Time to Hire a New CEO? How to Choose Between Hiring Internally or Externally

ceoCEOs have profound impacts on the companies they run, and choosing the right CEO is essential for ensuring success. However, the decision can be difficult to make. In particular, companies must choose between hiring a CEO internally or hiring one externally. Here are some of the factors that may affect this decision.

Benefits of Internal Hiring

CEOs who have worked with the company they will manage will have an edge over those who have not worked with the company. A company’s workflow and mission cannot adequately be described on paper, and CEOs without experience will not be able to understand certain elements of the company that internal hires will understand. Because of their experience, internal CEOs can often start implementing their new ideas quickly.

Disadvantages of Internal Hiring

In some ways, the advantages of internal hires also represent the disadvantages. After working with a company for a certain period of time, it can be difficult to think of alternative ideas and solutions to problems. By hiring a CEO internally, it may be difficult to implement larger reforms that may be necessary for certain companies.

Benefits of External Hiring

Hiring a CEO without experience with a company gives those making the decision more options to choose from. The talent base within a company is necessarily limited; the talent base from outside a company is much larger. Because of this, those who want to target as large a pool of talent as possible may prefer external hirings. In addition, bringing a new person to a company can be a great way to gain new perspective on how the company operates. This insight can help to transform a company.

Disadvantages of External Hiring

It can be difficult to understand a potential hire based on his or her resume and interviews. Because of this, those who hire a CEO without experience with the company may not know who they are hiring until he or she has already started implementing changes. In addition, passing over qualified applicants may cause the company to lose great assets, and it may send the message that the company does not value prior work.

How to Decide

If the company is functioning well and is continuously growing, it may be best to hire internally. In other words, companies that will benefit from conservative leadership may be best served by hiring someone with experience in the company. Companies that are struggling, on the other hand, may wish to examine the value of radical changes. Companies that need to change quickly to survive and thrive will often find themselves best served by hiring a CEO with a vision for the company’s future.

About the Author

Executive consultant Pete Marks partners with business leaders around the world to help them build the most effective executive teams. He has written extensively on various issues, including an article about online MBA ranking.

“Lifers” To Look Up To

Along life’s path, change is something to be expected all along the way. This not only rings true in personal life, but also in business and vocation. In fact, according to longitudinal statistics information at the Bureau of Labor Statistics, in recent years past the average worker held approximately 11 different job positions in their lifetime. Today, this number of lifetime job changes is thought to even be higher.

This said, great respect naturally comes with long tenure and numbers substantially less than those cited above. Even greater respect is due to any individual that stays at the top or works their way there, all within one company. We highlight some of the most elite of this very small, select group; these are Fortune 500 “lifers” – those who only ever worked for one company.

Donald Washkewicz

Washkewicz started at Parker-Hannifin years ago working at the very bottom – working in the grease pit. Today, Washkewicz is the company CEO. He steadily worked his way up over the years and his story resonates with company culture and employees without doubt.

Ken Powell

In 1979, Ken Powell began a long career with General Mills as a basic marketing assistant. Over the years, Powell worked his way up and around the entire General Mills company. He eventually became a sort of brand ambassador overseas and eventually became CEO.

Doug Oberhelman

Oberhelman is said to have always had a love for heavy equipment. According to CNN Money, this was much because of his father’s occupation as a John Deere salesman. Right out of college, Oberhelman found work with Caterpillar as a credit analyst. After years of passion for his company and countless promotions, Doug Oberhelman is now CEO of Caterpillar.

John Strangfeld Jr.

More than 35 years have gone by since John Strangfeld Jr. was hired as a basic investment analyst for Prudential Financial. As the company grew to household-name status, Strangfeld’s tenure and abilities within the company also blossomed. Now sitting as CEO, Strangfeld only claims to have followed the work he enjoys.

Ursula Burns

Today, the globally known company, Xerox, is proudly headed by Ursula Burns. Burns began work with the company doing mechanical engineering by studied trade. She quickly gained attention and climbed the ladder, becoming involved with deep company logistics at all levels. 29 years later, Ursula Burns is known as the very first black woman to serve as CEO at the Fortune 500 level.

Virginia Rometty

In 1981, Virginia Rometty was a fresh graduate of Northwestern, majoring in computer science and electrical engineering. It is also the year in which Rometty began her life-long career at IBM. It wasn’t long before Rometty began gaining rank and working in management. Eventually, she reached the top and is now IBM’s CEO.

In knowing stories like these, there seems to be one common denominator. The individuals in these success stories all have a drive and passion for what they do. Perhaps that age-old saying resounds loud and clear – “Do what you love, and you’ll never work a day in your life.”