Executive Role Decision Process
Practical guidance for European headquarters appointing leaders in their U.S. subsidiaries: Internal Promotion vs. External Hiring
When a leadership role at a U.S. subsidiary becomes vacant, the first instinct of many European headquarters is to look internally. Developing loyal staff and promoting from within fits long-standing corporate values.
Yet at the level of General Manager or President, an internal promotion is not always the right strategy. The decision carries strategic risk, cultural complexity, and potential consequences for morale—both locally and back at headquarters.
Boards and executives must understand when to promote internally, when to recruit externally, and—above all—how to manage the process so the outcome strengthens the organization rather than creating friction.
The Double-Negative Risk of Internal Promotions
Promoting too early creates a double-negative:
You lose a highly effective operational or administrative manager.
You gain an underprepared general manager who may struggle with strategy, cross-cultural issues, or leadership presence.
This is not about loyalty—it’s about readiness. A subsidiary leader must interpret headquarters strategy through the lens of local realities, often under conditions of ambiguity and pressure. Few internal candidates are automatically prepared for this.
Why External Candidates Are Sometimes Essential
External recruitment often becomes necessary when:
Strategic change is required (digital transformation, restructuring, new go-to-market strategy).
Local expertise is missing (labor relations, compliance, customer expectations in the U.S.).
Fresh leadership is needed to reset culture, energize a team, or mentor the next generation.
Strong external hires bring proven credibility and independence. At best, they also serve as mentors—preparing rising internal managers to step up in the future.
Five Guidelines for European Headquarters
From work across dozens of German and U.S. subsidiaries, here are five practical steps headquarters should follow: