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Why You Should Always Look Internally When Replacing Top Talent

Wednesday, January 20th, 2016

So, your chief executive is leaving and you need to find a replacement. Where do you start? Do you try to have a clean break with the past and bring in some fresh blood, or is continuity the most important consideration? You might think you need to look outside your organisation for new talent, but often an internal candidate can be an even better fit.

Take the example of Marks and Spencer. Last week the high street retail giant announced its Christmas results along with the surprise news that its chief executive Marc Bolland is to stand down in April. There was apparently no pressure on Mr Bolland to leave, either from shareholders or the board, despite the company's mixed results.

But, rather than recruit a new CEO from outside M&S, the company looked within; Mr Bolland's replacement, Steve Rowe, is already employed by the company as its executive director of general merchandise.

Speaking to reporters, M&S chairman Robert Swannell said the succession planning process had not been done "quickly on the back of an envelope". Although he refused to say whether external candidates had been considered, he said the firm had used "external benchmarking" during a "thorough, rigorous process" to select candidates.

The urge to look externally

Often, when an organisation comes to engage with executive search professionals to find top talent, they have already decided they want to look externally. They might have convinced themselves they need fresh blood and new thinking. There might also be political or cultural pressures to seek an external person to come in because of performance issues and the perceptionthat only someone new can turn things around.

It could also be the case that succession planning has not been as rigorous as it should be. I don't think it is necessarily the case that if you are bigger you are more likely to go with an external candidate; some of the bigger corporates have been able to invest in robust succession planning.

Always look within

When I engage with any client one of the first things I look at is the extent to which they have already got good people or talent within their own organisation. I always ask up front what their internal talent looks like. They will of course have a view of their own but I would always recommend we consider internal candidates. We carry out a mapping exercise where we investigate the quality of talent available within an organisation to provide an objective view. It might be that a potential internal candidate has not been considered by the 'higher-ups' - often until an opportunity comes up they simply do not see the person in that light.

It is important to handle those candidates in exactly the same way you would handle an external candidate - interview them in the same way, and put them forward to the board in the same way. I have worked on a couple of assignments where internal candidates have been appointed because they have been measured against the best in theindustry.

The big name approach

Another recent example of looking within for a new leader is Swansea City FC. Last week the Premier League strugglers announced caretaker manager Alan Curtis would remain in charge until the end of the season following Garry Monk's departure. In a statement, club chairman Huw Jenkins said finding a replacement for Monk, himself recruited as manager while already employed by the club as a player, had not been easy. "In the end, we felt the best decision was to keep things in-house and change as little as we can until taking stock in the summer," he added.

Football is a particularly difficult environment in terms of recruitment because of the need to satisfy so many people. When it comes to recruiting a new manager, clubs must take into account the demands of multiple stakeholders such as fans, the media, investors, sponsors and shareholders. Many football clubs, especially those in the top flight, bow to that pressure and bring in a big name external candidate to lead them to future success.

Big businesses might also be tempted do the same, though it is not always the best approach. Instead it is more important to ensure genuinely good, solid leadership. And if that mutual respect, trust, credibility and knowledge isalready in place with an internal candidate, that shouldn't be ignored.

Siân Goodson is Managing Director of Cardiff and London based executive search and corporate insight business Goodson Thomas. She has appointed chairs, non-executive directors, chief executives and other senior management roles across a range of industries.

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