When Does a Long-Serving Industrial CEO Become a Liability?

The industrial sector’s most comfortable governance assumption, that the long-serving insider is the safest pair of hands, is producing a specific and largely unexamined cost that boards are only beginning to see clearly.

Stability has always been the stated rationale for keeping a known quantity in the chair. Industrial businesses are often operationally complex, relationship-driven, and built on institutional knowledge that takes years to accumulate, and the logic of preserving that knowledge at the top held up reasonably well in an era when the pace of change was slow enough to match the tenure of the people managing it. What has changed is not the complexity of industrial business. Rather, it is the rate at which the capabilities required to lead it are being outpaced by the environment. The industrial sector has been slower than almost any other to register that the executive who kept the company stable through the last decade may be exactly the wrong person to lead it through the next one. 

The problem is not tenure as a concept. The problem is what happens to a leader, and to the organization they run, when tenure extends past the point where institutional knowledge starts becoming institutional inertia. 

What the Research Shows

The body of evidence on CEO tenure and performance is more contested than either side tends to acknowledge, but on the specific question of very long tenures in sectors where the operating environment has changed faster than the person running the company, the research points in one direction. A recent Harvard Law Forum analysis documents that CEO tenures continue to shorten across the market, including at high-performing companies, with leadership turnover no longer confined to underperformers and the window boards will wait before acting narrowing accordingly. The Conference Board’s 2025 CEO succession study reinforces the point from a different angle. S&P 500 CEO succession rates climbed from 10% in 2024 to 13% in 2025. Boards are no longer treating succession as a response to failure. They are treating it as a governance discipline in its own right. 

The industrial sector has not responded at the same pace. Manufacturing and heavy industry have historically prized internal succession and long leadership trajectories, and that norm has proven surprisingly resistant to the same governance pressures that have shortened tenures elsewhere. The consequence shows up in the research. A study published in the Journal of Financial Stability, examining 2,428 CEO turnovers across nearly 1,500 firms, found that when a successor takes over after a long-tenured CEO, operating performance and stock returns are significantly lower, restructuring costs are higher, and firm recovery is slower than when the preceding tenure was shorter. The mechanism is not hard to understand. A long-tenure CEO might gradually optimize the organization around their own judgment, appointing people who share their assumptions and pruning the voices that challenge them, and the longer they stay, the larger the gap between the organization’s capabilities and the demands of the moment. 

A further body of research documents that as CEO tenure increases, risk aversion tends to increase with it, as entrenched leaders prioritize the protection of what they have built over the pursuit of new opportunities. The research does find that this pattern reverses once a CEO passes roughly 17 years in the role, but that finding is largely academic, because very few industrial CEOs serve long enough for it to matter. What matters in practice is the window between year eight and year fifteen, where the entrenchment is real and compounding, and where boards are least likely to intervene because the relationship capital the CEO has built with the board is at its highest. The result is an organization that has less capacity to challenge its own assumptions at the moment when the environment most demands it. 

Why This Matters in the Industrial Sector

The specific challenge facing industrial companies in 2026 is not that the environment is changing; it is that the environment is changing in ways that require capabilities the long-tenure industrial CEO is least likely to have developed. Three forces stand out: 

1. AI-driven automation, which is now moving fast enough to separate the sector into two distinct tiers. PwC’s Global Industrial Manufacturing Sector Outlook, published in February 2026 and drawing on 443 senior executives across 24 territories, found that the share of industrial manufacturers expecting to highly automate key processes by 2030 will more than double, from 18% to 50%. PwC is explicit about what this means for competitive position: the divide between technology-enabled manufacturers and those still running patched-up legacy systems will widen further, not close, and advantage will flow to whoever can adopt and orchestrate new tools fastest. An executive whose mental model of operational excellence was formed in the 2000s, and who has spent fifteen years reinforcing that model, is not the natural candidate to lead a business through that kind of inflection. 

2. Supply chain restructuring under tariff and geopolitical pressure, which requires a kind of geopolitical agility that the traditional industrial career path rarely builds. Deloitte’s 2026 Manufacturing Industry Outlook found that trade policy uncertainty was the top concern of more than three-quarters of manufacturers throughout 2025, with tariffs affecting everything from raw material costs to production footprints. The executive who built a globally optimized supply chain over a decade of low-tariff conditions has a vested interest in believing that model can be preserved. The executive who was hired last year does not. 

3. The energy transition, which is now material enough to force capital allocation decisions that long-tenure CEOs find particularly difficult because they involve writing down or divesting assets they built. This is not an abstract ESG consideration but rather a question of whether the company’s capital is deployed where it needs to be for the next decade, and long-tenure CEOs may have a tendency to defend past capital allocation decisions rather than revisit them. 

Long-tenure CEOs with solid track records are among the hardest cases for a board to act on because their performance record is tangible, the relationships they built are real, and any argument for change is forward-looking and therefore uncertain, which makes deferral feel like prudence rather than avoidance. 

BCG’s research found that the boards managing leadership transitions most effectively have moved to treating succession as a continuous discipline rather than a crisis response. For industrial companies, that means being honest about a set of questions that relational dynamics tend to soften. Does the current CEO have AI and automation fluency, or are they approving whatever the CTO suggests? Are they capable of making capital reallocation decisions that reverse positions they themselves built? Would a dispassionate board, free of the loyalty that ten or fifteen years of working together almost inevitably generates, answer those questions the same way the current board would? 

Separating the performance review from the succession conversation is the first structural step, because conflating them is how boards end up retaining executives whose returns are adequate while the company falls behind the pace of change.

The second is updating the competency profile for industrial leadership to reflect what 2026 and beyond require. The traditional profile, heavy on operational expertise, customer relationships, and financial stewardship, remains necessary but no longer sufficient on its own. It needs to extend to AI and automation literacy, geopolitical and trade strategy literacy, energy transition literacy where that is material, and the kind of organizational change capability that comes from having rebuilt something rather than run it steadily. Succession pipelines that are not developing these capabilities at the senior level below the CEO are producing an expensive problem for the next transition. 

The third is doing the post-tenure analysis honestly when the transition eventually happens. When a long-tenure industrial CEO leaves, the incoming executive almost always finds more restructuring to do than the board anticipated, more deferred decisions, and more capability problems papered over. The research cited earlier suggests this is structural and predictable, and the longer the preceding tenure, the more pronounced the cleanup. Boards that understand this pattern in advance are better placed to give an incoming CEO the mandate, the time, and the resources to address what actually needs to be done rather than what can be comfortably described to shareholders. 

However, it is important to note that none of this is an argument for instability. The industrial sector’s preference for considered, experienced leadership is not wrong. It is just being applied too broadly and held too long. The executive who leads a manufacturing business through ten years of growth and then continues for another decade as the competitive environment changes is not the same asset they once were, and treating them as such is a governance failure that ultimately lands on the P&L. The boards that are willing to ask hard questions earlier, while they still have the luxury of choosing the timing, are the ones whose companies will be better positioned to benefit from what the next five years in industrial are going to demand. 

Asking those questions rigorously, and finding the right leader once the answers point toward change, is exactly the work Stanton Chase’s Industrial practice does, through executive search, succession planning, and leadership assessment built for the realities of the sector as it stands today. 

About the Author

Jan Duniec, Partner at Stanton Chase Warsaw, serves as Stanton Chase’s Global Industrial Sector Leader. Jan specializes in consulting for the industrial, technology, consumer products and services, and SCC/BPO business sectors. He brings to the table a wealth of international experience in business and plant management, gained through his work in the UK, France, and Poland.