Another important consideration is resolving
unpleasant but important decisions that may be
lurking. Michael Fisher, former CEO of Cincinnati
Children’s Hospital, talked about the fact that you
have political capital that the new person doesn’t.
How can you spend that capital on ensuring that
you aren’t handing over any messes?
‘One reason why sometimes CEOs stay
too long is that they are not sure what’s
next. It’s easier to step aside at the
appropriate time when you’re excited
about your life after.’
–Carolyn Dewar
Additionally, agree on the transition approach. Role
clarity is important during these phases, as we
talked about in relation to the deputy CEO dynamic.
People need to know who is in charge, who is doing
what, and your successor should feel supported.
In cases of internal handovers, we often see a six- to
nine-month phase wherein you are the decision
maker during the first couple of months, and you’re
giving your successor, who may or may not be
already named publicly, opportunities to step up,
to shadow, to learn with a safety net. In the next
phase, you may act more like copilots, but do not
let this phase drag on too long. Then there’s
the phase where you step back. You are there to
advise and support but you distance yourself
from the operations and eventually formally leave
the organization.
The last stage is to get out of the way. This can
be incredibly hard so think through how you would
handle a situation where, for example, a board
member, an investor, a client, or senior executive calls
you and says, “I don’t know how well the new CEO
is doing with this, can you help me navigate it?” You
need to give your successor room to run.
Sean Brown: Do you have any advice you can share
on how to handle that final stage?
How to transition out of the CEO role 5
Blair Epstein: One tool that we have found helpful
is to develop a last 100-day plan. New CEOs make
first 100-day plans all the time, so have the same
discipline when you’re walking out the door. First,
think about how you will wrap up your legacy.
What will you do to bring your current strategy to
a close? You want to appropriately engage your
successor in the decisions they will have to live with.
For example, you probably should not unilaterally
do game-changing M&A. Another part of wrapping
up your legacy is finding closure, both for yourself
and for the organization. Make the rounds, check in
with people, say thank you, and let them tell you
the same.
Next, consider what parting gifts you can give your
successor. Are there tough calls you can make
so they are not on the new CEO’s shoulders? These
could be people decisions, budget calls, portfolio
pruning. Another parting gift you can offer is to
advocate for your successor and telegraph your
confidence in them. In every conversation, how
do you leave the person you’re speaking with more
excited about the next generation of leadership?
You want to hand over both work and relationships.
Can you help your successor build relationships
with internal and external stakeholders? Also, hand
over your business knowledge, particularly when
there is big, in-flight work that will continue. And
share some behind-the-scenes counsel. Talk to
them about talent and things that no one else might
know that could be helpful to them.
Finally, be very clear what, if any, role you will
continue to play. One common model is to stay on in
an advisory capacity where, at the discretion of
the new CEO, you are available to advise and coach.
Another model that is increasingly common is the
former CEO becoming the executive chair of the
board. It’s a way to provide support to the new CEO
while preserving role clarity. It does, however, have
drawbacks. A number of the CEOs, even those who
became effective executive chairs, talked about
how challenging that is for the successor and how
they wish that they had stepped away. You want
to allow your successor to critique you and identify
what they want to do better. That is hard for them
to do while you are still in the room. There are
situations where the executive chair role makes
good sense, where the new CEO needs extra
support, but do so with caution.
Sean Brown: A company’s structure could introduce
some nuances to how this transition plays out.
Are there any differences, for example, with family-
owned businesses? How do you avoid a scenario
like in the TV show Succession?
Carolyn Dewar: In the situations I’ve been close to,
the question tends to be around the parent’s
decision about when the child is “ready.” That can
be an ever-moving target, and the next generation
feels like the marker keeps moving on what they
need to do. It can be helpful to bring in some of the
rigor that non-family-owned businesses apply.
What does the company need of its CEO right now?
What are the proof points that the next leader is
ready? If seasoning is needed, let’s be deliberate
about it and put a timeline on it.
Kurt Strovink: One other thing that’s more
upside-oriented is that succession in family-owned
companies is an opportunity to discuss the
business—its reasons for being, the company’s
values, its proposition in the market. In such
scenarios, a successor can speak about those
topics with greater authority when they are
part of the family.
Sean Brown: The day they hand over the reins must
be difficult for many CEOs. How can they deal with
the psychological aspect of leaving the role?
Carolyn Dewar: One reason why sometimes CEOs
stay too long is that they are not sure what’s next.
It’s easier to step aside at the appropriate time when
you’re excited about your life after. That requires
self-reflection. What is important to you beyond
being a CEO? For some, it might be another CEO role.
For others, it can be relationships, friends, family,
hobbies, or meaningful social and community work.
The CEO role can be all-consuming, and those
who have the smoothest transitions tend to have
either nurtured their relationships and outside
interests in the last phase or made a deliberate
How to transition out of the CEO role 6
 effort to re-engage in them. Have conversations and to double down on health, sleep, and
Find more content like this on the
with friends and family to remind yourself that being relationships. The decisions those CEOs make at
McKinsey Insights App
a CEO is just one chapter, one piece of who you are. the end of that gap period are often different
than the ones they would have made in the thick
One path I’ve seen some CEOs pursue is to take of the transition.
a gap year or a gap six months. It helps them to fend
off the offers that they start getting right away

Scan • Download • Personalize Carolyn Dewar is a senior partner in McKinsey’s Bay Area office, where Blair Epstein is a partner. Kurt Strovink is a senior
partner in the New York office. Sean Brown is global director of communications for the Strategy & Corporate Finance practice
and is based in Boston.

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How to transition out of the CEO role 7