13. Should the successor come from inside?

Should the Successor Come From Inside?

When Dave first started thinking seriously about his exit, one question kept coming up—could someone inside the business take over? It seemed like the natural first option. After all, the team already knew the systems, the customers and the culture. But what seemed straightforward on the surface turned out to be one of the most complex decisions of the whole process.

With support from John and the RegenerationHQ team, Dave stepped back to take an honest look at whether internal succession was the right path. It meant looking past loyalty and familiarity to assess actual readiness, capability and fit.

Where did Dave start?

Dave had built strong relationships with a number of senior staff. A few had been with him for over a decade. They were loyal, reliable and understood how the business ran. There was also a quiet expectation from some that they might be considered for a more senior role if Dave stepped away. But none had ever been tested in a true leadership or ownership position.

What is the problem we are working on?

The challenge was balancing loyalty with objectivity. Promoting someone internally might preserve culture and give continuity, but if the person was not fully ready or lacked key skills, it could create real risk. Dave had to work out whether there was a true successor in the wings—or just a team of solid operators.

What are the options we can explore?

Dave could choose an internal candidate and invest in developing them into the role. He could appoint someone as a transitional leader with outside support. Or he could decide that the best fit for future growth would need to come from outside, with a fresh set of skills and a broader perspective.

What reflective questions should Dave be considering about this part of the journey?

• Who in the business has shown the ability to lead under pressure?

• Is anyone truly ready now, or would it require a long handover?

• Am I seeing potential, or projecting it?

• Would the team follow this person if I were not here?

• Would a buyer view this person as a strength or a gap?

What decision has Dave made?

After a series of structured assessments, conversations and trial leadership scenarios, Dave made the call not to pursue an internal successor. While several staff were highly valuable, none had the complete skill set or leadership presence required to take the business forward with confidence. He decided to look externally while continuing to grow internal capability for the long term.

Why did he make that choice?

Dave understood that choosing a successor based on loyalty rather than fit could damage the business and create unnecessary stress for everyone involved. It was not a reflection on the team’s effort or integrity—it was about being honest about what the business needed in its next chapter.

What are the implications for the rest of the journey?

By ruling out internal succession early, Dave gave himself and the team clarity. It allowed him to focus on building a strong external recruitment process and to keep the team engaged without fuelling false expectations. It also sent a signal to potential buyers that leadership planning was being handled with rigour.

What is HR best practice?

Good succession planning involves honest capability assessments, clear communication and development planning. HR best practice includes giving internal candidates feedback on what they would need to step up in future and supporting their career path regardless of the exit outcome.

What is the psychological perspective?

Turning down an internal successor can be emotionally tough. It can feel like letting people down. Dave had to work through guilt, disappointment and the fear of losing loyalty. But handled respectfully and transparently, these conversations can actually strengthen relationships and show that decisions are being made in the business’s best interest.

What are the red flags to be watched out for and how can they be eliminated or mitigated?

Red flags include promoting someone based on tenure alone, avoiding difficult conversations, or being vague about leadership intentions. These can be managed by creating a clear succession framework, involving trusted advisors in the assessment process and communicating decisions early and clearly.

What has been the immediate effect on the business of taking this action?

The team appreciated Dave’s honesty. While some were initially disappointed, they respected the process and felt reassured that the decision was made with the business’s future in mind. Dave also noticed that leadership engagement actually improved once expectations were clarified.

Golden nugget

Succession is not about rewarding the past. It is about preparing the business for the future—with the right person in the right role.

Talk to us about your exit journey. www.regenerationhq.co.nz/contact