June 10, 2023

Reflection Group

Business, BtoB, Health

Succession Management: Should You Hire the Company CEO Externally or from Within?

Hiring the best person for the leadership of your manufacturing unit can help to fire it to success while a wrong person could see it crumble.

With this fact in mind, entrepreneurs are always faced with the dilemma of whether to “promote from within or hire externally.” Here is a comparison of the two to help you make the right decision.

Hiring From Within 

Hiring from within is considered one of the best practices because you are tapping into the skills of a person who has been in the organization for some time. In some cases, the candidate will have worked with the outgoing leadership, making the transition smooth.

Businesses that hire from within also enjoy higher staff morale because employees perceive the new leader as part of the organization culture.

For example, if you promote the general manager to the CEO’s position, he/she understands the employees, probably knows them by names, and can associate with their daily routines.

This is the association that your staff needs to feel part of the organization. Other benefits of hiring from within include:

  • It is cheaper than external hiring. 
  • Helps to reduce disruption in company operations.
  • Promotes staff retention.

However, promotion from within might be less effective when you are trying to introduce changes in leadership or company operations. Also, it can result to damaging staff morale, especially when so many of them consider themselves to be qualified for the new position.

Hiring Externally 

Interestingly, even with the numerous benefits that come with internal hiring, most businesses are likely to hire externally. A new face in the businesses is considered a better bet because he/she is likely to introduce new ideas that can help a business to change and reach new heights.

This is very important because businesses are always working on reaching new heights, even when the previous objectives were met.

However, you need to appreciate that hiring externally can be expensive and lengthy. Also, the new leader might take time before getting used to the new system, and the staff morale could be affected negatively.

So, whether your manufacturing unit is in food production, auto parts, or mining as shown here, among other areas, you should work hard to boost the staff morale as the new leader starts working.

When it comes to hiring the top managers of your business, the main goal should be introducing leadership that can lever the organization for growth.

Therefore, there is no method that is superior to the other. If you have a good leader in the organization who can help to grow it, go for him/her. However, if an external candidate is more suitable to take the business to the next level, do not hesitate to hire him/her.