In a finding which challenges received wisdom about the relative risks of internal and external hires, international business leaders and human resource executives have raised concerns that managers promoted internally are almost as likely to struggle with their transition as candidates brought in from outside.

Global executive search firm, Egon Zehnder, questioned almost 200 delegates at a series of international events in Europe and the United States in late 2013 and spring 2014. After discussing the challenges around career transitions, all ranked external appointments as being at most risk of a difficult transition, closely followed by internal candidates taking charge of a business unit for the first time. The findings are significant because most organisations concentrate the greatest effort on integrating new executives from outside – typically giving less, or even no, support to an internal candidate moving into a new senior role. This is in the context of little support overall: almost 40 percent of respondents said their organisations provided no formal integration, even though the vast majority (84 percent) recognise the economic benefits.

“There’s an assumption within organisations that internal candidates know the ropes – but in fact an international move, or becoming head of a business unit for the first time can entail massive changes that are almost as challenging as for an external hire – so these transitions have significant hidden risks,” said Mark Byford, co-head of the integration practice at Egon Zehnder. “Research shows that most transitional support is given to mid- and lower-level hires coming in from outside,” said Dr Michael Watkins, author of “The First 90 Days”, whose consultancy Genesis Advisers recently signed a global alliance on integration with Egon Zehnder. “Senior people moving internally often receive the least support which makes absolutely no business sense.” Dr Watkins added that, with around a third of people dealing with a transition at any one time (their own or that of a close colleague) the potential impact on organisations is huge.

The Egon Zehnder study revealed that the vast majority of executives consider cultural complexities (87 percent) and stakeholder relationships (75 percent) as the biggest challenges in a new role. Gaining acceptance from the team (46 percent) was also considered a major challenge. Most of those whose organisations do have a formal integration programme said it did not address these aspects. When asked if HR departments could provide additional, more in-depth support, around 50 percent were unsure or lacked confidence, mainly due to pressures on time and resource. Mostly it’s not that new people fail, they just don’t deliver as much, or as fast, as was hoped – and this has a cost to the business – in terms of lost opportunities, decisions that are delayed, or slower traction for new ideas” said Egon Zehnder’s Mark Byford. “By speeding up these transitions and making new hires and internal transfers more effective, HR departments could unlock gains to businesses making a noticeable difference to the bottom line.”
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