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Internal or external successor?

Getting your successor ready is one of the most important jobs of a senior executive. And when it’s time to find a successor, the question arises whether you want an internal or external candidate. If you decide on a candidate from outside of the company, the top management is going to expect a ‘big name’. Someone who has a good track record. This means that the costs of taking in a hotshot like that could be pretty high. Besides, someone like that will want to have a ‘golden parachute’ for if things aren’t going as planned. Paying a severance grant could cost the company even more. But the damage done to the reputation of the company or negative reports in the press are even worse.

Getting an external candidate sends out a negative signal to the internal organisation. What do you tell the people who have been working for you for years, but can’t be promoted since there are no vacancies at the top? And executives who can’t make progress because the new candidate is already costing so much money.

In short: normally I advise companies to look for an internal candidate when it comes to succession. Hiring an external candidate has got a great chance of detriment and sends out a wrong signal to the internal management talent. This doesn’t mean that it never is better to appoint an external candidate. Just think twice!


By Paul Donkers

"my purpose is to help improve strategy execution, to create high performing teams and coach for effective business leaders"

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