The Secrets of Wise CEO Selection: Promote from Within or Hire from Outside?
Is it better to hire a CEO or to promote a person in your business into a CEO? Originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.
This is a great question and there is no one answer. It all depends on how the company was originally structured and the existing succession planning. Some companies do a fantastic job of promoting and moving people through various departments in preparation for the role.
I read some stats that there is a higher success rate among companies that promote from within, but I think a lot of that has to do with a very weak vetting plan of potential CEO candidates. I’ve sat through way too many weak interviews, and qualification oversights and can see why internal outperform external. Too many companies place a very high emphasis on pedigree and looks rather than drive and vision about where the company needs to go and why.
I’ll sometimes get a call for a role and the interviewer doesn’t have a clue what to ask me or even know what matters when hiring the CEO. Great companies have a very thorough process, that includes sometimes spending a week or more with the candidate in a variety of environments to better judge performance.
I sat through one “very promising” candidate interview where the the CEO candidate never once answered and question with an answer of real substance. It was an entire interview of empty statements and platitudes that all sounded good, but meant nothing. An example would be a statement such as building a stronger sales team to increase revenues, but not offering up any specifics.
It’s hard to interview a great potential CEO. For one, if they are good at sales, they may win the interview but fall down on a critical company strategy. They may be great technicians, but ultimately bad with people. The challenge is that an outside CEO could mess up and tank a company or because it harms that would take decades to repair. For that reason, companies will often go the most conservative route they know and hire the wrong person, while thinking they are hiring someone safe. Ultimately they fail, making your question difficult to answer.
Contributed by Tom Nault, Managing Partner at Middlerock Partners LLC (2016-present)
