Close this search box.
Close this search box.

Inside vs. Outside: Reeling in the New CEO

When it comes to finding a new CEO, do we draw on internal talent, or do we look outside?

In many areas of business, companies face a basic choice—build or buy? And in a sense, that’s the case when it comes to finding a new CEO. That is, do we draw on internal talent, or do we look outside?

The CEO1000 Tracker shows that companies clearly tend to look inside for CEOs, with more than three quarters of today’s CEOs having been promoted from within. The smallest companies (5,000 employees or less) and largest companies (100,000-plus employees) are somewhat more likely to have internally sourced CEOs. There is also some variation by industry, with more media, retail and technology CEOs being recruited from outside the company.

Internally sourced CEOs are most likely to have been COO, president or executive vice president prior to taking on the top job. On average, they were with their companies for 22 years before becoming CEO. Nearly three out of 10 started their careers at their company, a group that averages 25 years with the organization before becoming CEO. And 5% are the ultimate insiders, having founded the companies they currently lead.

The road to the top differs somewhat when looking at CEOs brought in from the outside. Here, the CEO role is by far the most common source of talent, with 44% having come from that position. Presumably, boards like the experience and track record they see in those who are already CEOs.

Overall, the emphasis on hiring CEOs from within probably stems from the fact that boards see it as the lower-risk route. “There are many studies that show better performance over time for companies who promote insiders to the CEO role,” says Dr. Paul Winum, head of RHR International’s Board and CEO Services practice.

“Except in situations requiring a turnaround or change in strategy, inside successors are usually the preferred option and are able to leverage their knowledge of the company, its culture and the talent to build on past performance. Plus, the compensation required to bring in an outside leader is on average more than twice as expensive, as there is usually a need to buy out stock options.

Investing in the development of internal CEO pipeline candidates usually yields a much better ROI.” In addition, he says, “an inside succession often indicates a planful development process over years with an intentional grooming process.”

At the same time, however, internal experience is no guarantee of success: In the CEO 1000, the CEOs at the lowest performing segment of companies actually had the highest number of years with their companies, on average—a reminder of the importance of leadership development and careful succession planning when relying on the internal pipeline.


  • Get the CEO Briefing

    Sign up today to get weekly access to the latest issues affecting CEOs in every industry
  • upcoming events


    Strategic Planning Workshop

    1:00 - 5:00 pm

    Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process

    Executives expressed frustration with their current strategic planning process. Issues include:

    1. Lack of systematic approach (70%)
    2. Laundry lists without prioritization (68%)
    3. Decisions based on personalities rather than facts and information (65%)


    Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns.  They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning.  Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process.  This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented.  If you are ready for a Strategic Planning tune-up, select this workshop in your registration form.  The additional fee of $695 will be added to your total.

    To sign up, select this option in your registration form. Additional fee of $695 will be added to your total.

    New York, NY: ​​​Chief Executive's Corporate Citizenship Awards 2017

    Women in Leadership Seminar and Peer Discussion

    2:00 - 5:00 pm

    Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations. 

    Limited space available.

    To sign up, select this option in your registration form. Additional fee of $495 will be added to your total.

    Golf Outing

    10:30 - 5:00 pm
    General’s Retreat at Hermitage Golf Course
    Sponsored by UBS

    General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.

    The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.

    To sign up, select this option in your registration form. Additional fee of $295 will be added to your total.