Want to Give Your Competitors a Boost? Ignore Your Internal Talent

CEO Succession
min Article
Dean Stamoulis
April 29, 2022
5 min
CEO Succession
Executive Summary
Giving competitors a leg-up is the last thing a board wants to do. But, in the pursuit of radical change, some do so inadvertently—by overlooking internal talent when searching for future leaders.


The last thing a board wants to do is give their competitors any sort of advantage. But many are inadvertently doing so—by overlooking internal talent when searching for future leaders.

When you hire leaders from outside your company, you send a message to your hungry, ambitious employees: your options for advancement here are limited. And the bottom-line impact stretches far beyond the blow of losing star employees.

Employee turnover due to lack of future career opportunities comes at a cost—both in terms of monetary impact and lost experience and skill. Those costs grow exponentially when the employees in question are also prominent leaders and figures within the organization; your rising stars, management team, and C-suite.

Why boards may overlook internals when looking for a CEO successor

There are a number of reasons why boards may overlook internals in their search for a new CEO. For example, the prevailing belief that change and transformation efforts are best led by external talent.

External candidates are often seen as more effective, due to their raft of diversified knowledge and experience and their lack of existing emotional ties. The latter, especially, could allow them to make more difficult strategic and talent decisions, as they would have no relationships or investments to color their thinking.

External candidates may also be seen as safer bets to hitch a company’s wagon to, as they come with clear records of their past achievements—“They did great things for that company, no doubt they’d do great things for us too!” (Despite the fact that, of course, no two companies are alike, and “past performance is not indicative of future results.”)

But every list of potential pros inevitably comes with a number of corresponding cons.

The dangers of overlooking internals: anger, attrition, and unwanted attention

Defaulting to external hires for high-level positions sends a strong message, whether that’s the board’s intention or not. It says the board isn’t confident enough in internal candidates—or that they think a drastic change in direction is needed.

Prioritizing external talent can result in:

  • Internal talent feeling snubbed and overlooked, leading to them leaving and joining competitors
  • Low employee morale and the assumption that meaningful career progression isn’t possible from within the company
  • Lack of shareholder confidence, as the need for outside help could be seen as a sign of uncertainty or internal problems—akin to saying “we were on the wrong track”.

Of course, there’s nothing wrong with change. Historical trends show that the companies consistently thriving through decades of disruptive technology and shifting goalposts are the ones able (and willing) to pivot and adapt to new business paradigms.

But a need for change does not necessitate bringing in external leaders. In fact, companies often do best with internal changemakers: the ‘outside-thinking insiders’.

The case for the internal changemaker

Change can be hard to enact from within an organization; that much is true. Especially when things have ‘always been done a certain way’.

But there will always be visionaries within an organization: people who are excited for—and motivated by—change for the better. They are the ones who have a vision of how things could be improved, alongside the willpower and drive to make it happen; the ones who keep an ear to the wind and stay ahead of changing best practices and ideological change.

These are your internal changemakers. Your outside-thinking insiders.

They may already be in positions of power, or they might be rising stars within your ranks. Given the chance, they can enact organizational change; and, with their existing relationships and established reputations, they often do a better job of getting stakeholders on-side than an external hire could.

Outside-thinking insiders are also more likely to be rapidly effective, as they won’t need to get up to speed with the nuances of company culture, the business model, and where change can begin. Outside-thinking members of the C-suite will also have a better understanding of where the organization can afford to experiment with change—they know where revenue is generated in the organization, meaning they know what to protect throughout the process in order to finance true, long-term transformation.

Championing internal superstars

So how do you find and champion these superstars?

It begins with having internal development processes in place to seek out and nurture stand-out talent. Implementing a CEO succession plan helps with this. Having clear succession planning processes sends the message that the company is invested in its people and their careers—and that it’s heading in a clear direction.

It also helps to set the company up for success and protect it against unexpected upheavals. With succession planning, your company will have options at the ready, even if there is a sudden need for a change in leadership.

To effectively create a CEO succession plan that will support your organization in coming years, you will need to:

  • Create a Leader Profile that outlines what good looks like for a CEO in your company—what personality traits, skills, background, priorities, etc.
  • Determine which internal candidates are a good match for the company’s current and projected future needs
  • Set those candidates on a development path that gives them the experience and know-how they need to succeed
  • Constantly re-evaluate the company’s path to ensure that training and development matches the company’s evolving needs
  • Have a plan in place for unsuccessful candidates that will help to prevent them from leaving the company when not selected

External candidates definitely have their place in a company succession planning process—but ideally as last resorts or in drastic times. For forward-thinking companies, succession plans should rest primarily on internal candidates.





Want to find out how to develop a pipeline of outside-thinking internal leadership prospects that will sustain your company for years to come?