CORPORATE Is an internal or external succession solution better for company succession?
What are the advantages of an internal succession solution?
An internal succession solution has several advantages that can be attractive for many companies. Firstly, the internal successors – regardless of whether they are long-standing employees or family members – already know the company very well. They are familiar with the internal processes, the corporate culture, and the existing customer relationships. The internal solution can make the transition smoother and faster. Another advantage is the motivation and commitment of an internal successor due to a strong emotional connection to the company. In addition, employees will often be more willing to follow a trusted internal successor, which increases the stability of all processes during the transition phase. Together, the team then wants to ensure the success of the company.
What are the disadvantages of an internal succession solution?
Despite the advantages, consider some disadvantages of an internal succession solution. Internal successors often need fresh ideas and external perspectives, which could hinder the company’s development. There is also a risk that internal conflicts or personal relationships may affect the objectivity and professionalism of the company’s management. In addition, internal successors may need more experience in management positions, which can lead to management problems. The major challenge is finding suitable internal candidates with professional and personal qualifications.
What are the advantages of an external succession solution?
External succession solutions also offer numerous advantages. External successors often bring new ideas, fresh perspectives, and innovative approaches, which can help the company develop and grow. External managers usually have extensive experience and expertise gained in other companies and can introduce best practices and strategies. In addition, external successors can act more objectively and are less influenced by internal politics or personal relationships. Another advantage is that external successors often have a broader perspective on the market and industry, which can lead to new business opportunities.
What disadvantages can occur with an external succession solution?
The use of external successors can also have some disadvantages. One of the most significant disadvantages is the extended training period required until the new successor fully understands the company and its processes. The external solution can prolong the transition process and make it more prone to mistakes. There may also be resistance from employees needing help identifying with the new successor and their management style. Another disadvantage is the potentially higher cost, as external successors often require higher remuneration and additional incentives.
How can you find the best succession solution for a company?
The choice between an internal and external succession solution depends heavily on the individual circumstances and needs of the company. A thorough internal talent assessment and an analysis of the company’s current and future challenges are crucial. An external consultant or M&A advisor can provide valuable support here by objectively weighing the pros and cons of the various options and helping with decision-making. Ultimately, the chosen solution should aim to secure the long-term stability and growth of the company.
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