-by Jane Halford and ChatGPT

Transitions at the top are pivotal and often, anxiety-inducing for both organizations and their strategic partners. Yet some leaders, instead of disappearing quietly, retain a guiding presence: stepping down as CEO while maintaining influence as executive chair, board member, advisor, or similar. This choice can be a powerful strategic move, at best, or a very difficult challenge, at worst.

Why Retiring, But Staying, Makes Sense (Sometimes)

A retiring CEO who transitions into a board role can provide continuity during a sensitive period. Their presence brings stability, offers institutional memory, and reassures customers and partners who may be nervous about change. They can also act as a bridge for the incoming CEO, helping the successor adapt to the complexities of the organization while avoiding abrupt directional shifts.

This arrangement also allows the organization to preserve its culture and strategic trajectory, while still opening the door to innovation and renewal.

In some cases, keeping the outgoing CEO close signals to employees, investors, and customers that the organization values both continuity and evolution.

Be cautious - this model has its challenges. You need to evaluate those before selecting this option. A former CEO who stays too close to the day-to-day risks overshadowing the new leader or confusing the lines of authority. It can also slow the pace of needed change, particularly if the retired leader struggles to let go of old ways of thinking. Success requires careful governance and a shared commitment to clarity. Very candid discussions between the board and the outgoing CEO are critical to explore if the outgoing CEO can truly shift roles without defaulting to what they know. This is both a logical conversation and a gut check by all parties. If the person cannot provide the new CEO freedom to lead from their experience and style, moving the outgoing CEO into a board role can be more risky than helpful.

What is less risky is working with the incoming CEO to see if they are interested in engaging the former CEO in an advisory capacity to them. This needs to be the decision of the new CEO. The board can support the concept but not force it on the new CEO. 

When This Approach Works—And When It Doesn’t

This type of transition works best when everyone knows their place in the story.

When the retiring CEO steps into a governance or advisory role with boundaries, the organization gets the benefit of stability without undermining the new leader.

Employees see continuity, investors feel reassured, and the incoming CEO has a trusted mentor nearby. But when roles are blurred, trouble follows.

If the retired CEO continues to weigh in on day-to-day operations or resists stepping back, the successor’s authority erodes.

Employees may hesitate to align with the new leader’s vision, stakeholders may question whether real change is possible, and the organization risks stalling rather than advancing. The difference lies not in the structure itself, but in the discipline and clarity with which it is carried out. The risk is higher when the outgoing CEO is (or is seen as a Founder), they are long tenured, they are well-loved, and/or they have great charisma internally and externally. If they are a magnet for people to stay aligned with them, the new leader will be distracted by trying to overcome "the ghost of the CEO past". That is not a welcome gift from the board to the new CEO.

Recommendations for Boards and Successors

To make this type of transition successful, boards and new CEOs need to be intentional about design and communication. Four practices stand out:

1. Define roles clearly
   When a CEO steps into board or advisor position, their responsibilities must be distinct from the new CEO’s. The retiring leader’s role should focus on governance, mentorship, not operational leadership. This clarity not only empowers the successor but also reassures the organization that decision-making authority has shifted.
2. Set a clear timeline for involvement
   A continued role for the retiring CEO should not be open-ended. Establishing a defined timeline—for example, two years in a governance role or 3-6 months advisory position—helps everyone understand when the baton will be fully passed. It also allows the successor to step forward gradually, gaining confidence and credibility with time.
3. Build in governance safeguards
   To avoid blurred lines, boards should implement safeguards such not placing the retired CEO in the chair role, documenting roles and responsibilities, and explicit reporting structures. These measures ensure that the new CEO’s authority is respected and that the organization does not drift back into old habits.
4. Communicate with transparency
   Stakeholders need to understand why the retiring CEO is staying on, what their role will be, and how it supports the organization’s success. Clear and consistent communication—both internally and externally—reduces confusion and builds confidence that the organization is managing this unique transition responsibly. If the role is advisory, the new CEO and board may choose for this to be private and not known to the public. 

5. 5. Leverage proven frameworks for CEO readiness
   Complement your transition plan with tools like the KASH Box Framework, which helps boards assess the readiness of incoming leaders by evaluating their Knowledge, Attitude, Skills, and Habits. This strengthens alignment between the successor’s capabilities and the organization’s future needs. 

   6. Center the new CEO’s early weeks on impact
   While the retired CEO is still onboard, the first 100 days are a critical window for the new leader to demonstrate direction and build credibility. Planning strategically during this time—prioritizing stakeholder engagement, clarity of purpose, and visible wins—sets a strong foundation. 

   7. Engage external thoughtfully during the transition
   Use this period to listen to and involve key stakeholders—customers, employees, investors. Their perspectives can strengthen the new CEO’s strategic decisions and reinforce the transition’s legitimacy.

Retiring as CEO but staying closely involved can offer the best of both worlds: leadership continuity and strategic renewal. It can reassure stakeholders, provide invaluable mentorship, and protect an organization’s culture. But it only works when roles are clear, timelines are set, and governance safeguards are in place. In many cases, not having a formal role is the best decision.

This type of transition is a nuanced dance—one that, when choreographed with foresight and clarity, allows organizations to evolve with both stability and purpose. Be intentional, measure impact, and make difficult decisions if it's not the right decision for your new CEO.

Download our free CEO Transition Resource Kit tailored for boards, senior leaders, and CEOs.

Have questions about leadership transition, governance, or family business? Try our free AI tool: Ask Jane 

Further Reading

Power, Influence, and CEO Succession, Harvard Business Review

Beware the Transition from an Iconic CEO, Harvard Business Review

The Vital Role of the Outgoing CEO, Harvard Business Review

CEO Succession: 10 Pitfalls Boards Must Avoid— and the CHRO Practices That Help, Harvard Law Forum

How to manage a successful CEO transition, McKinsey & Company

Should a Departing CEO Remain on the Board?, Directors & Boards