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Article -> Succession with Insiders & Outsiders

Date Added: January 2011

Note: This article appeared in the January 5, 2011 issue of The Green Bay Press-Gazette.

Succession planning continues to be a hot topic. This relates to succession at all levels – not just the CEO. Yet, recent research demonstrates organizations are not succeeding at succession.

 

The research placed people into five categories. Insiders were already working at an organization for several years. Outsiders were brand new to an organization. Board members were on the Board. Former leaders were retired and brought back. And Insider-Outsiders were hired externally and transitioned with a current leader for 12 – 18 months.

 

The most successful group was Board members, outperforming all other candidates with 32% being outstanding performers). Board members are often the last resort based on desperation or no other worthy candidates; although they have more knowledge than Outsiders and aren’t completely vested in the corporate culture like Insiders (i.e. they are not afraid to make unpopular decisions or lead change).

 

While Insider-Outsiders make the most sense as the person joins an organization, learns for a period of time, interacts with employees, and gains an understanding of the culture; Insider-Outsiders were the worst-performing group (0% outstanding performers and 60% poor performers). 

 

Once in a leadership role, Insider-Outsiders fail because the prior leader may still be involved, the new leader is afraid to make changes, and status quo and decision paralysis occur.

 

Most believe Insiders typically outperform Outsiders because they are more familiar with the organization. This proved untrue. More important to success was the health of the organization… more so than criteria such as college, degree, prior organizations, etc.

 

Insiders are best when promoted within a good performing organization, while Outsiders do better when the organization is not doing well – financially and/or culturally. This makes sense as high-performing organizations have positive, distinct cultures making it difficult for Outsiders to fit in; while organizations not doing well offer Outsiders a unique perspective to have more freedom to improve/change things.

 

If you’ve been identified as a succeeding (Insider) leader or are applying elsewhere (Outsider), ask organizational health questions as these will help your own success. And those responsible for succession should be prepared for the types of candidates sought based on the organizational health.

 

Citron, James M. and Dayton Ogden. "Succeeding at Succession." Harvard Business Review, November 2010: 29-31.

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