Is it Best to Look Inside or Outside Industry for New CEO?

Chicago, IL - In the wake of the departure of Pamela Forbes Lieberman from the top post at TruServ, speculation abounds about who the Board will select as their new leader. Recent press reports point to the Board wanting the new CEO to have, .....retail experience, not necessarily in hardware, but someone with know-how in retail distribution and store operations.

What are the pros and cons of hiring leadership that is within an industry compared to outside? Do outsiders bring a fresh perspective, as in the case of Home Depot naming former General Electric leader, Bob Nardelli, as its new CEO?

According to Susan Reyman, whose executive search firm filled four seats on the TruServ Board, Companies always want someone who has a proven track record relevant to whatever it is they need to focus on, i.e. turning around lagging sales, public image, manufacturing efficiencies, cost cutting, acquisitions/joint ventures/divestitures, etc. A proven track record within oneís industry more often assures a company this candidate will be able to help them, especially if they have lived through a similar situation. However, if a company is running respectably well but feels fresh ideas would lead to growth in new areas, they may want to venture outside of their industry. In that case, they will want to hire someone who has proven success in increasing revenues/profits within several different industries, demonstrating adaptability, flexibility and broad thinking, noted Reyman whose Chicago-based company ( http://reymanassoc.com ) is one of the nationís premier executive search firms for filling CEO, CFO, VPís, Directorís and Board positions.

There are very successful Fortune 500 companies who have always promoted internally and although they may have excellent management, they can become stale and too myopic in their thinking, Reyman said. There is a tendency to think their competition cannot compare to how well they have done. This tendency is one of the reasons to venture outside of oneís industry into another that is known for progressive marketing, sales, manufacturing, etc.

Chicago native, Betsy Burton believes it can be beneficial and even necessary to go outside of an industry to find the best talent. Sometimes an outsider comes in with a fresh perspective so that they donít have to íunlearní old habits, said Burton who was brought in as CEO of PIP Printing in the early 90ís after her stellar performance as CEO of the Supercuts hair cutting chain. This is especially true if the new CEO is seen as the clear leader. Also, if the top talent is not available to you, why would you want someone from a lesser competitor? We recently went outside to fill the number two position on two of my Boards, explained Burton who currently sits on the Board of Directors for: Staples Inc., The Sports Authority Inc., Aeropostale Inc., Rent-a-Center Inc., Zale Corporation, and GNC Inc. At Staples we brought in Mike Miles as COO. Miles was COO for Yum! Brands prior to joining Staples, Burton explained. A few days ago we announced the hiring of Dave Campisi as President of Merchandising at The Sports Authority. He joins us from Kohlís where he was GM of Womenís Apparel, Intimate and Cosmetics. Both are outstanding hires and bring a fresh perspective to the business.

Verinder Syal, CEO of Chicago-based SyalConsult, and former CEO of a unit of consumer packaged goods maker, Quaker Oats said, There are pros and cons for both sides. When you hire from inside your industry that person will have a familiarity with your business and industry. He or she, as the case may be, can easily transition with the new leadership. Although a possible issue will be that they bring a narrow perspective. When you hire from outside the new leader will have to take time to learn your industry and company. However, the perspective will be broader and generate a lot of íwhyí questions in the manner of a child. The leader will generally emerge with fresh thinking which can change the course of the business. Having said all of this, if you look at the book, íGood to Great,í imported leaders rarely do well. Big brand names are just that ñ their agenda is often themselves and not the company. The key to a leaderís success revolves around: a) their values and practices, b) having the right people in the right place and c) figuring out what the company can be the best at, noted Syal who is teaching a course called íLeadership, Ethics and Youí as an adjunct professor at Loyola University of Chicagoís graduate school of business. The key thing a leader brings to a company is personal attributes, a discipline, and integrity.