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Corporate Leadership:

Promote From Within or Hire From the Outside?

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Image by Sue Styles from Pixabay
Image by Sue Styles from Pixabay

There’s been a big debate over whether or not it’s a good idea to bring in outside leadership for C-Suite and executive level positions, or if promoting from within is the way to go.

In truth, there is not a right or wrong answer to this question. Annoying, I know. But there are ways to make the decision easier for your company, business, or organization. Here are the things you should consider when finding what’s right for you. 

The Numbers

First, it’s important to know that the statistics overwhelmingly state the case for hiring from within. In a study conducted by Matthew Bidwell, external hires get paid significantly more, have lower performance reviews for at least the first two years, and are 61% more likely to be fired than their internally promoted counterparts. 

Yikes! Those are some scary numbers. 

If you were looking at statistics alone, it would be a simple open and shut case for external hires. But working with people isn’t that simple. There are other things to consider too.

Your Company’s Struggles

What has your company been experiencing over the past five years? Are you trying to fill a position that is consistently vacant, or one that’s been filled for the past 20 years? It’s important that you look at your company with open, honest eyes—which may or may not be a little painful. 

There are certain struggles you face where promoting from within makes sense. For example, do you have a strong, capable leader that’s ready to step up, is loved by your team, and that your team will follow? That would be a case for promoting from within.

Is your team already producing well with minimal infractions? Do they enjoy coming to work? Or do they consistently give you their best? This may be another case for promoting from within. 

However, if your company is facing team disengagement, if your employees are rebelling, if deadlines are consistently not being met, if you can’t seem to keep someone in the position long term, or if there are serious behavioral issues—you may need to hire externally. 

Hiring externally is usually best when there’s a high level of employee unrest, mistrust, or disengagement. These are things that heavily affect your bottom line. 

If you had to terminate a previous leader for infractions against your employees, this is a more delicate situation. You can certainly choose to hire externally, but it would be important in this case to discern how your team feels. 

You can give them an anonymous survey or conduct independent interviews through a third party so that they can express what they liked or did not like about the previous leader, what they’d like to experience with a new leader, if there was someone that they’d like to see promoted to the position, or if they’d rather have a fresh start with someone new. 

This can help you make a decision for which situation would be better for your team. 

Here’s an example of an external hire gone right: Steve Sammut, CEO of Rocky Mountaineer. The luxury train brand had just ended a 444 day lockout with it’s workers when Sammut took his position as CEO in 2012. The workers weren’t happy, and Sammut was going to have to put in some serious work to turn the company around. In true leader fashion, by the end of 2015, Rocky Mountaineer was named one of Canada’s Top Small and Medium Employers and has maintained that status since. 

Had Rocky Mountaineer hired within, the same practices, traditions, and mindset could have continued unraveling the company until there was nothing left. But by injecting the company with fresh perspectives, practices, and focuses from the new CEO, the company was able to scale tremendously, while rebuilding the relationships with its workers.

Hiring from within can also go right. Bob Iger, CEO of Disney, is one of the most visionary CEOs Disney has had, learning directly under former CEO, Michael Eisner. With the launch of Disney+, the Pixar acquisition, the Marvel Studios acquisition, the Lucas Films acquisition, the  Star Wars: Galaxy’s Edge theme park expansion, and so much more, Iger has left his mark on the Disney legacy. Iger had the experience, the vision, and the ability to take innovative risks, which made him a great candidate for CEO, and it’s paying off nicely.

Your Company’s Vision 

Do you have a clear vision of where the company is going in the future? Or is it unclear? 

If you have a solid vision with a thriving company culture and employees that already express emotional buy-in to that vision, consider hiring from within. When you have someone who can clearly see where you’re going, their work history proves that they are willing to fight for that vision, and your people will take their direction—my friend, you have a perfect opportunity for promoting from within. 

If you don’t have a clear vision of where the company’s going, it can be difficult to find employees who have that level of clarity. This may be a situation where hiring externally would make sense to give the company a newfound vigor in working toward a common vision. 

The most important thing to consider here are these three things: 

  • Does the candidate have a clear vision for where the company is going (and can simply articulate it in an exciting way)?

  • If yes, is that vision in alignment with the company’s values and goals?

  • Is the candidate someone your people are willing to follow? What is their leadership philosophy?

You need C-Suite and executives who have a clear vision, and that can share it with your employees to get them excited, engaged, and invested (they also need to lead with emotional intelligence). 

Scare tactic leadership is becoming an ineffective relic of the past, as employees drown in employment opportunities. It’s easier for team members to leave work environments that aren’t healthy or don’t support them. So you need a leader that will lead with compassion, empathy, and high performance standards to get the best out of your people.

Finally…

When all is said and done, you can’t base your hiring decisions on statistics and studies alone. While it may be comforting to know you made an informed decision, an informed decision is not always the right one. 

Think about who you want to lead with you? Who will carry your company through the next couple of decades? Who do you believe will make the company better and nurture the relationship with your employees?

Taking all of these things into account will help you make the best decision for your company.

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