Leadership transitions are inevitable. People leave, get promoted, burn out, or are pulled into new opportunities. The real difference between companies that absorb those changes smoothly and those that scramble is whether leadership development happens before it’s urgently needed. When there’s no internal bench, every departure becomes a crisis. Decisions slow. Teams lose direction. The pressure to “just fill the seat” takes over.

That’s where the external-hire spiral begins.

External hires are often brought in under urgent circumstances, with high expectations and limited context. They’re expected to fix problems quickly while learning the culture, the people, and the unwritten rules at the same time. Even strong leaders can struggle in that environment. (External hires are significantly more likely to fail within their first 18 months than internal promotions Exec). When they fail (by your standards) or give up (because there was no way they were going to be successful in the role to begin with), the organization is right back where it started, only now with less trust, more fatigue, and higher costs. The default response becomes hiring another outsider, repeating the cycle.

It's so easy to break this pattern, but few companies have the forethought to establish the business practices that will avoid the external-hire death spiral. 

When leaders are developed internally, transitions are planned, they are orderly, they are calm.

Teams already know the person stepping in. The new leader understands how work actually gets done, not just how it was explained to them (often by three different stakeholders with three different viewpoints or agendas). Momentum is preserved instead of reset. That continuity matters more than most organizations realize, especially when resources are tight and every delay has a real cost.

The financial impact alone is significant. Open leadership roles drain productivity, pull senior leaders into coverage mode, and often require expensive search fees. Add onboarding time and the risk of a mis-hire, and the true cost of filling a leadership role externally can actually exceed the salary attached to it!  Developing leaders ahead of time spreads that investment out gradually, rather than forcing it all at once under pressure.

But developing future leaders in-house isn’t just about money. It’s about stability.

Organizations with a leadership bench don’t have a “we’ll deal with it when we have to” mentality. They don’t panic when someone gives notice. They don’t rush into decisions they’ll regret six months later. They have options; and options reduce stress and allow leaders to focus on the business instead of constantly reacting to personnel gaps and the emergencies they may cause.

There’s also a cultural effect that compounds over time. When people see that leaders are grown from within, it signals opportunity. High performers stay engaged because they can see their future within the company. Managers take development seriously because they know it matters. Leadership stops being something that happens to the organization and becomes something the organization actively shapes.

Importantly, leadership development doesn’t mean creating a rigid succession chart or promoting people before they’re ready. It means giving people stretch opportunities, teaching them how to think beyond their current role, and preparing them for complexity before they’re thrown into it. It’s steady, intentional work, not a one-time program.

The organizations that struggle most with leadership turnover aren’t unlucky. They’re unprepared. And preparation is one of the few advantages fully within a company’s control.

Develop leaders before you need them, and transitions become manageable. Ignore the pipeline, and every exit becomes more expensive, more disruptive, and harder to recover from.

By Nanette Miner, Ed.D.

Keywords: Entrepreneurship, HR, Leadership

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