“ If there has been a major strategic shift in strategy , operating model or geography , this may require different experiences and skill sets than those found within the organisation . An external candidate can provide an organisation with a fresh perspective which can offer an opportunity to get ahead of their competitors , but it is not without risks which need to be thoughtfully considered and managed ”
PEOPLE | CEO SUCCESSION
Skinner says organisations not only recognise that there is now more at stake for society , and for companies and their boards , but that more is uncertain , and new skills and competencies are required .
And so , they are “ returning to a more expansive view of CEO succession ” and increasingly taking a broad , diverse , and multi-time period approach – considering external candidates and those from less traditional C-suite pathways .
“ As companies look for diversity in CEO successors , whether it be gender , ethnicity or other , it is necessary to look at less traditional backgrounds ,” says Skinner . “ We are seeing significant investment in developing internal leaders and scanning external talent against the backdrop of rapidly evolving geopolitical scenarios and across multiple time horizons .” Boards have long favoured internal , but are now widening search externally Traditionally , S & P 500 boards have long favoured internal candidates , with internal promotions marking 80 % of all CEO transitions in 2021 . Korn Ferry data backs this up . In the Fortune 1000 , many more boards promote internally than hire externally , though conversely , the private market is almost uniquely external .
Reasons for hiring internally are multiple , not least because an external candidate ’ s lack of internal social networks can hamper their effectiveness , a recent university study found . John Kurtz , a Partner in the Leadership Change & Organization practice of Kearney tells Business Chief that it can be hard for external CEO hires to understand deeply the culture of a complex organisation and to read and then motivate the whole organisation . While the facts of a company – its markets , financials , strategic opportunities – can be
“ If there has been a major strategic shift in strategy , operating model or geography , this may require different experiences and skill sets than those found within the organisation . An external candidate can provide an organisation with a fresh perspective which can offer an opportunity to get ahead of their competitors , but it is not without risks which need to be thoughtfully considered and managed ”
Claire Skinner
Head of Europe and Africa , Heidrick & Struggles