CEO Hire

Survey: Are CEOs hired externally more productive than those hired from within the organisation?

We recently conducted a survey to find out if CEOs hired externally are more productive than those hired internally.

We asked the question “Do CEOs hired externally move with more boldness and speed than those who are hired within the organisation (internal promotion)?”

The responses were as follows: –

• 64% said Yes,
• 14% said No,
• 21% responded with Sometimes.

Below are comments from respondents

• A common reason for hiring externally for the position of CEO is because the right internal talent isn’t available. But some companies will also want someone who can bring bold new ideas to the business, and hiring externally can be the best way to achieve this.
• The advantage of hiring internally is that the CEO already know the values of the company, the culture and the organisations’ mandate, as well as the processes within the organisation. It will not take time for the internally promoted CEO to find their way and the adaption process for them will be short.
• The most common problem that arises from hiring internally is that if the culture within the organisation is skewed, the internally hired CEO will carry on with that culture. Another problem is if the CEO did not work well with others, they will have a backlash from their counterparts which will make it harder for them to be productive.
• Hiring internally has advantages in the sense that it’s less costly for the organisation – no budget/ time/ effort is put in hunting for the right candidate outside the organisation. An internally hired candidate also knows the internal systems of the workplace so they are able to move with more speed. But this requires for the company to have a transparent succession plan which allows for the candidate to have the necessary traits to be successful.
• An externally hired candidate is the best way to go if the company is struggling because the external hire will not be attached to a failing strategy. They will be able to turn the company around with their new perspectives and concepts.
• Hiring internally is good for the company. Not only does it lower the costs associated with hiring but it also boost the morale of the existing employees. The message they get from an internal promotion is that if they work hard, they can be promoted. It also boosts the morale of the employee promoted.
• It is easier for an external hire to make tough decisions and to challenge current notions since they do have any pre-existing relationships and are not afraid of any prejudices. It is therefore better to hire externally.

 

The overall findings conclude that most prefer to hire CEOs externally. External CEOs are more productive and move with baldness because they bring fresh perspectives and are not conformed to the unproductive customs of the organization.  However, hiring internally also has its benefits if the company possess the right culture and an effective business strategy.