Internal or external? Ultimately, choosing a No. 2 boils down to that one question. Yes, all of the other issues surrounding a new hire -- personality, skill set, a good cultural fit -- will be at play. But the outsider-insider question will resonate the most. Hiring an outsider ideally brings a fresh perspective, maybe even filling a void that's keeping a company from growing. Conversely, outsiders may make unrealistic demands upon a small company, uproot the successful dynamic, and alienate present executives. Worse, you could find someone, at a premium price, who flat-out doesn't get your business. Going with an insider mitigates risk managerially and monetarily. Of course, if mitigating risk was your chief concern, you'd be working at GE. Consider these case studies:
Going Outside. Jim Ansara, chairman of Shawmut Design and Construction, decided to hire a No. 2 when his Boston-based company jumped from the $20 million-$40 million range to $60 million-$70 million. A two-year search led him to someone from one of the larger traditional firms who was stuck in a lower spot and looking for advancement. "Initially, Tom Goemaat thought Shawmut was the Wild, Wild West compared with his previous employer," says Ansara, "but I knew he could help professionalize the company." Together, they worked to combine the entrepreneurial and the professional. "Shawmut is now more predictable, but overall, a better place to work," says Ansara, who officially passed the reins to Goemaat in 2000. Revenue now tops $339.9 million.
Staying Inside. Ernie Riling, CEO of Riling Enterprises, interviewed a handful of external people to be the No. 2 in a pallet business he owns. In one breath, they said they wanted out of the corporate atmosphere. In the next, they asked for $180K. "If they come from a corporation, they think there's a magical checkbook," Riling says. Also, most outsiders didn't have an all-around sense of the industry, and Riling has little use for visionaries who can't work the equipment. "You can't be great in sales if you've never worked on the plant floor," he argues. Having tapped an insider, Riling now happily spends the majority of his time on strategy. "You've succeeded when your phone doesn't ring," he says.
Either Way: Find a No. 2 who complements you. Hire a total opposite, and it's likely that you won't be reading the same book, let alone be on the same page, and problems that didn't exist before will erupt. Hire an exact clone and the odds are good that the problems that exist now won't go away and new opportunities will go undiscovered. Ansara brought Goemaat in knowing that he was great on the execution side and worked with him developing the managerial side. Best of all, though, no matter where you look, choosing the right No. 2 can do a world of good for No. 1. "In the search I had to learn to be truthful and diplomatic," says Riling. "I realized that I used to be a totalitarian, like Stalin, which is a terrible way to run a business."