Internal or External? Best Practice for CEO Recruitment

Appointing a new chief executive officer (CEO) is a critical decision. The choice between internal and external recruitment is pivotal, balancing the need for continuity with the potential for transformation. Matthew Clements Wheeler explains…

Before embarking on the recruitment process, schools and trusts should collectively address three fundamental questions to guide decision-making:

Continuity or fresh thinking?
Have we built a leadership pipeline?
How will stakeholders perceive the choice?

Consider whether the organisation requires stability and deep institutional knowledge or a new perspective to drive innovation and change. This decision should align with your strategic plan, current challenges and future ambitions.

Evaluate the strength of your internal talent pool. Has the organisation invested in succession planning and leadership development, or is there a reliance on external candidates to fill senior roles? A lack of internal candidates may signal weaknesses in talent management.

Reflect on the expectations of key stakeholders, including staff, volunteers, donors, beneficiaries and regulators. An internal appointment may reassure stakeholders of stability, while an external hire could signal ambition or a shift in direction. Transparent communication is essential to manage perceptions.

Define Clear Objectives

Be explicit about the organisation’s goals for the appointment. Do you need a leader to consolidate existing strengths, drive growth, or navigate a period of change? Is fresh thinking required to address challenges or seize new opportunities? This should reflect your strategic plan and current context.

Make Sure You Are Legally Compliant

While there is no legal requirement to advertise a CEO vacancy externally in the UK not-for-profit sector, schools and trusts should review internal policies, funding conditions, and equality obligations. A transparent and inclusive recruitment process, often including external advertising, is advisable to minimise legal risks and align with good governance. For specific guidance, consult your organisation’s policies or seek advice from your legal advisor.

In the meantime, here are some of the legal and practical considerations to be taken into account:

Compliance with Internal Policies and Agreements

If your organisation has a recruitment policy or collective agreements (e.g., with trade unions), these may mandate internal or external advertising. Failing to follow such policies could lead to grievances or disputes.

Equality Act 2010

Job advertisements must comply with the Equality Act 2010, which prohibits discrimination based on protected characteristics (e.g., age, gender, disability, race). Not advertising a role, particularly externally, may limit the candidate pool and risk allegations of discrimination if certain groups are excluded from applying. For example, consistently appointing without advertising could disadvantage underrepresented groups, potentially leading to indirect discrimination claims.

Redundancy Situations

If staff are at risk of redundancy, failing to advertise a vacancy internally or externally could impact the fairness of redundancy dismissals, especially if the role suits an at-risk employee.

Protected Employees

Employees on maternity, paternity, shared parental, or adoption leave have enhanced rights, including being informed of suitable vacancies. While advertising isn’t mandatory, these employees must be made aware of opportunities.

Grant-Funded Roles

If the CEO position is funded by a grant, funders may require external advertising to ensure fairness and transparency. Similarly, external adverts may be a condition of other (un)restricted grant funding.

Best Practice

Although not legally required, advertising externally is recommended to ensure a fair, transparent, and competitive process. This reduces risks of perceived bias, boosts stakeholder confidence, and widens the talent pool. Using inclusive language and diverse advertising platforms helps attract a broad range of candidates and mitigates discrimination risks.