Seven Big Mistakes in Executive Succession Planning

I have sat in enough executive and board conversations to know leadership succession is still one of the most overlooked risks in a bank. Most banks have a plan on paper. Far fewer have real depth across the executive team, which creates risk when leadership changes.

Executive succession is not just an event. It is a long game of building leaders, testing readiness and making clear decisions over time.

Here are seven patterns I continue to see go wrong.

1. Betting On One Successor
Many banks depend heavily on one or two strong leaders, especially for CEO succession. When that person is stretched, falls short or leaves, the impact is immediate. Execution slows and pressure shifts back to the CEO and board. Succession becomes dependent on an individual instead of a system.

What works instead: Develop multiple leaders. Even if one emerges as the top candidate, depth matters.

2. Waiting Too Long To Build the Bench
Many banks wait until a transition is near before investing in potential successors. By then, time is limited, and gaps are harder to close. I often work with leaders who have been told they aren’t quite ready, but no one has made that expectation real. When the moment comes, they are unclear and hesitant.

What works instead: Build your bench early. Tie development to real work through stretch roles, clear expectations and support like coaching.

3. “We’ve Got This”
Strong CEOs and boards often believe they have succession covered. The team is solid. The culture feels strong. There is confidence the right people are already in place.

But when you look closer, there is often little real insight into readiness. Assumptions are based on tenure or past performance. Few have been tested at the leadership level. What feels like confidence is often untested.

What works instead: Pressure test your assumptions. Look beyond performance to leadership readiness and bring in outside perspective when needed.

4. Avoiding Hard Conversations
Leaders do not always get clear feedback on where they stand. Potential is implied, not defined. Over time, this creates confusion and disengagement. I have seen banks lose strong internal successors because no one had a clear conversation about their future or what it would take to get there.

What works instead: Be clear and direct. Define readiness and give specific guidance. Development accelerates with structured feedback and ongoing support.

5. Rewarding Performance Without Building Leaders
High performers get promoted because they deliver results. But executive leadership requires broader thinking, stronger communication and the ability to lead through others during periods of uncertainty.

I worked with a strong producer who stepped into a leadership role but kept doing the work himself. His team waited, and the bank stalled until he shifted from producing to leading.

What works instead: Build leadership skills early. Use tools like assessments, coaching and programs, but tie them to real expectations and roles.

6. Chasing the Perfect External Hire
When a C-suite role opens, the instinct is often to search externally. External hires can be the right move, but they are not a shortcut. Culture, relationships and execution risk are real.

What works instead: Invest in your internal pipeline while being thoughtful about when to go external.

7. Borrowing a Plan Instead of Building One
It is easy to look at what a peer bank is doing and assume it is the right answer. Structures get copied. Succession plans start to look the same. But those plans are built for a different strategy and team. I see banks follow what looks right instead of defining what they need from their leaders. The gap shows up in execution.

What works instead: Build your plan from your strategy. Define the capabilities your leaders need and develop toward that.

Executive succession is where strategy becomes real. It shapes how decisions are made, how leaders show up, and how much time the CEO spends on growth versus managing gaps.

The banks that do this well build leadership depth across the executive team. They develop leaders through real experience, clear feedback and targeted support. They are honest about readiness and make decisions with the future in mind.

If your plan lives on a piece of paper or depends on one person, it is worth taking a hard look at what is real and what is assumed.

These seven pitfalls of executive succession are easy to fall into because they often feel like strength in the moment.