When it comes to CEO succession, promoting from within is viewed as best practice. But, in the case of struggling companies, bringing in fresh blood may be the better option. That’s one of the findings of a survey by the Toronto branch of Spencer Stuart, an executive recruitment firm (via The Globe and Mail).
The results find shares perform better if a company brings in a CEO from outside the company, compared to if they hire internally. And that this is particularly true if the company is in crisis and has fired the incumbent CEO. In this case, shares outperform by 4.3 percent over three years, according to the survey, which used a group of Canadian companies for its sample.
The results are unsurprising. If a company has made mistakes and is in a rut, internal candidates probably lack the ideas to turn it round. But, perhaps even less surprising, is the involvement of Spencer Stuart in such a survey, which makes its money by placing top-level executives. Triples all round then!