I was reading with interest at the weekend an article in the Sunday Times written by Peter Evans. He cited research by remuneration consultants Pearl Meyer finding bosses that are promoted internally offer better value for shareholders than external hires. Their analysis found 70% of new CEO’s in the FTSE 100 over the past 5 years’ have been promoted internally. They subsequently added 6% more value to a company than outsiders brought in, whilst being paid 20% less.
The obvious advantages of promoting someone from within are that they know the business in both tangible and intangible senses. The cultural fit, operating practices and simply understanding the way things are done, should not be underestimated in terms of their value. Equally, the individual has probably to some extent proven themselves capable of doing the role, before even being promoted.
However, as much as internal promotions and talent succession programmes offer these advantages to the business, they can also be limiting both organisations and individuals ability to affect real change. Businesses can find themselves creating templates of ‘perfect candidates’ for roles that seldom allow for significant change. Instead they find themselves seeking replica’s of outgoing employees.
From an individuals perspective, when I am discussing new career opportunities with senior leaders, they are often frustrated at being ‘pigeon-holed’ and struggle to break the perception of themselves internally. This then translates to a pay and grade that doesn’t often move much, even when their remit does. Often for them to truly advance, the opportunity needs to be sought externally.
So whilst internal moves might provide the best value to the business, it might not always be the best move for the individual.
Jen Gaster
Founder and Director of HR Heads. Passionate about the innovative and successful recruitment of HR talent and creating strong, lasting networks built on trusted relationships. Industry specialist for the Hampshire region
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