Succeeding the Founder: How to Assess Both Internal and External Options

Whilst many founder-led companies do conduct external searches for leaders it is also equally important to prioritise the moulding and shaping of internal talent for the potential succession as well.

It does seem to be common practice that a founder has already picked one of their current employees as their replacement, they will know the company values, culture, strategic direction and vision already so half of the work is already done. However, whatever the case is, internal candidates bring specific challenges, such as potential bias, limited external experience, and the risk of internal conflicts if multiple contenders exist.

Recently our MD at Collingwood, Doug, has had a couple of conversations with founders that have come to us with this exact situation, looking for a credible candidate to pick up the mantle and continue their work and vision. It inspired me to pen some thoughts around best practice for internal assessment but also to give people in this period of flux, a checklist to understand when they should potentially consider external assessment.

Core Considerations for Internal Evaluation:

• Leadership Identity: Internal candidates should have a distinct leadership style and not merely echo the founder’s vision. Successful successors are those who can innovate while respecting company traditions.

This can be assessed in a couple of ways, it is important to ask about their long-term vision for the company and areas where they might diverge from existing strategies. Additionally, 360-degree feedback from peers, direct reports, and mentors can highlight their leadership style and degree of authenticity in their current role.

• Team Dynamics: It’s vital to evaluate how internal candidates are perceived within the company to ensure they command respect. Collecting feedback with careful filtering helps identify genuine support and credibility.

Following on from the previous point, gathering internal feedback is crucial, but it should be done discreetly and with consideration of individual biases. Confidential focus groups, anonymous surveys, or one-on-one interviews can reveal honest insights about how well-regarded and trusted the candidate is by different levels of the organisation. It's also valuable to observe the candidate in team settings to assess their collaborative and conflict-resolution skills, especially if they’ll be managing former peers as this transition can be difficult to navigate.

• Development Needs: Internal candidates benefit from targeted leadership training to prepare for the elevated responsibilities of a top role. Programs like executive coaching can help bridge gaps in skills and mindset.

As I mentioned in my previous article, 2025 is likely to be a year where companies double down on their leadership development. To find potential pit flaws, in-depth competency assessments can identify gaps in a candidate’s skillset. Once identified, targeted leadership development plans, such as a tailored coaching program, can be implemented. Simulation exercises, role-play scenarios, and mentorship from external leaders can also provide real-time insights into areas for improvement. These steps should focus not only on upskilling but also on supporting the candidate’s mindset shift from a departmental leader to a company-wide leader.

• Fresh Perspectives: While internal candidates have deep organisational knowledge, it’s essential they stay updated with industry trends and seek external insights, either by building their own advisory network or through a diverse leadership team.

Interview questions should focus on how the candidate gathers insights and their comfort level with change. For example, ask how they stay updated on industry trends and what external sources or advisors they consult regularly. Encourage them to take part in external seminars, networking events, or think tanks relevant to the company’s field. Observing how they engage in industry conversations or use external data to make decisions can reveal their aptitude for adaptability.

• Emotional Intelligence and Crisis Management: Emotional intelligence is critical for leaders transitioning to high-pressure roles. A candidate’s ability to manage stress, resolve conflicts diplomatically, and remain composed in challenging situations reflects maturity and resilience.

Behavioural assessments, case studies, and situational questions during interviews can evaluate a candidate’s emotional intelligence. Asking for examples of past conflicts or crises and observing how they describe their responses can give insight into their level of self-awareness, empathy, and adaptability. External coaching programs focused on emotional intelligence can also be beneficial as part of their development plan.

Replacing a founder is one of the most complex transitions a company can face. Boards, or individual founders, need to select a leader who can balance continuity with growth, ensuring they are positioned for long-term success in a new era.

In cases where internal talent does not meet the criteria, an executive search agency like Collingwood is invaluable. By working with a trusted partner to find, assess, and onboard the right leader, companies can confidently bridge the gap between founder leadership and the future, ensuring they have a leader ready to drive sustainable success.

Considering External Options: When Internal Talent Falls Short

When internal candidates do not align with the company’s evolving needs or are unable to step up to the founder’s legacy, turning to external talent becomes a logical choice. This is where an executive search agency, like Collingwood, offers specialised guidance and tools to find the right fit. Here’s what to consider when exploring external options:

1. Identifying Essential Qualities: External successors should bring the experience and skills the organisation lacks internally, like diverse industry insights, innovative thinking and adaptability. Start by defining these qualities based on the company’s strategic goals to ensure alignment.
2. Using an Executive Search Agency: Partnering with an agency like Collingwood offers several advantages:

• Broad Access to Talent: We have extensive networks and can tap into a pool of qualified candidates who may not be actively looking but possess the unique mix of skills the company needs. Allowing us to understand the culture, vision and drivers means that we can tailor who in the networks will fit the ethos of the business, not just have the ability to perform in the role.
• Objective Evaluation: As a 3^rd party who act as an extension of your business, we have the unique ability to provide impartial assessments of candidates, minimising bias and ensuring the focus is on finding the best strategic fit on all fronts.
• Tailored Process: We are in a position where we can conduct thorough, tailored assessments, understanding your culture and long-term goals to match you with candidates who will drive both continuity and innovation. Sometimes leaders are a step before this, they may not know what their internal process should look like to assess candidates correctly and we can create these bespoke frameworks through best practice for you too.

3. Ensuring Cultural Compatibility: A new leader from outside the company needs to adapt to its culture while also introducing fresh perspectives. Collingwood’s expertise helps ensure that shortlisted candidates align well with the company ethos, making for a smoother transition and increased team acceptance.

In situations where internal talent is limited, we can be invaluable. We have completed multiple assignments like this in the past and bring a rigorous, tailored approach to identify, assess and recommend leaders who can honour the founder’s legacy, while confidently steering the company into the future.

If you are in a similar position to this or know that in the coming years you may well be, please do let us know and we can have an exploratory call to determine if and how we can help.