Identifying the right leaders: Who is the best one for me?

Building the frontline of your company is an important but complex and stressful task. The quality of the leadership team can determine the success or failure of the venture.

Bibiana Jou
Patrik Schulcz

In the fast-paced world of startups, just as finding the right talent is critical, finding the right person to be at the helm can also prove crucial. Many great founders are good at igniting projects, but they are not necessarily good at being a CEO and they might find themselves in need of someone else to step in. Yet, while changes might be necessary, appointments always come with some unavoidable conflict and disappointment. As a company reaches this crossroads, two opposite strategies seem to unfold: internally promoting or outsourcing leadership

Until not so long ago, companies used to fill a major part of non-entry-level positions internally. However, in recent years this approach has changed and many positions are outsourced as well as the selection process itself. While external hires can bring fresh perspectives, promoting from within might offer a unique set of advantages. 

Giving a chance to your team 

Promoting internal workers encourages a culture of talent and motivates workers to excel as they perceive that the company values and compensates them for their hard work. Employees feel that there is a clear path to advancement, and it strengthens their commitment and loyalty to the company. Additionally, rewarding top performers might help motivate the skill development of other employees, therefore contributing to the growth of the company’s talent pool and reducing workers’ turnover. 

Promoting internal workers encourages a culture of talent and motivates workers

Moreover, promoting internally ensures a smooth transition, as existing employees benefit from previous relationships with other colleagues and a better knowledge of the company’s processes, therefore reducing the onboarding time and costs — two crucial aspects at any stage of a company’s journey. 

Invest in the company’s culture 

Another important aspect to consider is the employee’s understanding of the company’s values and mission. The cultural fit in a company can’t be overlooked. While some candidates might have the right skills and experience to get the job done, they might be completely inappropriate for the role as if they do not share the company’s values. In-house promotion ensures that the new leader understands and supports the company’s principles, making him or her better equipped to take a leadership role.  

At the same time, having the company’s values engrained in the team means that the leader can rely on the employees’ decisions and their ability to solve problems according to those principles. This allows for delegation, granting workers autonomy and sense of self-efficacy. Shared values promote employee ownership, create consistency, and ultimately simplify decision-making for everyone in the company. 

Building a strong frontline means knowing to face conflict

However, promoting from within involves some potential pitfalls. Before upgrading a current employee, it might be wise to re-evaluate their skills and suitability for the new position. On many occasions, just because an employee proves successful in their role does not mean they will fit in a position requiring more responsibility and different abilities. Even a proven record of accomplishment in a similar position does not guarantee the same successful performance this time. 

You have to let go the wrong players to keep the important ones

Building a strong frontline means not avoiding conflict and knowing when to ‘lose’ the wrong players to keep the important ones. Demoting or learning how to let go the people not doing well in their job or not performing as expected might be a wise move and help avoid future problems causing an unknown impact on the company. Although loyalty is important, keeping low performers could negatively affect the perception of the company’s promotion culture, and employees might feel that they do not need to work hard to stay or advance in their career.  

The grass is always greener...

External hiring can be game changer for companies seeking new talents. By looking beyond the internal candidates, the company gains access to a wide range of talent with diverse skills and experiences. The larger pool of applicants increases the chance of finding the perfect match to fill specific needs and helps your company grow in particular areas. 

External hires can boost your company immediately

Additionally, new hires can be a powerful driver of innovation. Their fresh perspectives and unfamiliar approaches can challenge the existing conditions, which is especially valuable when the company is seeking innovation and creativity. The external hires often have the benefit of an “outsider’s view”, which allows them to spot areas for improvement that current employees, comfortable in their routines, might miss. Their previous experiences may equip them with business methods and solutions, which potentially can be integrated into the company leading it to new heights. 

Instant impact

Beyond the volume of qualified candidates, external hiring offers the distinct advantage of immediate access to specialized knowledge and experience. While training internal employees to become experts in a new field or market can be expensive and time-consuming, an external hire who already has the necessary skills and knowledge can make the process much faster. This “external expert” also brings the benefit of understanding the nuances of the process, which often develops over years of experience, which translates to fewer costly mistakes. They can also serve as a valuable source of knowledge transfer for the existing team members. Ensuring their success in the new role requires a comprehensive onboarding experience. This means walking them through the company’s specific processes in detail. 

However, while external hiring offers a broader range of talent, it comes with its own set of drawbacks. The process can be time-consuming and expensive. Advertising, recruitment, and screening a large pool of applicants can strain the HR department’s resources. Even after selecting the seemingly perfect candidate (who might not always be the best fit), additional time is needed for onboarding. New hires need to acclimate to the company culture, specific workflows, and internal tools as well. This can lead to a temporary dip in productivity. In the worst-case scenario, if the new hire is not a good fit, the entire process starts all over again, adding further time and cost burdens.  

The ideal candidate on paper isn't always the best fit in practice

Considering a hybrid approach might be the right solution as companies’ needs evolve over time. Startups with limited resources might prioritize internal hiring to help them solidify their path. In contrast, larger companies might need specific knowledge or skills to help them position and grow in new markets and find outsourcing more strategic. 

Tips to find the right fit 

Nevertheless, whether a company chooses one strategy or the other, some tips can help employers pick the right fit: 

  • Evaluate the position well: provide a good description of the skills and knowledge needed for that specific role before opening the position. Transparency fosters a sense of growth and development and avoids promotions seem arbitrary. 
  • For crucial positions, consider taking on an interim role yourself. This allows you to intimately understand the needs and challenges before hiring or promoting a leader. 
  • Reference checks: Go beyond the "glowing" references. Seek out honest feedback, by the candidate as a referee. 

And remember, hiring the right person is just half the job! 

  • Micro-management might come in handy even at executive levels. It is important to stay close to the new leaders during onboarding, so you can provide a detailed handover to them and make them feel more confident in the role in a shorter time. 
  • Communicate and always give feedback: one-on-one meetings are important, including peer one-on-one. Communicating well the expectations helps to avoid failures. 
  • Beyond experience, identify high potential. The best candidate may not have held the exact position before. Focus on potential, coachability, and a willingness to learn. 
All written content is licensed under a Creative Commons Attribution 4.0 International license.