Do We Always Need to Look Outside? Rethinking CEO Succession
By Marsha Koelmel, Co-President of Catapult
In the world of Board governance, few decisions are more consequential than the selection of a new CEO. It’s no wonder that many Board members feel an external search is the gold standard—ensuring fairness, transparency, and access to the broadest pool of talent. But what if, in some cases, the best candidate is already on the team?
As a consultant who advises Boards on both executive search and CEO succession planning, I frequently encounter this tension: the instinct to “run a full search” versus the opportunity to promote a known, trusted, and proven leader from within. When done right, internal succession is not a shortcut—it’s a signal of strength.
The Case for Internal Succession
Research from the Harvard Business Review and the National Association of Corporate Directors (NACD) consistently shows that internal successors, when well-prepared, often outperform external hires. Why?
- Faster ramp-up: Internals already understand the organization’s culture, stakeholders, and strategic landscape.
- Lower risk of derailment: They are known quantities—boards can observe their behavior and leadership over time.
- Greater stability: Internals send a message of continuity, which builds confidence among staff, partners, and funders.
- Stronger long-term performance: Companies with internally promoted CEOs have a higher median total shareholder returns than those with external hires.
In the nonprofit sector, where mission continuity and community trust are paramount, these advantages are magnified.
Why the Default to External Search?
Despite these advantages, many Boards default to external searches. The rationale often sounds like this:
“We need to ensure we’re getting the best.”
“We owe it to the organization to test the market.”
“It’s not transparent unless we go outside.”
These are valid concerns—but they assume that the internal candidate hasn’t been subject to rigorous evaluation. That’s where strong succession planning changes the conversation.
When Succession Planning Is Done Well
A well-run internal succession process is not a handoff—it’s a runway. It begins years before the CEO departs and includes:
- Board-approved CEO success criteria aligned with future strategy and discussions around culture continuity vs. necessary culture changes
- Validated psychometric assessments, 360 feedback, and stretch assignments
- Board engagement with potential successors through committee work, presentations, and strategic initiatives
- Development plans that close skill gaps and build executive readiness supported by Executive Coaching
- Contingency planning and external benchmarking to ensure objectivity
In such a scenario, the Board is not taking a chance—they are making a data-informed decision.
When an Internal Appointment Without an External Search Is Appropriate
An internal successor can be confidently appointed without a full external search when:
- The Board has defined and agreed upon the future CEO profile based on future business challenges and the internal candidate demonstrably aligns.
- The candidate has been objectively assessed using behavioral interviews, psychometric tools, and real-time leadership challenges.
- Stakeholders express confidence in the candidate’s ability to lead.
- There has been transparency and engagement with the Board throughout the process.
- The organization’s strategic context supports continuity.
As one Board Chair recently told me, “We realized an external search would have introduced more risk—not less.”
Guardrails to Maintain Governance Integrity
Boards that opt for internal succession without an external search must be disciplined:
- Document the process and rationale clearly in the Board record.
- Engage external consultants or assessment firms to ensure objectivity.
- Communicate transparently with stakeholders about how and why the decision was made.
- Conduct an onboarding process that includes support from the outgoing CEO if appropriate.
This isn’t a shortcut—it’s a signal of confidence in the Board’s investment in leadership development.
The Courage to Choose What’s Right—Not Just What’s Customary
Ultimately, the question for Boards is not “Did we run a search?” but “Did we follow a rigorous, strategic process that led us to the right leader?”
The best governance practices are not rituals—they are decisions rooted in readiness, accountability, and alignment with mission and strategy. If the answer is yes, and the best leader is already part of your organization, then it may be time to look inward, not just outward.
Succession planning is about preparing leaders, not just replacing them. When Boards invest in that preparation—and assess it with clarity and courage—they may find that the most qualified candidate is already walking the halls.
When that happens, don’t hesitate. Celebrate it. Because the real hallmark of a high-performing organization isn’t who you recruit from the outside—it’s who you develop from within.
Resources:
HBR: https://hbr.org/2025/07/where-traditional-succession-planning-falls-short
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