The Correct Methodology of Selecting CEOs Abstract
Selecting the correct methodology for recruiting your next chief executive officer is undoubtedly one of the most difficult decisions that a board of directors will ever have to make. Horse races, promotion contests, and the extensive use of executive search firms have proven to be the most common forms of selecting company’s top executives. The fight to hold to the title of CEO between internal and external candidates is cut-throat and in most cases, a popularity contest based on reputation alone. Selecting the proper method of recruitment helps companies to eliminate these battles and pick the top candidate based on their qualifications such as their credentials, experience, …show more content…

Promotion contests are likely to cause a lot of in-house competition and will motivate current employees to exert more effort than normal. On one hand, promotion contests are a beneficial incentive for long-term, loyal employees who are trying to climb the corporate ladder. Current employees view these contests as a way to show to their peers how much work they put into the company and how much of an asset they really are to their teams. According to Tsoulouhas et al. (2007), if an inside employee is showing to be as good as or better than external applicants, promotion contests to insiders typically dominate and handicap outside applicants from being chosen for the position. This well known fact pushes current employees to strive for greatness everyday and fight to be the best man or woman in the office. On the other hand, if outsiders are found to be more qualified than inside applicants, it is the internal employees who suffer a handicap that is nearly impossible to overcome. This is caused because while the internal applicants are working harder than ever to win the promotion contest, they do not stand a chance against a more qualified external applicant. If the external applicant is chosen for the leadership position, this creates animosity between the long-term employees who were fighting for the CEO position and the new CEO creating a nearly impossible