No doubt all of us have worked somewhere where the recruitment of a new boss from outside the organisation has gone poorly, at least at first, provoking departures by others and leading to changes not always for the better.
Now a joint study in the US by a university business school and management consultancy A T Kearney has examined the performance of leading publicly listed companies over 20 years and compared their performance under chief executives recruited internally and those brought in from outside.
The headline findings appear stark - although a note of caution is warranted as I don't have the full study to hand, just a summary, and as any reader of The Guardian's wonderful Bad Science column will know, the results a study and the conclusions in the summary don't always correspond. However, let's take the conclusions on trust for a moment as this is not a matter of life or death.
The study by A T Kearney and the Kelley School of Business at Indiana University was referred to in an article in The Times yesterday, around which there is a pay wall, but can be found on the A T Kearney website.
It found that 36 listed companies which regularly recruited CEOs from their own ranks "were consistent leaders" and "significantly outperformed" other companies, displaying a "superior long-term performance reflected in . . . revenue growth, profit margins, earnings per share, productivity and share appreciation".
The study concluded that "no non-financial company [in the top-500 US listed firms] with externally recruited CEOs generated 20-year performance numbers that . . . even equated [with] those of the top 36".
It also found 40% of externally recruited CEOs lasted two years or less and 64% had gone inside four years.
A separate study by Professors Yan Zhang of Rice University's Graduate School of Business and Nandini Rajagopalan of the University of Southern California Marshall school of business suggested that the short-term changes often introduced by externally recruited CEOs "can be detrimental to a firm's performance".
Zhang and Rajagopalan concluded: "Outsiders are typically good at rapid cost-cutting and divestment, but over time those opportunities tend to dry up."
At the same time, the median remuneration for external CEOs appears to be 65% higher than for chief executives promoted from within.
None of this may amount to much, but it may or may not be worth noting that:
- Thomas Cook is run by Manny Fontenla-Novoa, who began his working life in the post-room.
- Tui Travel is run by Peter Long, who previously headed Tui-merger partner First Choice and has a lifetime's experience in tour operating.
- British Airways chose its own chief financial officer Keith Williams to succeed Willie Walsh when the latter took over BA's new parent International Airlines Group. Walsh himself was an external recruit, although he came from within the airline industry.
- Carnival chief executive David Dingle previously ran P&O Cruises.
That covers four of the five largest outbound travel and tourism companies listed in the UK - if we exclude hospitality groups and companies with interests extending beyond travel, such as Teletext owner Daily Mail and General.
The fifth is easyJet, which appointed former Guardian Media head Carolyn McCall as chief executive in June last year to replace the departing Andy Harrison, who in turn came from the RAC.
No doubt McCall won't give a hoot about the AT Kearney study. But it will be interesting to see how the budget carrier and its ambitious plans progress in the straightened times facing the sector. Watch out for further change.