19. Hiring External Leadership Talent
19. Knowing When Internal Leadership Isn’t Enough
While promoting from within can be an excellent strategy for leadership continuity, there are times when hiring external talent is necessary to drive business growth and innovation. Many SME owners struggle with determining when to look outside their organisation for leadership talent, fearing it could disrupt company culture or create resistance among existing employees. However, failing to bring in fresh leadership at the right time can limit business expansion, stifle innovation, and lead to stagnation.
Owners often grapple with questions such as -
How do I know when external hiring is the best option?
What leadership roles should be filled externally versus internally?
How do I ensure an external hire integrates smoothly into company culture?
What are the risks and benefits of hiring externally?
Failing to make the right call at the right time can result in a leadership gap, misaligned business strategy, or resistance from existing teams.
The Solution – Recognising When External Leadership is Necessary
Hiring externally should be a strategic decision based on the business’s needs, growth trajectory, and leadership pipeline. The most effective way to determine if external hiring is required is by assessing key indicators, such as -
1. Leadership Gaps That Can’t Be Filled Internally
If no internal employees have the necessary skills, experience, or vision for a leadership role, it may be time to look externally.
Leadership development programs take time, and some urgent roles may require hiring an experienced professional.
The company may need leadership skills that do not exist in the current team, such as deep industry expertise, global expansion knowledge, or digital transformation experience.
2. Business Growth Requires Fresh Perspectives
As businesses scale, they often need external talent with experience leading organisations through rapid growth or market changes.
External hires bring new industry insights, best practices, and networks that can help SMEs expand and compete more effectively.
A fresh perspective can break internal groupthink, encouraging innovation and strategic agility.
3. Struggles with Internal Leadership Development
If leadership development initiatives fail to produce candidates ready to step up, external hiring may be necessary.
SME owners who find themselves constantly stepping back into leadership roles due to a lack of internal readiness should consider hiring externally.
External hiring can be a way to introduce mentorship and knowledge transfer to accelerate internal leadership development.
4. The Need for Specialised Expertise
Some leadership positions, such as CFOs, CTOs, or Heads of Digital Transformation, require specialised expertise that may not be available internally.
Hiring an industry expert can provide immediate impact in areas where internal teams lack experience.
External leaders with a history of navigating market shifts, regulatory changes, or mergers and acquisitions can provide strategic advantage.
5. Company Culture and Diversity Enhancement
External hires bring diverse perspectives that help strengthen company culture and improve decision-making.
If the leadership team lacks diversity in experience, gender, or industry knowledge, external hiring can enhance team dynamics.
New leaders can help shift company culture in a positive direction, particularly when innovation or transformation is required.
The Impact on the Business and the Owner
For the business, bringing in external leadership talent at the right time strengthens overall strategy, operational efficiency, and competitive advantage. It ensures the business stays agile, innovative, and prepared for market shifts.
For the owner, external hires reduce leadership burdens by filling capability gaps and introducing fresh expertise. It allows for a more balanced leadership structure where decision-making and responsibilities are distributed effectively.
Key Considerations for SME Owners
Determining the Business’s Strategic Needs – What leadership capabilities are required to achieve business goals?
Balancing Internal Growth with External Hiring – How can hiring externally complement internal leadership development efforts?
Ensuring Cultural Fit – What steps should be taken to integrate external hires into the existing company culture?
Managing Employee Perceptions – How can the business ensure that existing employees feel valued while bringing in external talent?
Evaluating the Cost and ROI of External Hiring – What is the financial and strategic impact of hiring a senior leader externally?
HR Best Practice
Successful organisations develop leadership hiring roadmaps to define when external hiring is necessary. Best practices include -
Conducting leadership gap analyses to determine when external hiring is required.
Using executive search firms or industry networking to find the best external candidates.
Implementing structured onboarding programs to integrate external leaders effectively.
Creating internal-external leadership collaboration models to ensure knowledge sharing.
Setting clear success metrics for external hires, including performance benchmarks and cultural integration goals.
Psychological Perspective
Hiring external leaders can cause anxiety among existing employees who fear being overlooked for promotions. Transparent communication about why an external hire is necessary and how it benefits the business can reduce resistance and encourage collaboration.
For business owners, bringing in external talent requires trust and delegation. It can be challenging to accept outside leadership, but research shows that well-integrated external hires lead to faster innovation, stronger financial performance, and long-term business stability.
Practical Tips
Define the Role and Expectations Clearly – Outline specific leadership responsibilities before beginning the hiring process.
Ensure Alignment with Business Goals – Hire leaders with experience that directly supports company growth and strategic objectives.
Involve Internal Leaders in the Hiring Process – Reduce resistance by ensuring existing leadership participates in candidate selection.
Onboard External Leaders with Purpose – Set up structured introductions to company culture, team dynamics, and strategic goals.
Monitor the First 90 Days Closely – Ensure external hires integrate smoothly and have clear performance goals.
The Long-Term Benefits of Hiring External Leadership
Strategic external hiring ensures that SME leadership teams remain strong, dynamic, and forward-focused. Long-term benefits include -
Faster Business Growth – Experienced external leaders accelerate company expansion and market entry.
Improved Innovation and Competitiveness – New perspectives drive creative problem-solving and strategic innovation.
Stronger Leadership Bench – External hiring strengthens the overall leadership pipeline for future succession planning.
Greater Operational Efficiency – Specialised expertise enhances process improvements and decision-making.
Reduced Owner Dependency – A well-rounded leadership team allows the owner to step back and focus on long-term goals.
Golden Nugget - "The right external hire at the right time isn’t just an addition—it’s a transformation. Strategic leadership hiring ensures the business evolves, innovates, and thrives beyond the founder’s vision."