Hiring a new manager presents an electric cooperative board with a common question: select from within the co-op or look outside?
Staying within the co-op itself, or the co-op network more broadly, has the advantage of bringing on someone who understands the business model and unique culture of cooperatives.
“They’ve already got the goodwill of people within the co-op,” says Michelle Rinn, NRECA senior vice president for human resources. “They already know the ‘skeletons in the closet’ and the relationships that exist. There’s a sense of continuity.”
If a cooperative has a clearly articulated sense of where it wants to go, she adds, that continuity can be an asset. But employment experts say the answer is far from clear-cut.
Ken Holmes, NRECA’s director for executive search, estimates that only about half of internal CEO hires are successful.
“There are great individuals who’ve come up through the ranks and been promoted from within and done a super job,” he says. “But more than 50 percent of the time, from what I’ve seen, the heir-apparent situation has not worked.”
One main reason, he says, is that it can be hard for the new CEO, the board, and other employees to adjust to the change in status of someone they already know.
Rinn concurs. “Someone who has risen up from within the ranks, they go from being a colleague to being a leader, and the transition can be difficult,” she says. “They almost need to start every relationship with a clean slate because people already know who you are, and they’re going to view you through that short lens. They’ve already decided what your strengths and weaknesses are, so that limits you.”
Holmes says even if there is a strong internal candidate at the co-op, someone who has been groomed for the top spot, there are significant benefits to conducting a search and interview process.
First, it indicates to the co-op’s members that the board is taking seriously its responsibility to find the best candidate for the job, not simply following the path of least resistance. Secondly, it helps to legitimatize the elevation of the internal candidate if he or she succeeds in an open process that includes more than one applicant.
“If they do get the job, they come in with so much more credibility,” Holmes says. “The board learns a lot about themselves. They learn a lot about the co-op. They learn from the candidates. They get new ideas from those people, even if they don’t end up hiring them. There’s a tremendous amount of value that they’re going to receive by going through the process.”
Martin Lowery, NRECA executive vice president for member and association relations, says the key to evaluating a potential new manager, particularly an external candidate, is to see beyond the technical and managerial aspects of the job.
“You want to really probe for values as opposed to simply competencies,” he says.
Look for candidates who are open to co-op principles like democracy, cooperation, self-help, and member ownership, he adds.
“If a person can talk about examples of how they can support those values, it’s likely going to be a good match.”