Experts at an executive search firm wonder why nearly half of employers with a CEO succession plan will eventually wind up hiring a leader from outside of the organization.

Of the 80 new CEOs who were hired by Fortune 1,000 companies in 2008, only 44 of them were promoted from within, according to Heidrick & Struggles, a recruitment agency for C-suite level positions.

“While almost all companies technically have a succession plan in place, the fact that 45% of them had to go outside to hire a CEO means that many of these plans failed to hit the mark,” says Stephen Miles, vice chairman and managing partner at Heidrick & Struggles. “And this failure shows that while these plans allowed companies to comply with corporate governance rules saying ‘they do succession planning,’ the plans were not truly ‘operational.’ They involve just checking the boxes, which is a real risk for shareholders,” adds Miles.

Some employers struggle to tap internal candidates for executive positions because there is a real disconnect between the sitting CEO and the company’s board directors on the capability of potential in-house successors.

“Very often you will interview a CEO and he will enthusiastically state that he has one or two potential successors. And then you will independently interview the board of directors and they will unanimously state that 'there is no one who can run this company,” explains Miles.

“Boards are often unfamiliar with internal candidates who are more removed from the CEO's office - those outside the COO, CFO, or other C-level positions,” he adds. “I've seen too often that, when pressed, board members admit concern about the presence of truly viable CEO successors, when it may be simply a lack of real exposure to internal candidates.”

According to Heidrick & Struggles, common roadblocks to succession planning include:

• Favoring the exciting external candidate over an internal option: “It appears boards often prefer the devil they don't know to the devil they do,” Miles observes.
• Demanding a ‘ready now’ successor: The concept of a 'ready now' executive effectively eliminates perfectly viable candidates from true consideration. An employer would only know that someone is 'ready now' after the fact – when it sees the executive moving to another company, probably a competitor, and proving him or herself there.
• Focusing on the high profile CEO role and not on the whole team: The best succession planning really involves constant assembly and re-assembly of a leadership puzzle with many pieces, including not only the CEO, but the CFO, COO, sales and marketing chiefs, and other C-level officers. “A trend we are seeing in the best-managed companies is that boards are looking beyond the CEO and his or her direct reports. Now boards want a detailed calibration of the C+2 and C+3 executive populations to see who's 'on deck' to take the reins down the road,” says Miles.