A stimulating article in strategy+business, Summer 2010, at 80, describes research into the comparative performance of companies after CEOs are appointed from within (“insiders”) or from outside the company. “Four out of five times, boards around the world choose insider candidates when selecting a CEO, and that ratio has been broadly consistent for ten years. Their intuition or logic has been borne out. Based on market-adjusted shareholder returns, insiders promoted “tend to perform better and last longer.”
My impressionistic sense about general counsel selections, however, is that less than 80 percent of general counsel positions are filled from inside. If so, fewer executive search firms would be in business, I suspect (See my post of May 18, 2010: promotions to general counsel with 9 references.). One difference between the two positions is that a group (the Board of Directors) selects a CEO, but the CEO alone can select a general counsel.