Management Turnover as Change Agent

Wednesday, March 11, 2009

Recommended Reading - Hiring a New CEO? Go Outside the Company

Klaus Kneale wrote a fascinating piece in Forbes yesterday entitled, Hiring a New CEO? Go Outside the Company. Kneale’s piece refers to a study conducted by Vell Executive Search. The firm located in New England performed a study that,

looked at 51 CEOs and their companies’ revenue growth, focusing on publicly owned technology outfits based in New England with $100 million or more in annual revenues.

Externally hired CEOs at companies with over $1 billion in revenue brought in a median three-year revenue growth of 99%; their internally promoted counterparts achieved only 35% growth. Founders, which were concentrated in smaller companies, outperformed both of these groups.

The study raised a number of very important points about CEO succession but its overall conclusion, while worth serious consideration, does not adequately answer the real questions typically surrounding the efforts and goals behind finding a CEO replacement for a company. Each business circumstance is different, whether it is for a technology related company, a food company or other type of company and the CEO search must be dealt with in a manner capable of meeting a specific company’s goals and immediate needs. The study sample of 51 companies appears to have been far too small to make any sweeping conclusions.

Determine for yourself the applicability of the Vell study, read Klaus Kneale’s Forbes piece.

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