Harvard Business Review IdeaCast – Why More CEOs Should Be Hired from Within

For the Harvard Business Review IdeaCast, Egon Zehnder Senior Advisor Claudio Fernández-Aráoz sat down with Senior Editor Sarah Green Carmichael to discuss how more companies can make good decisions by developing and hiring insiders. According to Fernández-Aráoz, there is emerging research that shows that organizations, particularly at the very high levels, are hiring from the outside excessively, perhaps five times too often. “It is so much better to promote someone from within if you have the right type of candidate, not only from an economic point of view, as this research shows, but also from a motivational point of view. Who would like to work for a company, where, whenever there is an opening at a senior position, they hire someone from outside, because they are so clever and we are so stupid down here. So, I think it’s the right thing to do,” he says.

Fernández-Aráoz goes on to explain in detail why companies should not begin their CEO succession planning at the 11th hour, but rather three years or more before. In Egon Zehnder’s Global database, at the C-Suite level, about 9% of candidates have the potential to be very successful CEOs. There is often more potential at the lower levels, but, “this is one of the problems: organizations don’t proactively start their CEO succession early enough.”

Listen to the full interview from Harvard Business Review’s IdeaCast: “Why More CEOs Should Be Hired from Within” for Harvard Business Review (28 November 2017).