The CHRO Paradox — Part 3: Building the Bench Together

**Stacie Baird** (0:07)
Hey, humans, welcome to The HX Podcast. This is Stacie Baird, and we are here to put the humans back in human experience long before the machines have got us here.
If you're smart, busy, and a little suspicious of all the hype that's going on right now, let's get into it. And today's topic is something that is both personal and professional from a development standpoint. I hear this a lot from boards, from CEOs, so I wanted to take the third element of the series and dig into this. You've probably noticed a pattern in the headlines really over the last year. I've seen this fairly frequently. A beloved company needs a new CEO, they run a search, and then the founder comes back. Or their recently retired leader is called out of the wings for one more act. We saw it at Disney, we saw it at Workday, and we've seen it enough times that it now has a name. And here's the thing I want to say very carefully, because it matters, those returns often work. A steady hand in a moment of transition can be a true gift. But every one of those moments is also telling us something, and it's a little bit hopeful if we're willing to hear it. It's telling us the single most valuable thing we can build in leadership is a deep, ready bench of people prepared to step up. It's also the thing that we, as executive teams, because we are so busy being busy at building the company, we often postpone.
Not because there's anything wrong with what we're doing, because building leaders actually takes years, and the urgent always crowds out something that's really critical for the growth and trajectory and expansion and potential sale. If you're private equity or VC backed specifically, if that's the outcome you're looking for, this can be a hindrance to that trajectory. So today, in the final chapter of The CHRO Paradox, I want to talk about the most rewarding work that we ever do together with CEOs and boards, which is building a bench of talent of the next generation of leaders, the people who will carry us forward as an organization.
And this one is for CEOs as much it is for people leaders or executives, because the data tells us a story. And it's that the job you do better together is the one that creates partnership, that creates how we develop leaders as an organization. And it's a very specific journey to that organization and also to the career and trajectory of a CEO as an example. So let's get into it.
And let's talk about the data.
34% of directors name CEO and C-suite succession in their number one priority for 2026 ahead of AI. So this is board of directors citation. 54% of orgs with strong leadership development at every level also hit top-decile financial performance. So in the why and why should you care? Probably care about top financial performance. There's a two and a half times more likely those companies that really dedicate resources and effort. Outperform peers when HR leadership and talent are integrated. So this conversation around the CHRO Paradox leading us to this place of if there is an integration of in a collaboration around leadership and talent with executive presence, that's when you get your best results. So if you want to look at a gap, there is a 20% citation of about 20% top decile performance for orgs with no effective leadership development. So again, this is the gap that is created when you are not dedicating time, energy, and effort to your actual performance. If you're not generating leadership talent within your organization, internal promotions create more value and lower risk than external hires. That's a corn fairy study that's well known and been done many times. And CEO attrition is 54% lower by year three when succession is planned with rigor. So what does that tell you? That for CEO retention, there has to be some level of succession planning done in a structured way inside of an organization because otherwise that creates CEO risk. So hopefully, that makes sense. That was again, another corn fairy study. So some of these, we'll put this in the show notes where we're getting some of this data and information. But that 34% as an example is a US public company board of director survey. And so that was a 2026 survey. So when you look at prioritization, AI is a priority, workforce analysis and competency building is a priority, and succession continues to lead the way at about 34%. So why should we collaborate on this?
Because the CEO already owns this, in my opinion. So let's start with something that should be encouraging for anybody listening who is in a chief seat, specifically a CEO seat. You already care about this more than anything else on your plate. That's most CEOs I talk to care about this and understand it. They understand that succession is a priority and that HR's agenda being elevated and having the right person in seat is ensuring that there is someone partnering to pay attention to that succession planning. So the question isn't whether leadership development matters to the top of the organization. It clearly does. The question is, who is building the system that delivers it and whether they're doing it together or this is happening in parallel. And I've seen this happen a lot of different ways. But it's a great question to ask yourself. Here's where for me, again, you've heard me say this ad nauseam, not that you need my citation on my work experience, but I've been doing this a long time, over 25 years, that the organizations that build leadership development at every level, not just the top, are hitting top decile financial performance, greater than 50% of the time. So if you compare that to organizations with no effective development anywhere, it's 20% or less.