An advantage to hiring a new CEOinternally is that CEOs who have worked with the company have an edge overthose who have not worked with the company. This is because company-specificknowledge about its vision, mission, and values cannot be easily acquired, andCEOs without firsthand experience at the company won’t be able to quickly understandcertain elements of the company that internal hires will already know.
As aresult, internal CEOs can often start implementing their new ideas quicklybecause there is no time spent on learning company operations, understandingthe culture and processes, and assessing the management. However, adisadvantage of hiring a CEO internally is that after working with a companyfor an extended amount of time, it can be difficult to think of alternativeideas and solutions to problems the company may be facing. Also, by hiring a newCEO internally (and in general), it may be difficult to implement larger reformsor change the strategic vision and/or mission of the company. When hiring a new CEO externally,there are more options to choose from because the talent base from outside acompany is much larger. In addition, bringing in a new person can be a greatway to gain a new perspective on how achieve company goals and improveperformance.
This insight can help to transform a company and revitalize acompany’s vision and/or mission. However, it can be difficult to learn a newcompany’s operations, understand the culture and processes, and assess the currentmanagement expeditiously when a CEO is hired externally as mentioned above. Becauseof this, those who hire a CEO without experience with the company mayexperience longer timeframes to implement much needed changes. In addition,passing over qualified applicants may send the message that the company doesnot value employees, making it harder for current employees to buy into thechanges a new leader will make.