When recruiting someone to fill a C-suite role, companies have many decisions to make. A key one is whether to hire someone from within the company, or whether to bring in an outsider.
There are benefits to both approaches, and the right course for a company depends on the specific circumstances—the available talent in the pipeline, the organization’s overall situation, industry forecasts, and other factors. The same company might want to promote from within for certain positions, at certain times, and recruit externally at others.
This blog, however, will focus on the situations when it’s best to hire someone from outside the organization for a C-suite position. If you’re wondering whether you should promote someone internally or look for a candidate elsewhere, keep the following points in mind.
Keeping Pace with Growth
The goal of any company is to grow. Ideally, your organization is stronger and more profitable than it was when it was first established.
That could mean people who might have been qualified for a high-level executive position in the past no longer have the necessary experience to thrive in such a role. If the company has grown substantially, they might simply not be ready to take on major responsibilities at a large organization.
Alternatively, your company may not have increased in size, but you may be poised for growth—in this case, you need someone who is skilled in taking an organization to scale. So-called “growth leadership” demands a very specific skill set, and your current staff may not have this expertise.
You want to be certain anyone filling a C-level position is thoroughly prepared for the job they’ll be doing. Finding that individual within your own company may be difficult if you’ve consistently grown, or if you’re on the cusp of growth and want to take your company to scale. Hiring externally, on the other hand, gives you greater freedom to evaluate candidates who’ve already succeeded in similar positions at companies of similar sizes.
The situations above are just a few examples of times when companies simply don’t have access to the right candidates when they focus solely on their current employees. Another example would be a relatively young organization where most of the employees are also relatively young. It’s possible there are few workers at the company who are prepared for the responsibilities of an executive position. This all goes to show that you simply have more options when you recruit externally.
Someone being considered for a promotion to the C-suite at the organization they currently work for is almost always going to be someone who’s already in a relatively high-ranking position. They likely got there by understanding how to make the ideal impression on the company’s managers and executives over the years. By the time they have enough experience to become an executive as well, their entire perspective on the business has been thoroughly influenced by the beliefs and attitudes of their superiors.
This isn’t to say that these individuals are always simple-minded “yes men,” though they may be. The point is that their leadership styles and their strategic ideas may be similar to that of the executives who came before them. This can be a good thing when the company is on sound footing, or when it’s recently made big changes that are just beginning to pay off. In these situations, it may be wise to promote someone who will continue the previous leader’s policies. Other times, another course of action is needed.
All industries change. In order for businesses to survive, a certain degree of dynamic thinking is essential, especially when profits are stagnating, costs are increasing, the industry is evolving, or morale is flagging. In these situations, when your current pool of internal talent can only deliver more of the same, that’s a cue to look outside the organization. Hiring an outsider with a fresh perspective or experience addressing the company’s main challenges can help you grow.
Maintaining Positive Relationships
It’s worth noting that hiring internally for high-level positions can have a positive impact on employee morale. People are always happy to see that their employer offers growth opportunities to those who demonstrate their skills and dedication.
However, there are also cases in which multiple people may be vying for the same promotion. Additionally, there are instances in which some people have years of personal dislike for the person being promoted to the executive role. Even if they weren’t trying to claim the position, they might believe the company made the wrong choice.
Circumstances such as these can understandably generate tension at a company. You need to honestly assess your own organization to determine if you’re at risk of harming important relationships by hiring internally. Sometimes, the best way to avoid upsetting anyone significantly is to hire an outsider instead. In this way, you can sidestep the politics, and no one will feel like you’re playing favorites.
Again, none of this is to suggest you should never hire internally when filling C-suite positions. There are times when doing so is the best choice. Either way, deciding where you’ll look for candidates is an important early decision to make during the recruitment process. These points will help you better understand why you might find the best candidate outside the organization.