When Robert A. Iger was promoted from president to chief executive officer of the Walt Disney Company on March 13, the proverbial water cooler conversations the next day concerned much more than the NCAA basketball brackets for March Madness. The appointment of Iger to replace embattled Disney CEO Michael Eisner raised a few eyebrows in the corporate world: It's highly unusual, succession experts say, for a company to select a number-two person to succeed the number-one executive when the company's shareholders are unhappy and the former chief was all but forced from office. Experts Wharton and elsewhere discuss the merits of hiring an outsider CEO vs. an insider, and agree that, in Iger's case, success will hinge on his ability to follow through on his own vision -- in short, his ability to behave like an outsider.
"It's an anomaly for a company under siege to pick an insider," said Dennis C. Carey, a consultant at global recruitment firm SpencerStuart who specializes in the hiring of CEOs. "Without implying any criticism of Disney's decision, [Iger] is the equivalent of a field commander reporting to a general, when the general has been disgraced. It is a challenge. How can the field commander, who was responsible for carrying out the general's orders, distance himself? How can he put on a new set of clothes and toe a new line? For at least six months, Iger must refrain from being too critical but usher in a new era for Disney. It will be an interesting dynamic to watch."
Although the pros and cons of appointing an insider to replace an outgoing CEO can be debated, Wharton experts agree there are some definite positive results -- the first one being the message it conveys to the organization. "It sends the signal that there are ways to move up within the organization, that if you are number two you can become number one," said Wharton management professor Nicolaj Siggelkow. "It says: 'If you work hard, you might get promoted.
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