Leadership development expert Claudio Fernández-Aráoz iand is a senior adviser at the executive search firm Egon Zehnder. Recently Sarah Green Carmichael interviewed him for an HBRIdeacast titled “Why More CEOs Should Be Hired from Within.†That’s where he made this thought-provoking statement.
“there is emerging research that shows that organizations, particularly at the very high levels, are hiring from outside excessively. So, the typical large American firm would, for example, hire a CEO from outside about 30 percent of the times. And there is some research that I believe in that shows that they should only be doing that on average six percent of the time. “
That got me thinking that when a leadership development doesn’t develop leaders for the company’s top positions, it fails in three important ways.
Leadership development and remaking culture
Your development should be the carrier of your culture. If you’re bringing in top executives from outside, you run the risk of disrupting the very thing that defines you
Leadership development and the transfer of knowledge
Every company is different. When you bring in a top executive from outside, he or she needs to learn a lot quickly about the company and, perhaps, the industry. He or she will also have to develop relationships, mostly from scratch. None of that will be easy or quick.
Leadership development, hope, and retention
If you bring in most of your senior leadership from outside, you’re sending a message to every aspiring leader. The message is simple: “You’ll only go so far here.†That’s not a good message to send if you want to retain leadership talent.
