Drawing on research about CEOs, better to promote general counsel from within than hire from without?
The Harvard Bus. Rev., Vol. 88, Jan.-Feb. 2010 at 104, has an intriguing study of the “best- performing CEOs in the world.” I wondered how many of them have outstanding general counsel at the helm, but when I searched among my 5,000 posts, I found almost nothing about the legal departments of Apple, Samsung Electronics, Gazprom, or Reliance Industries – four of the top five companies whose CEOs were lauded.
Disappointed on that score, I did salvage something. The analysis of 1,999 CEOs showed that insiders promoted to the top position tended to do better with their company’s performance than outsiders hired in. “On average they [internal promotes] ranked 57 places higher than outsiders in the full list.” It would not surprise me to learn that internally promoted general counsel lead their departments to more success and effectiveness than general counsel who parachute in from another company or law firm (See my post of Jan. 4, 2006: If the law department needs shaking up, hire a general counsel from outside; and Feb. 19, 2006: higher pay for the external GC hire than the internal GC.).