An internal candidate isn't always the safest choice

Petra Palmgren Lindwall, one of the podcast’s hosts, recognizes the situation from her own time as chair. On several occasions, a CEO has resigned to take a new position. In those cases, she has suggested an interim solution, since the hiring process takes time and the CEO wants to move on fairly quickly. But she has encountered resistance to bringing in someone from outside the company. The concern is that an external candidate won’t have enough time to understand the company well enough in such a short period.

Lars acknowledges the objection and says that it is sometimes valid. But he believes that people often overestimate the importance of already being familiar with the organization, the customers, and the resellers.

– That’s not often what determines whether a CEO succeeds or fails. What matters is being able to make quick decisions, get a handle on the situation, understand the issues, and identify what drives profitability and the various KPIs.

No ties to past decisions

An external interim executive has no connection to why certain investments were made or to the logic behind past decisions. This makes it easier to make difficult decisions based on facts and data. According to Lars, boards are often pleasantly surprised by how quickly an interim CEO understands the business. It takes weeks to a few months before the person delivers truly impressive results. It’s not uncommon for the board to then ask if the person would be willing to take on the role on a long-term basis.

Family-owned companies often need someone to bounce ideas off of

Petra points out that resistance to hiring from outside may be greater in private and family-owned companies, where people know their employees and are aware of who they could bring in from within the company. Lars agrees with this logic but highlights another side of the issue. These companies often have fewer resources, sometimes no HR department of their own, and rarely any experience with these types of issues. They therefore often seek advice just as much as a candidate does. How should we approach this, how can we organize ourselves, and what would it mean to bring in a new interim CEO?

Compare the internal candidate with three external candidates

Lars has some concrete advice for boards that already have an internal candidate: don't rule out other options before considering them.

– You have an internal candidate—let’s identify three external interim candidates, and then we’ll compare your internal candidate with the external ones. That will give you a wider selection, and it’s also a good way forward for the board.

According to Lars, boards of directors tend to recognize the value of bringing in someone with a different perspective once they start meeting candidates with a different kind of experience. This is especially true when the company is facing a major change and perhaps some very difficult decisions.

Listen to the full episode of "Styrelsesnack" with Petra Palmgren Lindwall and Jonas Fasth here.