Here’s why South African companies appoint external candidates to fill CEO posts

As companies continue to grapple with the question of whether they should appoint top leaders from within, or whether it would be better to bring in someone from outside, research finds that there are distinct benefits in the long term of appointing external candidates.

“For many organisations, it is almost always instinctively preferable to make an internal appointment to the CEO role, because of institutional memory, knowledge of corporate culture, limited delay in the learning curve and the ability to hit the ground running, among others,” said Debbie Goodman-Bhyat, CEO of leading local and African search firm Jack Hammer.

But she said that data gathered by Jack Hammer in recent years, showed that 70% of CEO placements were external candidates. The balance of appointments came from the company making either an internal appointment, or the company importing an internal candidate from their international office.

While there are distinct benefits to appointing an internal candidate who was identified as part of a company’s succession planning strategy, there were also solid reasons for sourcing top leaders from outside the company, Goodman-Bhyat said.

Recent research, published in the January/March edition of the Health Care Management Review Journal, investigated the extent to which insider CEO succession versus outsider succession impacted an organisation’s competitive advantage.

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