Submitted by Paul Croteau
It is certainly no surprise to me that 75% of all CEOs who leave an organization are dismissed as part of disciplinary action related to financial performance. Nor is it a surprise that the appointment and/or loss of a CEO can move the market value of a company up or down in a split second. And, finally, it isn’t a surprise to me that the trend to hire new CEOs from outside an organization has grown over the past number of years.
While company owners must develop a clear vision and strategy for the future, the question of whether to appoint an internal or external candidate should still be given full consideration. However, it’s not what value either an internal or external candidate would bring; the question is who would bring the right value?
External candidates bring a fresh approach to the organizational culture as they are not entwined in the current way the organization operates. This is particularly helpful when the external work environment has changed. For instance, a company with good potential that is labelled as a “sleepy”, slow-moving organization might find itself in a new competitive market and therefore needs to change. The company needs a leader who is able to operate in a fast-paced environment, therefore recruiting an external candidate would often be the most strategic approach.
An external candidate also brings value in that he/she will bring unique skills that were not available internally. In addition, the successful candidate will often recruit additional new hires from their own network which will contribute to building strengths throughout the organization. All in all, these external individuals bring new ideas, strategies and tactics that can stimulate creativity and new thinking.
On the other hand, a successful external candidate cannot take too long to get a grip on the strengths or weaknesses of the business. An external candidate needs to be intellectually sharp and very strategic with excellent problem solving and decision making skills. One clear advantage is that external candidates don’t have any established internal relationships and can therefore more easily make the hard decisions that need to be made.
Internal senior-level candidates also have their own leadership benefits. Certainly, they already understand the fundamentals of the business and the capabilities of the organization. They also know the level of talent within the organization and can quickly move these employees to where they can have the greatest impact. Internal candidates will hopefully have the ability to become highly productive at a faster rate and will have already gained the respect and trust of other employees. Promoting an internal candidate also sends a message to other employees that your company values career planning and succession.
On the other hand, an internal candidate may create the common trap of “same old, same old”. In other words, they continue along the known path and perhaps cannot break away from the old ways of doing things; this hinders their ability to create the change needed to move the company forward. As well, the individual will have strong, established relationships within the company that might obstruct him/her from making those tough decisions.
Determining whether to recruit internally and/or externally is a tough decision. This is where an executive search professional can be of assistance. As a search professional, my role is to assist you to examine your business life cycle and to define the skills, competencies and personal character required of a new leader. This key task is accomplished through in-depth discussions and interviews so that everyone has a clear picture of what is required in a new leader. Once this is complete, the task of finding a good candidate and orienting him/her into the new leadership position is much easier.
Paul Croteau is Managing Partner of Legacy Bowes Group, Manitoba’s leading Talent Management Solution. He can be reached at [email protected]