“Internal Change Agent, or Definition of Insanity?” -February 10th, 2017 

-Dean Cantrill

Should you promote an internal candidate to lead a business turnaround? I believe this is a valid question in today’s job market. Hearing more and more recruiters ask about turnaround experience drove me to do some research and self-reflection on what I think it takes for internal candidates to succeed, leading positive change in a distressed business.

My conclusion, unless the candidate possesses certain experiences, skills, and leadership traits, the likely outcome is more of the same.

Regardless of whether Einstein gets credit for defining insanity as “Doing the same thing over and over again and expecting different results”, the quote is a perfect fit for this evaluative question.

I propose, that the hiring team should ask the following questions if considering the promotion of an internal candidate to lead a business turnaround:

1) Does the internal candidate have the experience?

I am not necessarily talking about turnaround experience in this regard. I am referring to overall business experience. It is my strong opinion that successful leaders have broad business and functional experiences that allow them to make timely, consistent, and competent decisions. In other words, good leaders learn from their successes and their mistakes enabling them to manage through all of the various challenges that face them day-to-day. The ability to make quick, sound decisions will help them keep the company’s momentum moving in the right direction, avoiding additional wrong turns on their journey to recovery. If your internal candidate has broad business and functional experiences, as well as, turnaround experience, I think you have a winner. If not, I highly recommend looking externally for your turnaround leader.

For example, I recently researched failed CEOs that have been in the press the past 5 years. A common trait exhibited by failed CEOs was the lack of cross-functional experience. Many high-profile CEOs who failed over this time period where highly educated in one functional discipline and road the success of a startup business. When their career led them from the successful startup to lead a struggling business, many failed. What may have worked at the startup did not apply to the new challenges they were facing. After one or two years, their Board of Directors and the Market labeled them failures.

From the failed CEO example, I draw the conclusion that being a “one hit wonder” or riding a successful startup is not the same thing as being a turnaround specialist. I also believe this theory can be scaled for an up-and-coming functional manager, all the way to a CEO. It is important to analyze an individual’s past success before promoting them or placing them into a new challenge. In many cases, past success could be pure luck, right place at the right time, or due to very specific functional skills that fit the past challenge perfectly. Typically, neither type of good fortune prepares a leader for a new turnaround opportunity.

2) How deep is the company culture running in the veins of the internal candidate?

The question needs to be asked, has the internal candidate shown initiative for change in the past (without prompting)? Back to the quote defining insanity, promoting an internal candidate to a leadership role in a turnaround situation who plans to improve the business by doing more of the same, only “better” is probably a flawed strategy, or simply insane.

In contrast, potentially successful internal candidates may not have the old company culture flowing through their veins and may be know for fighting the company’s destructive culture. More than likely, they are the ones who speak out against “doing it the way we always do it”. This leadership trait may be developed independently of the company’s culture, in spite of it, or simply brought in from a past employer.

Regardless, it is important that the internal candidates have a proven past of fixing broken processes and make change for the better. Try to avoid someone who appears favorable to upper management simply because they carry the company banner, bleed company colors, or are next in line for a promotion because viewed as “too valuable” to overlook.   None of these candidates will likely deliver a turnaround when needed.

3) Is the internal candidate a good communicator?

What good is someone with good turnaround ideas if they cannot communicate to every layer in the business? Here’s a news flash, “People resist change!” and because of this, the turnaround leader must have the ability to clearly, consistently, and competently communicate to every employee at some point in the change process. This trait may seem too obvious to list, but it is not uncommon for companies to promote successful, bright functional leaders into top leadership roles based on past functional performance to later realize they do not relate or communicate effectively with employees outside of their functional comfort-zone. This leadership trait can be developed and improved on over time, but most turnaround situations do not have the luxury of time.

4) Is the internal candidate respected at all levels in the organization?

The manner in which a potential leader interacts with subordinates, peers and superiors is a reflection of their personality. This personality trait can either support or damage their ability to become a good leader. For example, how many times have your heard the phrase “So-and-so really knows how to manage upward”? Or, “if So-and-so was a Lieutenant in the Army, their troops would shoot them in the back taking a hill in battle”? Neither are flattering statements, but far too common when describing an individual aspiring to become a business leader.

In my experience, successful turnaround leaders know how to communicate and influence at all levels in the organization. The art of a turnaround is identifying the root cause of the problem, developing a corrective action, leading the implementation of the corrective action, verifying the corrective action delivers the desired results, and step and repeat. More than likely, a turnaround problem exists at multiple levels, impacting multiple functional disciplines in the organization. This being said, long lasting influence that delivers positive change is far easier to obtain if the employees respect the individual leading the change process, rather than despise them. The later will likely deliver poor turnaround execution and drive the opposite behavior needed for the business to succeed.

5) Is the internal candidate a leader?

This may be the hardest question to answer. What makes a good or great leader? Plenty of books and theories on this subject already, so for time’s sake, lets take the opposite approach for this article.

Is the internal candidate a bad leader?

Don’t laugh, in your own experience, how many “bad leaders” have been promoted? It happens all the time. From the previous example, how many CEOs fail to deliver sustainable financial benefit to their shareholders? With the help of a web search, it does not take too long to create this list.

So, perhaps a few of these mistakes could have been avoided if the hiring team simply eliminated the “bad leaders” from the list. But for some reason, this negative leadership trait does not make the checklist when selecting candidates for leadership roles. Bad leadership traits are often overlooked because the candidate has specific technical skills or past accomplishments.

For starters, if the candidate is internal, at least perform a 360-degree review of the potential candidate to make sure you are not considering a “bad leader” for the turnaround leadership role. For external candidates, investigate past track records through reference checks and/or company financial records. These may be the best measuring stick to see if they were “bad leaders” in past roles.  

Regardless, there is really no good excuse to promote an internal candidate into a leadership role if they have proven to be a bad leader in the past. This trait will not improve when the role is bigger and under more pressure, only worsen.

And finally, there are probable more leadership traits worth mentioning, but this list a good starting point when considering an internal candidate for a turnaround leadership role.

I would like to close this article with one more thought; in addition to broad business experience and this list of leadership traits, there is a critical skill that a turnaround leader should possess. The skill is Change Management. This is a skill, and a bit of an art form that can be learned by a turnaround leader with the capacity and desire to learn it.

Bottom line, if the internal candidate for your turnaround leadership role has demonstrated all of these leadership traits and skills, you probably have a winner on your hands. On the other hand, overlooking missing leadership traits, skills and a past of “bad leadership” will more than likely lead to a failed business turnaround.