Are you in the process of looking for a new CEO? Or maybe you are considering your decisions for the future when it comes to hiring a new CEO. Well, one of the biggest questions is do you promote your new CEO from within, or do you hire externally? Watch the video above or continue reading below for some things to consider about both options!
Hiring a New CEO
With all of the retirements happening out there, especially in the CEO role, boards are asking themselves whether they should promote from within or if they should look externally. And that is an incredibly important question, especially since hiring a new CEO is definitely not easy. In fact, I have seen board members decide to leave the board prior to the CEO retiring so they don’t have to be part of the long arduous process that is hiring a new CEO.
Hiring the new CEO is tough, and sometimes boards decide to simply promote from within for two reasons. First, they think it’s easier to do than looking externally since they won’t have to go through the entire process. And two, they think it will save them money because they won’t have to hire an expensive search firm. However, I urge you to not take the easy way out, and to evaluate all of your options.
Things to Consider
Here are some things to consider when deciding if you should promote from within or hire externally.
- Has your organization been doing CEO succession planning?
Have your potential internal successors been working on developing the skills that are needed for the CEO role? How long have they been developing those skills as well?
- Are you confident that your internal successors are ready?
This is important to consider, because you have to figure out how you truly know that they are ready. I feel that it is important to still go through an entire process with your internal candidates to gauge their readiness — maybe doing things like interviews and assessments. It is important to have a process and not just automatically promote your internal candidate.
- Do all board members agree?
Is there a consensus on the board that you want to promote from within, or are there people who are hesitant to do so without looking externally first. It is important that everyone agrees and feels comfortable with the decision being made. If board members are hesitant to move forward without looking externally as well, then it may be time to do an external search with a search firm.
- Do you as a board have the necessary skills to pick a new CEO?
If you have someone who has high level HR experience on your board, then your board may have the right set of skills to select a new CEO. However, without those skills, this process may be difficult and you want to be able to make the best decision for the organization. An executive search firm has professionals who do this day in and day out and have the proper skills to assist you in selecting your next CEO. They are able to properly evaluate your internal and external candidates.
What You Can Do
- Ensure you have a CEO succession plan in place and that your potential successors are being developed on a regular basis.
- Evaluate the skills on your board of directors. Do you have the skills necessary to evaluate either potential internal successors and maybe even external candidates on your own?
- Be open to using an external search firm. They truly are the experts in evaluating potential successors and can be very valuable in the process.
Hiring a CEO is absolutely one of the most important roles of a board member. Make sure that you are open and using the correct process to find your next CEO!